BBX BBX Capital Corporation

BBX CAPITAL CORPORATION

(Exact name of registrant as specified in its charter)

Florida 

001-13133

65-0507804

(State or other jurisdiction

(Commission

(IRS Employer

of incorporation)

File Number)

Identification No.)

401 East Las Olas Boulevard, Suite 800, Fort Lauderdale, Florida

33301

(Address of principal executive offices)

(Zip Code)

Not applicable

(Former name or former address, if changed since last report.)

Exhibit No.

Description of Document

10.1

Credit Agreement, dated as of June 11, 2014, among Renin Canada Corp. and Renin US LLC, as borrowers, Renin UK Corp. and Renin Holdings LLC, as guarantors, and Wells Fargo Capital Finance Corporation Canada, as lender.

BBX CAPITAL CORPORATION

Date: June 17, 2014

By: /s/  John K. Grelle            

John K. Grelle,

Executive Vice President and 

Chief Financial Officer

Exhibit

Description

10.1

Credit Agreement, dated as of June 11, 2014, among Renin Canada Corp. and Renin US LLC as borrowers, and Renin UK Corp. and Renin Holdings LLC as guarantors and Wells Fargo Capital Finance Corporation Canada, as lender.

Page

1.

DEFINITIONS AND CONSTRUCTION

1.1     Definitions, Accounting Terms and Construction

2.

LOANS AND TERMS OF PAYMENT    

2.1     Revolving Loan Advances

2.2     Term Loan

2.3     Borrowing Procedures

2.4     Payments; Prepayments

2.5     [Intentionally Deleted]

2.6     Interest Rates: Rates, Payments, and Calculations

2.7     Designated Account

2.8     Maintenance of Loan Account; Statements of Obligations

2.9     Maturity Termination Dates

2.10     Effect of Maturity

2.11     Termination or Reduction by Borrowers

2.12     Fees

2.13     Letters of Credit

2.14     Illegality; Impracticability; Increased Costs

2.15     Capital Requirements

2.16     Extent of each Borrower’s Liability, Contribution

3.

INTENTIONALLY DELETED    

4.

CONDITION    

4.1     Conditions Precedent to the Initial Extension of Credit

4.2     Conditions Precedent to all Extensions of Credit

4.3     Conditions Subsequent

5.

REPRESENTATIONS AND WARRRANTIES    

6.

AFFIRMATIVE COVENANTS    

6.1     Financial Statements, Reports, Certificates

6.2     Collateral Reporting

6.3     Existence

6.4     Maintenance of Properties

6.5     Taxes

6.6     Insurance

6.7     Inspections, Exams, Collateral Exams and Appraisals

6.8     Account Verification

6.9     Compliance with Laws

6.10     Environmental

6.11     Disclosure Updates

6.12     Collateral Covenants

6.13     Material Contracts

6.14     Location of Inventory, Equipment and Books

6.15     Applications under the CCAA and BIA

6.16     Operation of Pension Plans

6.17     Minimum Availability

6.18     Further Assurances

7.

NEGATIVE COVENANTS    

7.1     Indebtedness

7.2     Liens

7.3     Restrictions on Fundamental Changes

7.4     Disposal of Assets

7.5     Change Name

7.6     Nature of Business

7.7     Prepayments and Amendments

7.8     Change of Control

7.9     Restricted Junior Payments

7.10     Accounting Methods

7.11     Investments; Controlled Investments

7.12     Transactions with Affiliates

7.13     Use of Proceeds

7.14     Limitation on Issuance of Stock

7.15     Consignments

7.16     Inventory and Equipment with Bailees

7.17     Parent as Holding Company

7.18     Other Payments and Distributions

7.19     Defined Benefit Plans

8.

FINANCIAL COVENANTS    

9.

EVENTS OF DEFAULT    

10.

RIGHTS AND REMEDIES    

10.1     Rights and Remedies

10.2     Additional Rights and Remedies

10.3     Lender Appointed Attorney in Fact

10.4     Remedies Cumulative

10.5     Crediting of Payments and Proceeds

10.6     Marshaling

10.7     License

10.8     Disposition of Pledged Interests by Lender

10.9     Voting and Other Rights in Respect of Pledged Interests

11.

WAIVERS; INDEMNIFICATION    

11.1     Demand; Protest; etc.

11.2     Lender’s Liability for Collateral

11.3     Indemnification

11.4     Currency Indemnity

12.

NOTICES    

13.

CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER    

14.

ASSIGNMENTS; SUCCESSORS    

15.

AMENDMENTS; WAIVERS    

16.

TAXES    

17.

GENERAL PROVISIONS    

17.1     Effectiveness

17.2     Section Headings

17.3     Interpretation

17.4     Severability of Provisions

17.5     Debtor-Creditor Relationship

17.6     Counterparts; Electronic Execution

17.7     Revival and Reinstatement of Obligations

17.8     Confidentiality

17.9     Lender Expenses

17.10     Setoff

17.11     Survival

17.12     Patriot Act and Canadian AML Laws

17.13     Integration

17.14     Language

17.15     Bank Product Providers

17.16     Excluded Swap Obligations

1. Definitions and Construction

1.1

Definitions, Accounting Terms and Construction

2. Loans and Terms of Payment

2.1

Revolving Loan Advances

(a)

Subject to the terms and conditions of this Agreement, and during the term of this Agreement, Lender agrees to make revolving loans (“Advances”) to Borrowers by way of Canadian Prime Rate Loans,  and Daily Three Month LIBOR Loans in an amount at any one time outstanding not to exceed the lesser of:

(i)

the Maximum Revolver Amount less the Letter of Credit Usage at such time, and

(ii)

the Borrowing Base at such time less the Letter of Credit Usage at such time.

(b)

Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to the terms and conditions of this Agreement, reborrowed at any time during the term of this Agreement. The outstanding principal amount of the Advances, together with interest accrued and unpaid thereon, shall be due and payable on the Termination Date. Lender has no obligation to make an Advance at any time following the occurrence of a Default or an Event of Default.

(c)

If at any time the Maximum Revolver Amount is less than the amount of the Borrowing Base, the amount of Advances available under Section 2.1(a) above shall be reduced by any Reserves established by Lender with respect to amounts that may be payable by any Borrower to third parties.

2.2

Term Loan

Date

Installment Amount

October 1st, 2014

$75,000

Thereafter, on the first day of each fiscal quarter

$75,000

2.3

Borrowing Procedures

(a)

Procedure for Borrowing.  Each Borrowing shall be made by a written request by an Authorized Person delivered to Lender. Such written request must be received by Lender no later than 11:00 a.m. (Eastern time) on the Business Day that is the requested Funding Date specifying (i) the amount of such Borrowing, (ii) the requested Funding Date, which shall be a Business Day, (iii) if such Borrowing will be by way of Canadian Prime Rate Loan,  or Daily Three Month LIBOR Loan.

(b)

Making of Loans. Promptly after receipt of a request for a Borrowing pursuant to Section 2.3(a), Lender shall make the proceeds thereof available to Borrowers on the applicable Funding Date by transferring immediately available funds equal to such amount to the Designated Account; provided, however, that, Lender shall not have the obligation to make any Advance or Term Loan if (i) 1 or more of the applicable conditions precedent set forth in Section 4 will not be satisfied on the requested Funding Date for the applicable Borrowing unless such condition has been waived by Lender, or (ii) the requested Borrowing would exceed the Availability on such Funding Date.

(c)

Protective Advances. Lender may make an Advance for any reason at any time in its Permitted Discretion, without Borrowers’ compliance with any of the conditions of this Agreement, and (i) disburse the proceeds directly to third Persons in order to protect Lender’s interest in the Collateral or to perform any obligation of Borrowers under this Agreement or otherwise to enhance the likelihood of repayment of the Obligations, or (ii) apply the proceeds to outstanding Obligations then due and payable (such Advance, a “Protective Advance”).

2.4

Payments; Prepayments

(a)

Payments by Borrowers. Except as otherwise expressly provided herein, all payments by Borrowers shall be made as directed by Lender or to Lender’s Account.

(b)

Payments by Account Debtors. Borrowers shall instruct all account debtors to make payments either directly to the Controlled Account, or instruct them to deliver such payments to Lender by wire transfer, Automated Clearing House (ACH), or other means as Lender may direct for deposit into Lender’s Account or for direct application to reduce the outstanding Advances. If any Borrower receives a payment of the Proceeds of Collateral directly, such Borrower will promptly deposit the payment or Proceeds into the Controlled Account. Until so deposited, such Borrower will hold all such payments and Proceeds in trust for Lender without commingling with other funds or property.

(c)

Crediting Payments. For purposes of calculating Availability and the accrual of interest on outstanding Obligations, unless otherwise agreed between Borrowers and Lender, each payment shall be applied to the Obligations as of the first Business Day following the Business Day of deposit to the Controlled Account of immediately available funds or other receipt of immediately available funds by Lender provided such payment is received in accordance with Lender’s usual and customary practices as in effect from time to time. Any payment received by Lender that is not a transfer of immediately available funds shall be considered provisional until the item or items representing such payment have been finally paid under applicable law. Should any payment item not be honored when presented for payment, then Borrowers shall be deemed not to have made such

payment, and that portion of Borrowers’ outstanding Obligations corresponding to the amount of such dishonored payment item shall be deemed to bear interest as if the dishonored payment item had never been received by Lender. Each reduction in outstanding Advances resulting from the application of such payment to the outstanding Advances shall be accompanied by an equal reduction in the amount of outstanding Accounts.

(d)

Application of Payments. All Collections and all Proceeds of Collateral received by Lender, shall be applied, so long as no Event of Default has occurred and is continuing, to reduce the outstanding Obligations in such manner as Lender shall determine in its discretion. After payment in full in cash of all Obligations, any remaining balance shall be transferred to the Designated Account or otherwise to such other Person entitled thereto under applicable law. Amounts collected by Lender from a Loan Party in relation to or for the account of Bank Product Obligations shall be remitted to the applicable Bank Product Provider.

(e)

Optional Prepayments of Term Loan. Borrowers may, upon at least three (3) Business Days prior written notice to Lender, prepay the principal of the Term Loan, in whole or in part. Each prepayment of principal made pursuant to this Section 2.4(e) shall be accompanied by the payment of accrued interest to the date of such payment on the amount prepaid and the prepayment fee described in Section 2.12 and Schedule 2.12, if any. So long as no Default or Event of Default shall have occurred, each such prepayment shall be applied against the remaining installments of principal due on the Term Loan in the inverse order of maturity  (for the avoidance of doubt, any amount that is due and payable on the Maturity Date shall constitute an installment). 

(f)

Mandatory Prepayments - Revolver. If, at any time, (i) the Revolver Usage exceeds (A) the Borrowing Base or (B) the Maximum Revolver Amount, less Reserves (in accordance with Section 2.1(c) at such time or (ii) (A) the sum of the outstanding principal balance of the Term Loan on such date plus the Revolver Usage on such date exceeds (B) the Maximum Credit, less Reserves (in accordance with Section 2.1(c)) at such time (such excess amount described in clauses (i) and (ii) being referred to as the “Overadvance Amount”), then Borrowers shall immediately upon demand,  prepay the Obligations in an aggregate amount equal to the Overadvance Amount. If payment in full of the outstanding revolving loans is insufficient to eliminate the Overadvance Amount and Letter of Credit Usage continues to exceed the Borrowing Base, Borrowers shall maintain Letter of Credit Collateralization of the outstanding Letter of Credit Usage. Lender shall not be obligated to provide any Advances during any period that an Overadvance Amount is outstanding.

(g)

Mandatory Prepayments - Term Loan.  If Lender obtains an appraisal of the Equipment at any time as permitted under this Agreement, and such appraisal shows the aggregate unpaid principal amount of the Term Loan to exceed 100% of the Net Forced Liquidation Value of Eligible Equipment, then Lender may (i) require Borrowers to immediately prepay the unpaid principal of the Term Loan in the amount of such excess. If any Eligible Equipment is disposed of pursuant to

paragraph (a) of the definition of Permitted Dispositions, then the proceeds of such disposition (net of reasonable, documented expenses) shall be paid to Lender to repay the unpaid principal amount of the Term Loan.

2.5

[Intentionally Deleted]

2.6

Interest Rates: Rates, Payments, and Calculations

(a)

Interest Rates. Except as provided in Section 2.6(b), the principal amount of all Obligations (except for undrawn Letters of Credit and Bank Products) that have been charged to the Loan Account pursuant to the terms hereof shall bear interest on the Daily Balance thereof at a per annum rate equal to the applicable Interest Rate plus the applicable Interest Rate Margin.

(b)

Default Rate. Upon the occurrence and during the continuation of an Event of Default and at any time following the Termination Date, at the discretion of the Lender:

(i)

the principal amount of all Obligations (except for undrawn Letters of Credit and Bank Products) that have been charged to the Loan Account pursuant to the terms hereof shall bear interest on the Daily Balance thereof at a per annum rate equal to two (2) percentage points above the per annum rate otherwise applicable thereunder, and

(ii)

the Letter of Credit fee provided for in Section 2.12 shall be increased by three (3) percentage points above the per annum rate otherwise applicable hereunder.

(c)

Payment. Except to the extent provided to the contrary in Section 2.12, all interest, all Letter of Credit fees, all other fees payable hereunder or under any of the other Loan Documents, all costs and expenses payable hereunder or under any of the other Loan Documents, and all Lender Expenses shall be due and payable, in arrears, on the first day of each month. Each Borrower hereby authorizes Lender, from time to time without prior notice to Borrowers, to charge all interest, Letter of Credit fees, and all other fees payable hereunder or under any of the other Loan Documents (in each case, as and when due and payable), all costs and expenses payable hereunder or under any of the other Loan Documents (in each case, as and when accrued or incurred), all Lender Expenses (as and when accrued or incurred), and all fees and costs provided for in Section 2.12 (as and when accrued or incurred), and all other payment obligations as and when due and payable under any Loan Document or any Bank Product Agreement (including any amounts due and payable to any Bank Product Provider in respect of Bank Products that Borrowers have not otherwise made payment of or provided for) to the Loan Account, which amounts shall thereupon constitute Advances hereunder and, shall accrue interest at the rate then applicable to Advances. Any interest,

fees, costs, expenses, Lender Expenses, or other amounts payable hereunder or under any other Loan Document or under any Bank Product Agreement that are charged to the Loan Account shall thereafter constitute Advances hereunder and shall accrue interest at the rate then applicable to Advances.

(d)

Computation

(i)

All interest and fees chargeable under the Loan Documents shall be computed on the basis of a 360 day year with respect to Daily Three Month LIBOR Loans and a 365 day year (or a 366 day year in a leap year) with respect to Canadian Prime Rate Loans, in each case, for the actual number of days elapsed in the period during which the interest or fees accrue. In the event the Interest Rate is changed from time to time hereafter, the rates of interest hereunder based upon the Interest Rate automatically and immediately shall be increased or decreased by an amount equal to such change in the Interest Rate.

(ii)

For greater certainty, whenever any amount is payable under this Agreement or any other Loan Document by Borrowers as interest or as a fee which requires the calculation of an amount using a percentage per annum, each party to this Agreement acknowledges and agrees that such amount shall be calculated as of the date payment is due without application of the “deemed reinvestment principle” or the “effective yield method”. As an example, when interest is calculated and payable monthly, the rate of interest payable per month is 1/12 of the stated rate of interest per annum.

(e)

Intent to Limit Charges to Maximum Lawful Rate. In no event shall the interest rate or rates payable under this Agreement or any other Loan Document, plus any other amounts paid in connection herewith and therewith, exceed the highest rate permissible under any law (including the Criminal Code (Canada)) that a court of competent jurisdiction shall, in a final determination, deem applicable. Borrowers and Lender, in executing and delivering this Agreement and the other Loan Documents, intend legally to agree upon the rate or rates of interest and other amounts paid in connection therewith and manner of payment stated herein and therein; provided, however, that, anything contained herein and therein to the contrary notwithstanding, if said rate or rates of interest or other amounts paid in connection therewith or manner of payment exceeds the maximum allowable under applicable law, then, as of the date of this Agreement, Borrowers are and shall be liable only for the payment of such maximum amount as is allowed by applicable law, and payment received from Borrowers in excess of such legal maximum, whenever received, shall be applied to reduce the principal balance of the Obligations to the extent of such excess.

(f)

Interest Act (Canada). For purposes of disclosure pursuant to the Interest Act (Canada), the annual rates of interest or fees to which the rates of interest or fees provided in this Agreement and the other Loan Documents (and stated herein or therein, as applicable, to be computed on the basis of a 360 or 365 day year or any

other period of time) are equivalent to the rates so determined multiplied by the actual number of days in the applicable calendar year and divided by 360, 365 or such other period of time, respectively.

(g)

Certificate of Lender. A certificate of an authorized signing officer of Lender as to each amount and/or each rate of interest or fees payable under the Loan Documents from time to time shall be conclusive evidence of such amount and of such rate, absent manifest error.

2.7

Designated Account

2.8

Maintenance of Loan Account; Statements of Obligations

2.9

Maturity Termination Dates

2.10

Effect of Maturity

2.11

Termination or Reduction by Borrowers

(a)

Borrowers may terminate the Credit Facility or reduce the Maximum Revolver Amount or prepay the Term Loan at any time prior to the Maturity Date, if they (i) deliver a notice to Lender of their intentions at least 30 days prior to the proposed action, (ii) pay to Lender the applicable termination fee, reduction fee or prepayment fee set forth in Schedule 2.12, and (iii) pay the Obligations (other than the outstanding Hedge Obligations, which shall be paid in accordance with the applicable Hedge Agreement) in full or down to the reduced Maximum Revolver Amount or to the reduced amount of the Term Loan, as applicable. Any reduction in the Maximum Revolver Amount or Term Loan shall be in multiples of $100,000, with a minimum reduction of at least $500,000. Each such termination, reduction or prepayment shall be irrevocable. Once reduced, the Maximum Revolver Amount may not be increased.    Proceeds of Advances shall not be used by Borrowers to make a prepayment of the Term Loan. 

(b)

The applicable termination fee, reduction fee and prepayment fee set forth in Schedule 2.12 shall be presumed to be the amount of liquidated damages (and deemed not a penalty) sustained by Lender as a result of an early termination, reduction or prepayment, as applicable, and each Borrower agrees that it is reasonable under the circumstances currently existing (including the borrowings that are reasonably expected by Borrowers hereunder and the interest, fees and other charges that are reasonably expected to be received by Lender hereunder). In addition, Lender shall be entitled to such early termination fee upon the occurrence of any Event of Default described in Sections 9.4,  9.5 and 9.6 hereof, even if Lender does not exercise its right to terminate this Agreement, but elects, at its option, to provide financing to Borrowers or permit the use of cash collateral during an Insolvency Proceeding. The early termination fee, reduction fee and prepayment fee, as applicable, provided for in Schedule 2.12 shall be deemed included in the Obligations.

2.12

Fees

2.13

Letters of Credit

(a)

Subject to the terms and conditions of this Agreement, upon the request of a Borrower made in accordance herewith, Lender agrees to issue a requested Letter of Credit for the account of such Borrower. By submitting a request to Lender for the issuance of a Letter of Credit, such Borrower shall be deemed to have requested that Lender issue, or arrange for the issuance of, the requested Letter of Credit. Each request for the issuance of a Letter of Credit, or the amendment, renewal, or extension of any outstanding Letter of Credit, shall be irrevocable and shall be made in writing by an Authorized Person and delivered to Lender via telefacsimile, or other electronic method of transmission reasonably acceptable to Lender and reasonably in advance of the requested date of issuance, amendment, renewal, or extension. Each such request shall be in form and substance reasonably satisfactory to Lender, and (i) shall specify (A) the amount of such Letter of Credit, (B) the date of issuance, amendment, renewal, or extension of such Letter of Credit, (C) the proposed expiration date of such Letter of Credit, (D) the name and address of the beneficiary of the Letter of Credit, and (E) such other information (including, the conditions to drawing, and, in the case of an amendment, renewal, or extension, identification of the Letter of Credit to be so amended, renewed, or extended) as shall be necessary to prepare, amend, renew, or extend such Letter of Credit, and (ii) shall be accompanied by such Letter of Credit Agreements as Lender may request or require, to the extent that such requests or requirements are consistent with the Letter of Credit Agreements that Lender generally requests for Letters of Credit in similar circumstances. Lender’s records of the content of any such request will be conclusive.

(b)

Lender shall have no obligation to issue (or arrange for), amend, renew or extend a Letter of Credit if, after giving effect to the requested issuance, amendment, renewal, or extension, the Letter of Credit Usage would exceed the lesser of: (i) 

the Borrowing Base at such time less the outstanding amount of Advances at such time, (ii) the Maximum Revolver Amount less the outstanding amount of Advances, less Reserves (in accordance with Section 2.1(c) at such time, or (ii) $1,000,000 or the Equivalent Amount in US Dollars.

(c)

Lender shall have no obligation to issue (or arrange for) a Letter of Credit if (i) any order, judgment, or decree of any Governmental Authority or arbitrator shall, by its terms, purport to enjoin or restrain Lender from issuing (or arranging) such Letter of Credit or any law applicable to Lender or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over Lender shall prohibit or request that Lender refrain from the issuance (or arranging) of letters of credit generally or such Letter of Credit in particular, or (ii) the issuance (or arranging) of such Letter of Credit would violate one or more policies of Lender applicable to letters of credit generally.

(d)

Each Letter of Credit shall be in form and substance reasonably acceptable to Lender, including the requirement that the amounts payable thereunder must be payable in Canadian Dollars or US Dollars, and shall expire on a date no more than 12 months after the date of issuance or last renewal of such Letter of Credit, which date shall be no later than the Maturity Date. If Lender makes a payment under a Letter of Credit, Borrowers shall pay the Lender an amount equal to the applicable Letter of Credit Disbursement on the Business Day such Letter of Credit Disbursement is made and, in the absence of such payment, the amount of the Letter of Credit Disbursement immediately and automatically shall be deemed to be an Advance hereunder (notwithstanding any failure to satisfy any condition precedent set forth in Section 4 or this Section 2.13) and, initially, shall bear interest at the rate then applicable to Advances. If a Letter of Credit Disbursement is deemed to be an Advance hereunder, Borrowers’ obligation to pay the amount of such Letter of Credit Disbursement to Lender shall be automatically converted into an obligation to pay Lender such resulting Advance.

(e)

Each Borrower agrees to indemnify, defend and hold harmless Lender and any issuer of a Letter of Credit (including their respective branches, Affiliates, and correspondents) and each such Person’s respective directors, officers, employees, attorneys and agents (each, a “Letter of Credit Related Person”) (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penalties, and damages, and all reasonable fees and disbursements of legal counsel, experts, or consultants and all other costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (as and when they are incurred and irrespective of whether suit is brought), which may be incurred by or awarded against any such Letter of Credit Related Person (other than Taxes, which shall be governed by Section 16) (the “Letter of Credit Indemnified Costs”), and which arise out of or in connection with, or as a result of: (i) any Letter of Credit or any pre-advice of its issuance; (ii) any transfer, sale, delivery, surrender or endorsement of any Drawing Document at any time(s) held by any such Letter of Credit Related Person in connection with any Letter of Credit; (iii) any action or proceeding arising out of, or in connection with, any

Letter of Credit (whether administrative, judicial or in connection with arbitration), including any action or proceeding to compel or restrain any presentation or payment under any Letter of Credit, or for the wrongful dishonor of, or honoring a presentation under, any Letter of Credit; (iv) any independent undertakings issued by the beneficiary of any Letter of Credit; (v) any unauthorized instruction or request made to Lender or issuer in connection with any Letter of Credit or requested Letter of Credit or error in computer or electronic transmission; (vi) an adviser, confirmer or other nominated person seeking to be reimbursed, indemnified or compensated; (vii) any third party seeking to enforce the rights of an applicant, beneficiary, nominated person, transferee, assignee of Letter of Credit proceeds or holder of an instrument or document; (viii) the fraud, forgery or illegal action of parties other than the Letter of Credit Related Person; (ix) Lender’s or issuer’s performance of the obligations of a confirming institution or entity that wrongfully dishonors a confirmation; or (x) the acts or omissions, whether rightful or wrongful, of any present or future de jure or de facto governmental or regulatory authority or cause or event beyond the control of the Letter of Credit Related Person; in each case, subject to the proviso immediately below, including that resulting from the Letter of Credit Related Person’s own actions or omissions;  provided, however, that such indemnity shall not be available to any Letter of Credit Related Person claiming indemnification under clauses (i) through (x) above to the extent that such Letter of Credit Indemnified Costs may be finally determined in a final, non-appealable judgment of a court of competent jurisdiction to have resulted directly from the gross negligence or willful misconduct of the Letter of Credit Related Person claiming indemnity. Borrowers hereby agree to pay the Letter of Credit Related Person claiming indemnity on demand from time to time all amounts owing under this Section 2.13(e). If and to the extent that the obligations of Borrowers under this Section 2.13(e) are unenforceable for any reason, Borrowers agree to make the maximum contribution to the Letter of Credit Indemnified Costs permissible under applicable law. This indemnification provision shall survive termination of this Agreement and all Letters of Credit.

(f)

The liability of Lender or any issuer of a Letter of Credit (or any other Letter of Credit Related Person) under, in connection with or arising out of any Letter of Credit (or pre-advice), regardless of the form or legal grounds of the action or proceeding, shall be limited to direct damages suffered by Borrowers that are caused directly by Lender’s or issuer’s gross negligence or willful misconduct in (i) honoring a presentation under a Letter of Credit that on its face does not at least substantially comply with the terms and conditions of such Letter of Credit, (ii) failing to honor a presentation under a Letter of Credit that strictly complies with the terms and conditions of such Letter of Credit or (iii) retaining Drawing Documents presented under a Letter of Credit. Lender or such issuer shall be deemed to have acted with due diligence and reasonable care if Lender or such issuer’s conduct is in accordance with Standard Letter of Credit Practice or in accordance with this Agreement. Borrowers’ aggregate remedies against Lender, any issuer of a Letter of Credit and any other Letter of Credit Related Person for wrongfully honoring a presentation under any Letter of Credit or wrongfully retaining honored Drawing Documents shall in no event exceed the aggregate

amount paid by Borrowers to Lender or such issuer in respect of the honored presentation in connection with such Letter of Credit under Section 2.13(d), plus interest at the rate then applicable to Advances hereunder. Borrowers shall take action to avoid and mitigate the amount of any damages claimed against Lender, any issuer or any other Letter of Credit Related Person, including by enforcing its rights against the beneficiaries of the Letters of Credit. Any claim by Borrowers under or in connection with any Letter of Credit shall be reduced by an amount equal to the sum of (x) the amount (if any) saved by Borrowers as a result of the breach or alleged wrongful conduct complained of; and (y) the amount (if any) of the loss that would have been avoided had Borrowers taken all reasonable steps to mitigate any loss, and in case of a claim of wrongful dishonor, by specifically and timely authorizing Lender or such issuer to effect a cure.

(g)

Borrowers are responsible for preparing or approving the final text of the Letter of Credit as issued or arranged by Lender, irrespective of any assistance Lender or an issuer of a Letter of Credit may provide such as drafting or recommending text or by Lender’s or such issuer’s use or refusal to use text submitted by Borrowers. Borrowers are solely responsible for the suitability of the Letter of Credit for Borrowers’ purposes. With respect to any Letter of Credit containing an “automatic amendment” to extend the expiration date of such Letter of Credit, Lender or the issuer of such Letter of Credit, in its sole and absolute discretion, may give notice of nonrenewal of such Letter of Credit and, if Borrowers do not at any time want such Letter of Credit to be renewed, Borrowers will so notify Lender and such issuer at least 15 calendar days before Lender or such issuer is required to notify the beneficiary of such Letter of Credit or any advising bank of such nonrenewal pursuant to the terms of such Letter of Credit.

(h)

Borrowers’ reimbursement and payment obligations under this Section 2.13 are absolute, unconditional and irrevocable and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever, including: (i) any lack of validity, enforceability or legal effect of any Letter of Credit or this Agreement or any term or provision therein or herein; (ii) payment against presentation of any draft, demand or claim for payment under any Drawing Document that does not comply in whole or in part with the terms of the applicable Letter of Credit or which proves to be fraudulent, forged or invalid in any respect or any statement therein being untrue or inaccurate in any respect, or which is signed, issued or presented by a Person or a transferee of such Person purporting to be a successor or transferee of the beneficiary of such Letter of Credit; (iii) Lender or any of its branches or Affiliates being the beneficiary of any Letter of Credit; (iv) Lender or any issuer or any correspondent honoring a drawing against a Drawing Document up to the amount available under any Letter of Credit even if such Drawing Document claims an amount in excess of the amount available under the Letter of Credit; (v) the existence of any claim, set-off, defense or other right that any Borrower or any of its Subsidiaries may have at any time against any beneficiary, any assignee of proceeds, Lender, any issuer of a Letter of Credit or any other Person; (vi) any other event, circumstance or conduct whatsoever, whether or not similar to any of the foregoing that might, but for this Section 2.13(h), constitute a legal or equitable defense to or discharge of,

or provide a right of set-off against, any Borrower’s or any of its Subsidiaries’ reimbursement and other payment obligations and liabilities, arising under, or in connection with, any Letter of Credit, whether against Lender, the issuer of such Letter of Credit, the beneficiary or any other Person; or (vii) the fact that any Default or Event of Default shall have occurred and be continuing; provided, however, that subject to Section 2.13(f) above, the foregoing shall not release Lender or any issuer of a Letter of Credit from such liability to Borrowers as may be finally determined in a final, non-appealable judgment against Lender or such issuer of a court of competent jurisdiction against Lender or such issuer following reimbursement or payment of the obligations and liabilities, including reimbursement and other payment obligations, of Borrowers to Lender or an issuer of a Letter of Credit arising under, or in connection with, this Section 2.13 or any Letter of Credit.

(i)

Without limiting any other provision of this Agreement, Lender, any Letter of Credit issuer, and each other Letter of Credit Related Person (if applicable) shall not be responsible to Borrowers for, and Lender’s and any Letter of Credit issuer’s rights and remedies against Borrowers and the obligation of Borrowers to reimburse Lender or any Letter of Credit issuer for each drawing under each Letter of Credit shall not be impaired by: (i) honor of a presentation under any Letter of Credit that on its face substantially complies with the terms and conditions of such Letter of Credit, even if the Letter of Credit requires strict compliance by the beneficiary; (ii) honor of a presentation of any Drawing Document that appears on its face to have been signed, presented or issued (A) by any purported successor or transferee of any beneficiary or other Person required to sign, present or issue such Drawing Document or (B) under a new name of the beneficiary; (iii) acceptance as a draft of any written or electronic demand or request for payment under a Letter of Credit, even if nonnegotiable or not in the form of a draft or notwithstanding any requirement that such draft, demand or request bear any or adequate reference to the Letter of Credit; (iv) the identity or authority of any presenter or signer of any Drawing Document or the form, accuracy, genuineness or legal effect of any Drawing Document (other than Lender’s or an issuer’s determination that such Drawing Document appears on its face substantially to comply with the terms and conditions of the Letter of Credit); (v) acting upon any instruction or request relative to a Letter of Credit or requested Letter of Credit that Lender or such issuer in good faith believes to have been given by a Person authorized to give such instruction or request; (vi) any errors, omissions, interruptions or delays in transmission or delivery of any message, advice or document (regardless of how sent or transmitted) or for errors in interpretation of technical terms or in translation or any delay in giving or failing to give notice to Borrowers; (vii) any acts, omissions or fraud by, or the insolvency of, any beneficiary, any nominated person or entity or any other Person or any breach of contract between any beneficiary and any Borrower or any of the parties to the underlying transaction to which the Letter of Credit relates; (viii) assertion or waiver of any provision of the ISP or UCP 600 that primarily benefits an issuer of a letter of credit, including any requirement that any Drawing Document be presented to it at a particular hour or place; (ix) payment to any paying or negotiating bank (designated or permitted by the terms

of the applicable Letter of Credit) claiming that it rightfully honored or is entitled to reimbursement or indemnity under Standard Letter of Credit Practice applicable to it; (x) acting or failing to act as required or permitted under Standard Letter of Credit Practice applicable to where Lender or an issuer has issued, confirmed, advised or negotiated such Letter of Credit, as the case may be; (xi) honor of a presentation after the expiration date of any Letter of Credit notwithstanding that a presentation was made prior to such expiration date and dishonored by Lender or an issuer if subsequently Lender or such issuer or any court or other finder of fact determines such presentation should have been honored; (xii) dishonor of any presentation that does not strictly comply or that is fraudulent, forged or otherwise not entitled to honor; or (xiii) honor of a presentation that is subsequently determined by Lender or an issuer to have been made in violation of international, federal, state or local restrictions on the transaction of business with certain prohibited Persons.

(j)

Each Borrower acknowledges and agrees that any and all fees, charges, costs, or commissions in effect from time to time imposed by, and any and all expenses incurred by, Lender, an issuer of a Letter of Credit, or by any adviser, confirming institution or entity or other nominated Person relating to Letters of Credit, at the time of issuance of any Letter of Credit and upon the occurrence of any other activity with respect to any Letter of Credit (including transfers, assignment of proceeds, amendments, drawings, renewals or cancellations), shall be non-refundable Lender Expenses for purposes of this Agreement and shall be reimbursable immediately by Borrowers to Lender.

(k)

If by reason of (i) any change after the Closing Date in any applicable law, treaty, rule, or regulation or any change in the interpretation or application thereof by any Governmental Authority, or (ii) compliance by Lender or any issuer of a Letter of Credit with any direction, request, or requirement (irrespective of whether having the force of law) of any Governmental Authority or monetary authority including, Regulation D of the Board of Governors as from time to time in effect (and any successor thereto): (i) any reserve, deposit, or similar requirement is or shall be imposed or modified in respect of any Letter of Credit issued or caused to be issued hereunder or hereby, or (ii) there shall be imposed on Lender or an issuer of a Letter of Credit any other condition regarding any Letter of Credit, and the result of the foregoing is to increase, directly or indirectly, the cost to Lender or such issuer of issuing, arranging, making, participating in, or maintaining any Letter of Credit or to reduce the amount receivable in respect thereof, then, and in any such case, Lender may, at any time within a reasonable period after the additional cost is incurred or the amount received is reduced, notify Borrowers, and Borrowers shall pay within 30 days after demand therefor, such amounts as Lender may specify to be necessary to compensate Lender or such issuer for such additional cost or reduced receipt, together with interest on such amount from the date of such demand until payment in full thereof at the rate then applicable to Advances hereunder; provided, that (A) Borrowers shall not be required to provide any compensation pursuant to this Section 2.13(k) for any such amounts incurred more than 180 days prior to the date on which the demand for payment of such amounts is first made to Borrowers, and (B) if an event or circumstance

giving rise to such amounts is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof. The determination by Lender of any amount due pursuant to this Section 2.13(k), as set forth in a certificate setting forth the calculation thereof in reasonable detail, shall, in the absence of manifest or demonstrable error, be final and conclusive and binding on all of the parties hereto.

(l)

Unless otherwise expressly agreed by Lender and Borrowers, when a Letter of Credit is issued, (i) the rules of the ISP and UCP 600 shall apply to each standby Letter of Credit, and (ii) the rules of UCP 600 shall apply to each commercial Letter of Credit.

(m)

In the event of a direct conflict between the provisions of this Section 2.13 and any provision contained in any Letter of Credit Agreement, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.13 shall control and govern.

2.14

Illegality; Impracticability; Increased Costs

(i)

Daily Three Month LIBOR may be adjusted by Lender on a prospective basis to take into account any additional or increased costs to Lender of maintaining or obtaining any eurodollar deposits or banker’s acceptances or other increased costs, in each case, due to changes in applicable law, including any Changes in Law (including any changes in tax laws (except changes of general applicability in corporate income tax laws)) and changes in the reserve requirements imposed by any Governmental Authority, which additional or increased costs would increase the cost of funding or maintaining loans bearing interest at such rates. In any such event, Lender shall give Borrowers notice of such a determination and adjustment and, upon its receipt of the notice from Lender, Borrowers may, by notice to Lender (A) require Lender to furnish to Borrowers a statement setting forth in reasonable detail the basis for adjusting such interest rate and the method for determining the amount of such adjustment, or (B) repay the Loans with respect to which such adjustment is made (together with any amounts due hereunder).

(ii)

In the event that (i) any change in market conditions or any Change in Law makes it unlawful or impractical for Lender to fund or maintain extensions of credit with interest based upon Daily Three Month LIBOR or to continue such funding or maintaining, or to determine or charge interest rates based upon Daily Three Month LIBOR, (ii) Lender determines that by reasons affecting the London Interbank Eurodollar market or bankers’ acceptances market, adequate and reasonable means do not exist for ascertaining Daily Three Month LIBOR, or (iii) Lender determines that the interest rate based on Daily Three Month LIBOR will not adequately and fairly reflect the cost to Lender of maintaining or

funding Advances or the Term Loan at the interest rate based upon Daily Three Month LIBOR, Lender shall give notice of such changed circumstances to Borrowers and (i) interest on the principal amount of such extensions of credit thereafter shall accrue interest at a rate equal to the US Base Rate plus the applicable Interest Rate Margin or the Canadian Prime Rate plus the applicable Interest Rate Margin, as the case may be, and (ii) Borrowers shall not be entitled to elect Daily Three Month LIBOR until Lender determines that it would no longer be unlawful or impractical to do so or that such increased costs would no longer be applicable.

(iii)

Anything to the contrary contained herein notwithstanding, Lender is not required actually to acquire eurodollar deposits to fund or otherwise match fund any Obligation as to which interest accrues at Daily Three Month LIBOR.

2.15

Capital Requirements

2.16

Extent of each Borrower’s Liability, Contribution

(a)

Joint and Several Liability. Each Borrower agrees that it is jointly and severally liable for, and absolutely and unconditionally guarantees to Lender the prompt payment and performance of, all Obligations under this Agreement and all agreements under the Loan Documents. Each Borrower agrees that its guaranty obligations hereunder and under the other Loan Documents constitute a continuing guaranty of payment and not of collection, that such obligations shall not be discharged until cash payment in full of the Obligations, and that such obligations are absolute and unconditional, irrespective of (i) the genuineness, validity, regularity, enforceability, subordination or any future modification of, or change in, any Obligations or Loan Document, or any other document, instrument or agreement to which any Borrower is or may become a party or be bound; (ii) the absence of any action to enforce this Agreement (including this Section) or any other Loan Document, or any waiver, consent or indulgence of any kind by Lender with respect thereto; (iii) the existence, value or condition of, or failure to perfect any of Lender’s Liens or to preserve rights against, any security or guaranty for the Obligations or any action, or the absence of any action, by Lender in respect thereof (including the release of any security or guaranty); (iv) the insolvency of any Borrower; (v) any election by Lender in an Insolvency Proceeding for the application of Section 1111(b)(2) of the Bankruptcy Code; (vi) any borrowing or grant of a Lien by any other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy Code or otherwise; (vii) the disallowance of any claims of Lender against any Borrower for the repayment of any Obligations under Section 502 of the Bankruptcy Code or otherwise; or (viii) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, except cash payment in full of all Obligations.

(b)

Contribution. Each Borrower hereby agrees that it will not enforce any of its rights of contribution or subrogation against any other Borrower with respect to any liability incurred by it hereunder or under any of the other Loan Documents, any payments made by it to Lender with respect to any of the Obligations or any collateral security therefor until such time as all of the Obligations have been paid in full in cash. Any claim which any Borrower may have against any other Borrower with respect to any payments to Lender hereunder or under any of the Bank Product Agreements are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations and, in the event of any insolvency, bankruptcy, receivership, liquidation, reorganization or other similar proceeding under the laws of any jurisdiction relating to any Borrower, its debts or its assets, whether voluntary or involuntary, all such Obligations shall be paid in full in cash before any payment or distribution of any character, whether in cash, securities or other property, shall be made to any other Borrower therefor.

(c)

No Limitation on Liability. Nothing contained in this Section 2.16 shall limit the liability of any Borrower to pay extensions of credit made directly or indirectly to that Borrower (including revolving loans advanced to any other Borrower and

then re-loaned or otherwise transferred to, or for the benefit of, such Borrower), Obligations relating to Letters of Credit issued to support such Borrower’s business, and all accrued interest, fees, expenses and other related Obligations with respect thereto, for which such Borrower shall be primarily liable for all purposes hereunder. Lender shall have the right, at any time in its discretion, to condition an extension of credit hereunder upon a separate calculation of borrowing availability for each Borrower and to restrict the disbursement and use of such extensions of credit to such Borrower.

3. Intentionally DeleteD

4. Condition

4.1

Conditions Precedent to the Initial Extension of Credit

4.2

Conditions Precedent to all Extensions of Credit

(a)

the representations and warranties of each Borrower and each other Loan Party or its Subsidiaries contained in this Agreement or in the other Loan Documents shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date of such extension of credit, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall continue to be true and correct as of such earlier date); and

(b)

no Default or Event of Default shall have occurred and be continuing on the date of such extension of credit, nor shall either result from the making thereof.

4.3

Conditions Subsequent

5. Representations and Warranties

6. Affirmative Covenants

6.1

Financial Statements, Reports, Certificates

6.2

Collateral Reporting

6.3

Existence

6.4

Maintenance of Properties

6.5

Taxes

(a)

Cause all assessments and taxes imposed, levied, or assessed against any Loan Party or its Subsidiaries, or any of their respective assets or in respect of any of its income, businesses, or franchises to be paid in full, before delinquency or before the expiration of any extension period, except to the extent that the validity of such assessment or tax shall be the subject of a Permitted Protest and so long as, in the case of an assessment or tax that has or may become a Lien against any of the Collateral, (i) such contest proceedings conclusively operate to stay the sale of any portion of the Collateral to satisfy such assessment or tax, and (ii) any such other Lien is at all times subordinate to Lender’s Liens.

(b)

Make timely payment or deposit of all tax payments and withholding taxes required of it and them by applicable laws, including those laws concerning F.I.CA., F.U.T.A., state disability and local, state and federal income taxes, and will, upon request, furnish Lender with proof reasonably satisfactory to Lender indicating that such Loan Party and its Subsidiaries have made such payments or deposits.

6.6

Insurance

6.7

Inspections, Exams, Collateral Exams and Appraisals

6.8

Account Verification

(a)

Subject to 6.8(b) below, permit Lender, in Lender’s name or in the name of a nominee of Lender, to verify the validity, amount or any other matter relating to any Account, by mail, telephone, facsimile transmission or otherwise. Further, at the request of Lender, Borrowers shall send requests for verification of Accounts or send notices of assignment of Accounts to account debtors and other obligors.

(b)

With respect to Accounts owing by Home Depot and Lowe’s Borrowers shall: 

(i)

provide Lender with or facilitate direct access to the supplier portals of Home Depot and Lowe’s used by Borrowers to access information regarding such Accounts for verification purposes;

(ii)

permit Lender, during field exams conducted by Lender, to verify the validity, amount or other matter relating to such Accounts by mail, telephone, facsimile transmission or otherwise; and

(iii)

at the request of Lender, send requests for verification of Accounts or send notices of assignment of Accounts to such Account debtors

6.9

Compliance with Laws

6.10

Environmental

(a)

Keep any property either owned or operated by any Borrower or any other Loan Party or its Subsidiaries free of any Environmental Liens or post bonds or other financial assurances satisfactory to Lender and in an amount sufficient to satisfy the obligations or liability evidenced by such Environmental Liens;

(b)

Comply, in all material respects, with Environmental Laws and provide to Lender documentation of such compliance which Lender reasonably requests;

(c)

Promptly notify Lender of any release of which any Borrower or any other Loan Party has knowledge of a Hazardous Material in any reportable quantity from or onto property owned or operated by any Loan Party or any of its Subsidiaries and take any Remedial Actions required to abate said release or otherwise to come into compliance, in all material respects, with applicable Environmental Law; and

(d)

Promptly, but in any event within five (5) Business Days of its receipt thereof, provide Lender with written notice of any of the following: (i) notice that an Environmental Lien has been filed against any of the real or personal property of any Loan Party or its Subsidiaries, (ii) commencement of any Environmental Action or written notice that an Environmental Action will be filed against any Loan Party or any of its Subsidiaries, and (iii) written notice of a violation, citation, or other administrative order from a Governmental Authority.

6.11

Disclosure Updates

(a)

Promptly and in no event later than five (5) Business Days after obtaining knowledge thereof or after the occurrence thereof, whichever is earlier, notify Lender:

(i)

if any written information, exhibit, or report furnished to Lender contained, at the time it was furnished, any untrue statement of a material fact or omitted to state any material fact necessary to make the statements contained therein not misleading in light of the circumstances in which made. Any notification pursuant to the foregoing provision will not cure or

remedy the effect of the prior untrue statement of a material fact or omission of any material fact nor shall any such notification have the effect of amending or modifying this Agreement or any of the Schedules hereto;

(ii)

of all actions, suits, or proceedings brought by or against any Loan Party or any of its Subsidiaries before any court or Governmental Authority which reasonably could be expected to result in a Material Adverse Change; provided that, in any event, such notification shall not be later than 5 days after service of process with respect thereto on any Loan Party or any of its Subsidiaries;

(iii)

of (A) any disputes or claims by any Borrower’s customers exceeding $25,000 individually or $50,000 in the aggregate during any fiscal year; and (B) Goods returned to or recovered by any Borrower outside of the ordinary course of business, with a fair market value exceeding $5,000,  individually or in the aggregate, $50,000;    

(iv)

of any material loss or damage to any Collateral or any substantial adverse change in the Collateral; or

(v)

of a violation of any law, rule or regulation, the non-compliance with which reasonably could be expected to result in a Material Adverse Change.

(b)

Immediately upon obtaining knowledge thereof or after the occurrence thereof, notify Lender of any event or condition which constitutes a Default or an Event of Default and provide a statement of the action that such Borrower proposes to take with respect to such Default or Event of Default.

(c)

Upon request of Lender, each Loan Party shall deliver to Lender any other materials, reports, records or information reasonably requested relating to the operations, business affairs, financial condition of any Loan Party or its Subsidiaries or the Collateral.

6.12

Collateral Covenants

(a)

Possession of Collateral. In the event that any Collateral, including Proceeds, is evidenced by or consists of Negotiable Collateral, Investment Related Property, or Chattel Paper, in each case, having an aggregate value or face amount of $25,000 or more for all such Negotiable Collateral, Investment Related Property, or Chattel Paper, the Loan Parties shall promptly (and in any event within two (2) Business Days after receipt thereof) notify Lender thereof, and if and to the extent that perfection or priority of Lender’s Liens is dependent on or enhanced by possession, the applicable Loan Party, promptly (and in any event within two (2) Business Days) after request by Lender, shall execute such other documents and instruments as shall be requested by Lender or, if applicable, endorse and deliver physical possession of such Negotiable Collateral, Investment Related Property, or Chattel Paper to Lender, together with such undated powers (or other relevant

document of assignment or transfer acceptable to Lender) endorsed in blank as shall be requested by Lender, and shall do such other acts or things deemed necessary or desirable by Lender to enhance, perfect and protect Lender’s Liens therein.

(b)

Chattel Paper.  If any Loan Party retains possession of any Chattel Paper or instruments (which retention of possession shall be subject to the extent permitted hereby), promptly upon the request of Lender, such Chattel Paper and instruments shall be marked with the following legend: “This writing and the obligations evidenced or secured hereby are subject to the Liens of Wells Fargo Capital Finance Corporation Canada, as Lender”.

(c)

Control Agreements.

(i)

Except to the extent otherwise provided by Section 7.11, each Loan Party shall obtain a Control Agreement from each bank (other than Lender) maintaining a Deposit Account for such Loan Party;

(ii)

Except to the extent otherwise provided by Section 7.11, each Loan Party shall obtain a Control Agreement from each issuer of uncertificated securities, securities intermediary or commodities intermediary issuing or holding any financial assets or commodities to or for any Loan Party; and

(iii)

Except to the extent otherwise provided by Section 7.11, each Loan Party shall cause Lender to obtain control and Lender’s Liens to be valid and perfected first priority Liens, with respect to all of such Loan Party’s investment property.

(d)

Letter-of-Credit Rights. If the Loan Parties (or any of them) are or become the beneficiary of letters of credit having a face amount or value of $25,000 or more in the aggregate, then the applicable Loan Party or Loan Parties shall promptly (and in any event within two (2) Business Days after becoming a beneficiary), notify Lender thereof and, promptly (and in any event within two (2) Business Days) after request by Lender, enter into a tri-party agreement with Lender and the issuer or confirming bank with respect to letter-of-credit rights assigning such letter-of-credit rights to Lender and directing all payments thereunder to the Lender’s Account unless otherwise directed by Lender, all in form and substance satisfactory to Lender.

(e)

Government Contracts. Other than Accounts and Chattel Paper the aggregate value of which does not at any one time exceed $25,000, if any Account or Chattel Paper of any Loan Party arises out of a contract or contracts with the federal government of the United States, Canada or any State or Province or any department, agency, or instrumentality thereof, Loan Parties shall promptly (and in any event within two (2) Business Days of the creation thereof) notify Lender thereof and, promptly (and in any event within two (2) Business Days) after request by Lender, execute any instruments or take any steps reasonably required by Lender (including executing all instruments and taking all steps required under the Assignment of Claims Act, 31 USC §3727, the Financial Administration Act 

(Canada) and any other similar applicable federal, state, provincial or local law) in order that all moneys due or to become due under such contract or contracts shall be assigned to Lender, for the benefit of Lender and each Bank Product Provider and shall provide written notice thereof under the Assignment of Claims Act, the Financial Administration Act or other applicable law.

(f)

Intellectual Property.

(i)

Upon the request of Lender, in order to facilitate registrations with CIPO (or any foreign equivalent), each Loan Party shall execute and deliver to Lender one or more Intellectual Property Security Agreements to further evidence Lender’s Lien on such Loan Party’s Intellectual Property, and the Intangibles of such Loan Party relating thereto or represented thereby;

(ii)

Each Loan Party shall have the duty, with respect to Intellectual Property that is necessary in the conduct of such Loan Party’s business, to protect and diligently enforce and defend at such Loan Party’s expense its Intellectual Property, including (A) to diligently enforce and defend, including promptly suing for infringement, misappropriation, or dilution and to recover any and all damages for such infringement, misappropriation, or dilution, and filing for opposition, interference, and cancellation against conflicting Intellectual Property rights of any Person, (B) to prosecute diligently any trademark application or service mark application that is part of the Trademarks pending as of the date hereof or hereafter, (C) to prosecute diligently any patent application that is part of the Patents pending as of the date hereof or hereafter, (D) to take all reasonable and necessary action to preserve and maintain all of such Loan Party’s Trademarks, Patents, Copyrights, Intellectual Property Licenses, and its rights therein, including paying all maintenance fees and filing of applications for renewal, affidavits of use, and affidavits of non-contestability, and (E) to require all employees, consultants, and contractors of each Loan Party who were involved in the creation or development of such Intellectual Property to sign agreements containing assignment to such Loan Party of Intellectual Property rights created or developed and obligations of confidentiality. No Loan Party shall abandon any Intellectual Property or Intellectual Property License that is reasonably necessary in the conduct of such Loan Party’s business. Each Loan Party shall take the steps described in this Section 6.12(f)(ii) with respect to all new or acquired Intellectual Property to which it or any of its Subsidiaries is now or later becomes entitled that is necessary in the conduct of such Loan Party’s or Subsidiary’s business;

(iii)

Each Loan Party acknowledges and agrees that Lender shall have no duties with respect to any Intellectual Property or Intellectual Property Licenses of any Loan Party. Without limiting the generality of this Section 6.12(f)(iii), each Loan Party acknowledges and agrees that Lender shall not be under any obligation to take any steps necessary to preserve rights in the Collateral consisting of Intellectual Property or Intellectual

Property Licenses against any other Person, but Lender may do so at its option from and after the occurrence and during the continuance of an Event of Default, and all expenses incurred in connection therewith (including reasonable fees and expenses of legal counsel and other professionals) shall be for the sole account of Loan Party and shall be chargeable to the Loan Account;

(iv)

Each Loan Party shall promptly file an application with CIPO (or any foreign equivalent) for any Copyright that has not been registered with CIPO (or any foreign equivalent) if such Copyright is reasonably necessary in connection with the conduct of such Loan Party’s business. Any expenses incurred in connection with the foregoing shall be borne by Loan Parties; and

(v)

No Loan Party shall enter into any Intellectual Property License to receive any license or rights in any Intellectual Property of any other Person unless such Loan Party has used commercially reasonable efforts to permit the assignment of or grant of a Lien in such Intellectual Property License (and all rights of such Loan Party thereunder) to Lender (and any transferees of Lender).

(g)

Investment Related Property.

(i)

Upon the occurrence and during the continuance of an Event of Default, following the request of Lender, all sums of money and property paid or distributed in respect of the Investment Related Property that are received by any Loan Party shall be held by such Loan Party in trust for the benefit of Lender segregated from such Loan Party’s other property, and such Loan Party shall deliver it promptly to Lender in the exact form received; and

(ii)

Each Loan Party shall cooperate with Lender in obtaining all necessary approvals and making all necessary registrations under federal, state, provincial, local, or foreign law to effect the perfection of Lender’s Liens on the Investment Related Property or to effect any sale or transfer thereof.

(h)

Real Property; Fixtures. Upon the acquisition by any Loan Party of any fee interest in Real Property, such Loan Party will promptly (and in any event within two (2) Business Days of acquisition) notify Lender of the acquisition of such Real Property and will grant to Lender a first priority Mortgage on each fee interest in Real Property now or hereafter owned by such Loan Party, which Real Property shall not be subject to any other Liens except Permitted Liens, and shall deliver such other documentation and opinions, in form and substance satisfactory to Lender, in connection with the grant of such Mortgage as Lender shall request in its Permitted Discretion, including appraisals, title insurance policies and endorsements, surveys, financing statements, fixture filings, flood insurance, flood insurance certifications and environmental audits and such Loan Party shall pay all recording costs, mortgage registration taxes, intangible taxes and other

fees and costs (including reasonable attorneys fees and expenses) incurred in connection therewith. All such appraisals, title insurance policies and endorsements, environmental audits and surveys shall be prepared or issued by parties reasonably acceptable to Lender. To the extent permitted by applicable law, all of the Collateral shall remain personal property regardless of the manner of its attachment or affixation to real property.

(i)

Controlled Accounts.

(i)

Each Loan Party shall establish and maintain Cash Management Services, including deposit accounts and lockbox services, of a type and on terms reasonably satisfactory to Lender. Each Loan Party shall (A) maintain Cash Management Services of a type and on terms reasonably satisfactory to Lender at one or more of the banks set forth on Schedule 5.15 to the Information Certificate (each a “Controlled Account Bank”), (B) take reasonable steps to ensure that all account debtors of each Loan Party and each of its Subsidiaries forward payment of the amounts owed by them directly to a Controlled Account at such Controlled Account Bank, and (C) deposit or cause to be deposited promptly, and in any event no later than the first Business Day after the date of receipt thereof, all of their Collections (including those sent directly by their account debtors to a Loan Party or to a Subsidiary of a Loan Party) into a bank account of such Loan Party (each, a “Controlled Account”) at one of the Controlled Account Banks; and

(ii)

Each Loan Party shall maintain Control Agreements with the applicable Controlled Account Bank, in form and substance reasonably acceptable to Lender. Each such Control Agreement shall provide, among other things, that (A) the Controlled Account Bank will comply with any instructions originated by Lender directing the disposition of the collected funds in such Controlled Account without further consent by the applicable Loan Party, (B) the Controlled Account Bank waives, subordinates, or agrees not to exercise any rights of setoff or recoupment or any other claim or Lien against the applicable Controlled Account other than for payment of its service fees and other charges directly related to the administration of such Controlled Account and for returned checks or other items of payment, (C) the Controlled Account Bank will forward, by daily standing wire transfer, all amounts in the applicable Controlled Account to the Lender’s Account or such other account as directed by Lender, and (D)  will prohibit any withdrawals from such Controlled Account by Borrowers and require all withdrawals from such Controlled Account to be made only as directed by Lender.

(j)

Pledged Interests.

(i)

If any Loan Party shall acquire, obtain, receive or become entitled to receive any Pledged Interests after the Closing Date, it shall promptly (and in any event within two (2) Business Days of acquiring or obtaining such

Collateral) deliver to Lender a duly executed Pledged Interests Addendum identifying such Pledged Interests;

(ii)

Each Loan Party shall promptly deliver to Lender a copy of each material notice or other material communication received by it in respect of any Pledged Interests;

(iii)

No Loan Party shall make or consent to any amendment or other modification or waiver with respect to any Pledged Interests, Pledged Operating Agreement, or Pledged Partnership Agreement, or enter into any agreement or permit to exist any restriction with respect to any Pledged Interests if the same is prohibited pursuant to the Loan Documents;

(iv)

As to all limited liability company or partnership interests, issued under any Pledged Operating Agreement or Pledged Partnership Agreement, each Loan Party hereby covenants that the Pledged Interests issued pursuant to such agreement (A) are not and shall not be dealt in or traded on securities exchanges or in securities markets, (B) do not and will not constitute investment company securities, and (C) are not and will not be held by such Loan Party in a securities account.

(k)

Commercial Tort Claims.  If any Loan Party obtains Commercial Tort Claims having a value, or involving an asserted claim, in the amount of $25,000 or more in the aggregate for all Commercial Tort Claims, then such Loan Party shall promptly (and in any event within two (2) Business Days after obtaining such Commercial Tort Claim), notify Lender upon incurring or otherwise obtaining such Commercial Tort Claims and, promptly (and in any event within two (2) Business Days) after request by Lender, amend the Information Certificate to describe such Commercial Tort Claims in a manner that reasonably identifies such Commercial Tort Claims and which is otherwise reasonably satisfactory to Lender, and hereby authorizes the filing of additional financing statements or amendments to existing financing statements describing such Commercial Tort Claims, and agrees to do such other acts or things deemed necessary or desirable by Lender to give Lender a first priority, perfected security interest in any such Commercial Tort Claim, which Commercial Tort Claim shall not be subject to any other Liens. 

6.13

Material Contracts

6.14

Location of Inventory, Equipment and Books

6.15

Applications under the CCAA and BIA

6.16

Operation of Pension Plans

(a)

administer the Pension Plans in accordance with the material requirements of the applicable pension plan texts, funding agreements, the ITA and applicable federal or provincial pension benefits legislation,

(b)

deliver to Lender an undertaking of the funding agent for each of the Pension Plans stating that the funding agent will notify Lender within 5 Business Days of any Loan Party’s failure to make any required contribution to the applicable Pension Plan,

(c)

not accept payment of any amount from any of the Pension Plans without the prior written consent of Lender,

(d)

not terminate, or cause to be terminated, any of the Pension Plans, without the prior written consent of Lender if such Pension Plan would have a material solvency deficiency on termination,

(e)

promptly provide Lender with any documentation relating to any of the Pension Plans as Lender may reasonably request, and

(f)

notify Lender within 30 days of (i) a material increase in the liabilities of any of the Pension Plans, (ii) the establishment of a new pension or benefits plan,

(iii) commencing payment of contributions to a pension or benefits plan to which any Loan Party had not previously been contributing.

6.17

Minimum Availability 

Time Period

Minimum Availability

First six (6) full calendar months following the Closing Date

$1,000,000

Next six (6) full calendar months following the Closing Date

$500,000 (provided no Default or Event of Default occurred during the first six (6) full calendar months following the Closing Date)

Thereafter

$0 (provided no Default or Event of Default occurred during first twelve (12) full calendar months following the Closing Date and the Loan Parties have delivered their audited financial statements to Lender, which financial statements are satisfactory to Lender)

6.18

Further Assurances

(a)

At any time upon the reasonable request of Lender, execute or deliver to Lender any and all financing statements, fixture filings, security agreements, pledges, assignments, endorsements of certificates of title, mortgages, deeds of trust, opinions of counsel, and all other documents (the “Additional Documents”) that Lender may reasonably request and in form and substance reasonably satisfactory to Lender, to create, perfect, and continue perfection or to better perfect Lender’s Liens in all of the assets of each Loan Party (whether now owned or hereafter arising or acquired, tangible or intangible, real or personal), and in order to fully consummate all of the transactions contemplated hereby and under the other Loan Documents. To the maximum extent permitted by applicable law, if a Borrower or any other Loan Party refuses or fails to execute or deliver any requested Additional Documents, such Borrower and such other Loan Party hereby authorizes Lender to execute any such Additional Documents in the applicable Borrower’s or Loan Party’s name, as applicable, and authorizes Lender to file such executed Additional Documents in any appropriate registration office. In furtherance and not in limitation of the foregoing, each Borrower and Loan Party shall take such actions as Lender may reasonably request from time to time to ensure that the Obligations are guaranteed by the Guarantors and are secured by substantially all of the assets of each Borrower and each other Loan Party and all of the outstanding capital Stock of each Loan Party (excluding the Parent).

(b)

Each Borrower and each other Loan Party authorizes the registration by Lender of financing statements, financing change statements, amendments or similar registrations, and such Loan Party will execute and deliver to Lender such other

instruments or notices, as Lender may reasonably request, in order to perfect and preserve Lender’s Liens granted or purported to be granted under the Loan Documents;

(c)

Each Borrower and each other Loan Party authorizes Lender at any time and from time to time to register financing statements, financing change statements or similar registrations, (i) describing the Collateral as “all personal property of debtor” or “all assets of debtor” or “the universality of all of each Borrower’s and each other Loan Party’s present and future corporeal and incorporeal moveable property” or words of similar effect, (ii) describing the Collateral as being of equal or lesser scope or with greater detail or (iii) that contain any information required by applicable law for the sufficiency or filing office acceptance of such financing statement. Each Borrower and each other Loan Party also hereby ratifies any and all financing statements, financing change statements or similar registrations previously registered by Lender in any jurisdiction.

(d)

Each Borrower and each other Loan Party acknowledges that no Loan Party is authorized to file any financing statement, financing change statement, amendment or discharge statement or other similar registration with respect to any financing statement, financing change statement or registration registered in connection with this Agreement or the Loan Documents without the prior written consent of Lender, subject to such Loan Party’s rights under applicable law.

7. Negative Covenants

7.1

Indebtedness

7.2

Liens

7.3

Restrictions on Fundamental Changes

(a)

Enter into any merger, consolidation, reorganization, or recapitalization, or reclassify its Stock, except for (i) any merger between Loan Parties; provided that a Borrower must be the surviving entity of any such merger to which it is a party, and (ii) any merger between Subsidiaries of a Borrower that are not Loan Parties.

(b)

Liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution), except for (i) the liquidation or dissolution of non-operating Subsidiaries of any Borrower with nominal assets and nominal liabilities, (ii) the liquidation or dissolution of a Loan Party (other than a Borrower) or any of its wholly-owned Subsidiaries so long as all of the assets (including any interest in any Stock) of such liquidating or dissolving Loan Party or Subsidiary are transferred to a Loan Party that is not liquidating or dissolving, or (iii) the liquidation or dissolution of a Subsidiary of a Borrower that is not a Loan Party (other than any such Subsidiary the Stock of which (or any portion thereof) is subject to a Lien in favour of Lender) so long as all of the assets of such liquidating or dissolving Subsidiary are transferred to a Subsidiary of a Borrower that is not liquidating or dissolving.

(c)

Suspend or cease operation of a substantial portion of its or their business, except as permitted pursuant to Sections 7.3(a) or (b) above or in connection with the transactions permitted pursuant to Section 7.4.

(d)

Form any direct or indirect Subsidiary, except for any Permitted Acquisitions. 

7.4

Disposal of Assets

7.5

Change Name

7.6

Nature of Business

7.7

Prepayments and Amendments

(a)

Except in connection with Refinancing Indebtedness permitted by Section 7.1:

(i)

optionally prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of any Loan Party or any of its Subsidiaries, other than

(A) the Obligations in accordance with this Agreement or a Bank Product Agreement, and (B) Permitted Intercompany Advances, or

(ii)

make any payment on account of Indebtedness that has been contractually subordinated in right of payment to the Obligations if such payment is not permitted at such time under the subordination terms and conditions.

(b)

Directly or indirectly, amend, modify, or change any of the terms or provisions of:

(i)

any agreement, instrument, document, indenture, or other writing evidencing or concerning Permitted Indebtedness other than (A) the Obligations in accordance with this Agreement or a Bank Product Agreement, (B) Permitted Intercompany Advances, and (C) Indebtedness permitted under clauses (a),  (e) and (f) of the definition of Permitted Indebtedness;

(ii)

any Material Contract except to the extent that such amendment, modification, or change could not, individually or in the aggregate, reasonably be expected to be materially adverse to the interests of Lender; or

(iii)

the Governing Documents of any Loan Party or any of its Subsidiaries if the effect thereof, either individually or in the aggregate, could reasonably be expected to be materially adverse to the interests of Lender.

7.8

Change of Control

7.9

Restricted Junior Payments

I.

Conditions Applicable to the First $2,500,000 (in the Aggregate) of such Dividends

(a)

no Default or Event of Default shall have occurred;

(b)

Lender shall have received copies of the audited, annual financial statements of the Loan Parties for the most recently completed financial year;  

(c)

Borrowers shall have had minimum Excess Availability of $2,500,000 for the thirty (30) days prior to the payment of any such dividend and shall have demonstrated to Lender, on a pro forma basis prior to the payment of any such dividend, that: (I) Excess Availability will be $2,500,000 for the thirty (30) days following the payment of such dividend, (II) the Loan Parties will be in compliance with all covenants in this Agreement, assuming such dividend has been made and (III) that no Default or Event of Default shall be caused by the payment of such dividend;

(d)

that dividends may only be made once per calendar year and not prior to receipt by Lender of the 2014 audited, annual financial statements of the Loan Parties; and

(e)

that the aggregate amount of all dividends made pursuant to Section 7.9I shall not exceed $2,500,000.

II.

Conditions Applicable to any Dividends in Excess of the First $2,500,000 (in the Aggregate)

(a)

no Default or Event of Default shall have occurred;

(b)

Lender shall have received copies of the audited, annual financial statements of the Loan Parties for the most recently completed financial year;  

(c)

Borrowers shall have had minimum Excess Availability of $3,000,000 and a Fixed Charge Coverage Ratio of 1.25:1.00 for the thirty (30) days prior to the payment of such dividend and shall have demonstrated to Lender, on a pro forma basis prior to the payment of such dividend, that: (I) Excess Availability will be $3,000,000 and the Fixed Charge Coverage Ratio will be 1.25:1.00 for the thirty (30) days following the payment of such dividend,  (II) the Loan Parties will be in compliance with all covenants in this Agreement, assuming such dividend has been made and (III) that no Default or Event of Default shall be caused by the payment of such dividend; and

(d)

that dividends may only be made once per calendar year.

7.10

Accounting Methods

7.11

Investments; Controlled Investments

(a)

Except for Permitted Investments, directly or indirectly, make or acquire any Investment or incur any liabilities (including contingent obligations) for or in connection with any Investment.

(b)

Other than (i) an aggregate amount of not more than $25,000 at any one time, in the case of each Borrower, each other Loan Party and its Subsidiaries, and (ii) amounts deposited into Deposit Accounts identified on Schedule 5.15 to the Information Certificate which are specially and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the employees of any Borrower or any Loan Party or its Subsidiaries, make, acquire, or permit to exist Permitted Investments consisting of cash, Cash Equivalents, or amounts credited to Deposit Accounts or securities accounts unless such Borrower and such other Loan Party or its Subsidiaries, as applicable, and the applicable bank (or as permitted solely pursuant to Section 6.12(i) or securities intermediary have entered into Control Agreements with Lender governing such

Permitted Investments in order to perfect (and further establish) Lender’s Liens in such Permitted Investments. Except as provided in Section 6.12(i) and Section 7.11(b)(i), and (ii), Borrowers and such Loan Parties shall not, and shall not permit their Subsidiaries to, establish or maintain any Deposit Account or securities account with a banking institution other than Lender.

7.12

Transactions with Affiliates

(a)

transactions contemplated by the Loan Documents or transactions (other than the payment of management, consulting, monitoring, or advisory fees) with any Affiliates of any Borrower or any Loan Party in the ordinary course of business of such Borrower or Loan Party, consistent with past practices and undertaken in good faith, upon fair and reasonable terms fully disclosed to Lender and no less favorable than would be obtained in a comparable arm’s length transaction with a non-Affiliate;

(b)

so long as it has been approved by a Loan Party’s board of directors (or comparable governing body) in accordance with applicable law, any customary indemnities provided for the benefit of directors (or comparable managers) of such Loan Party;

(c)

so long as it has been approved by a Loan Party’s board of directors (or comparable governing body) in accordance with applicable law, the payment of reasonable compensation, severance, or employee benefit arrangements to employees, officers, and outside directors of a Loan Party and its Subsidiaries in the ordinary course of business and consistent with industry practice;

(d)

transactions permitted by Section 7.3 or any Permitted Intercompany Advance; and

(e)

the payment of management, consulting, monitoring and advisory fees to Equity Sponsors or their Affiliates in an aggregate amount not to exceed $200,000 in any fiscal year of Borrowers, so long as no Event of Default has occurred or would result therefrom.

7.13

Use of Proceeds

7.14

Limitation on Issuance of Stock

7.15

Consignments

7.16

Inventory and Equipment with Bailees

7.17

Parent as Holding Company

7.18

Other Payments and Distributions

7.19

Defined Benefit Plans

8. Financial Covenants

(a)

Capital Expenditures.  Make Capital Expenditures in an amount less than or equal to, but not greater than the amounts set out below:

May, 2014

June, 2014

July, 2014

August, 2014

September, 2014

October, 2014

November, 2014

(b)

Minimum EBITDA. Achieve EBITDA, measured on a month-end, year-to-date basis, of at least the amounts set out below: 

May, 2014

June, 2014

July, 2014

August, 2014

September, 2014

October, 2014

November, 2014

($320,000)

(c)

Fixed Charge Coverage Ratio. Borrowers shall maintain a Fixed Charge Coverage Ratio, measured on a trailing twelve-month basis at the end of each month, commencing with the month ended December 31, 2014 of not less than the required ratio set forth in the following table for the applicable period set forth opposite thereto:

Minimum Fixed Charge
Coverage Ratio

Applicable Period

1.10:1.00

For each month ended during the period from December 31, 2014 through the Maturity Date 

9. Events of Default

9.1

If any Borrower fails to pay when due and payable, or when declared due and payable, all or any portion of the Obligations consisting of principal, interest, fees, charges or other amounts due Lender or any Bank Product Provider, reimbursement of Lender Expenses, or other amounts constituting Obligations (including any portion thereof that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding);

9.2

If any Loan Party or any of its Subsidiaries:

(a)

fails to perform or observe any covenant or other agreement contained in any of (i) Sections 4.3,  6.1,  6.2,  6.3 (solely if any Loan Party or any of its Subsidiaries is not in good standing in its jurisdiction of organization, other than by reason only of an administrative error of a Governmental Authority in connection with the filing of an annual return), 6.5(a) (solely with respect to F.I.C.A., F.U.T.A., federal income taxes and any other taxes or assessments the non-payment of which may result in a Lien having priority over Lender’s Liens), 6.5(b),  6.6,  6.7 (solely if any Loan Party or any of its Subsidiaries refuses to allow Lender or its representatives or agents to visit its properties, inspect its assets or books or records, examine and make copies of its books and records, or discuss its affairs, finances, and accounts with its officers and employees), 6.8,  6.11,  6.12;  6.13 or 6.14,  6.15 or 6.16, (ii) Section 7, or (iii) Section 8;

(b)

fails to perform or observe any covenant or other agreement contained in any of Sections 6.3 (other than if a Loan Party is not in good standing in its jurisdiction of organization, other than by reason only of an administrative error of a Governmental Authority in connection with the filing of an annual return), 6.4,  6.5(a) (other than F.I.C.A., F.U.T.A., federal income taxes and any other taxes or assessments the non-payment of which may result in a Lien having priority over Lender’s Liens), 6.7 (other than if any Loan Party or any of its Subsidiaries refuses to allow Lender or its representatives or agents to visit its properties, inspect its assets or books or records, examine and make copies of its books or records or disclose its affairs, finances and accounts with its officers and employees, 6.9,  6.10,  and 6.17 and such failure continues for a period of 15 days after the earlier of:

(i)

the date on which such failure shall first become known to or should have been known by any officer of any Loan Party, or

(ii)

the date on which written notice thereof is given to any Loan Party by Lender; or

(c)

fails to perform or observe any covenant or other agreement contained in this Agreement, or in any of the other Loan Documents, in each case, other than any such covenant or agreement that is unable to be cured or is the subject of another

provision of this Section 8 (in which event such other provision of this Section 8 shall govern), and such failure continues for a period of 30 days after the earlier of (i) the date on which such failure shall first become known to or should have been known by any officer of such Loan Party or (ii) the date on which written notice thereof is given to any Loan Party by Lender;

9.3

If one or more judgments, orders, or awards for the payment of money in an amount in excess of $50,000 in any one case or in excess of $100,000, in the aggregate (except to the extent fully covered (other than to the extent of customary deductibles) by insurance pursuant to which the insurer has not denied coverage) is entered or filed against a Loan Party or any of its Subsidiaries, or with respect to any of their respective assets, and either (a) there is a period of 30 consecutive days at any time after the entry of any such judgment, order, or award during which (1) the same is not discharged, satisfied, vacated, or bonded pending appeal, or (2) a stay of enforcement thereof is not in effect, or (b) enforcement proceedings are commenced upon such judgment, order, or award;

9.4

If an Insolvency Proceeding is commenced by a Loan Party or any of its Subsidiaries, or if any Loan Party or any of its Subsidiaries: (a) becomes insolvent, becomes unable to pay its indebtedness or meet its liabilities as the same become due, admits in writing its inability to pay its indebtedness generally, declares any general moratorium on its indebtedness, proposes a compromise or arrangement between it and any class of its creditors, or commits an act of bankruptcy under the BIA, (b) threatens to take any of actions described in this Section 9.4, (c) takes any action, corporate or otherwise, to approve, effect, consent to, or authorize any of the actions described in this Section 9.4, or (d) otherwise acts in furtherance of, or fails to act in a timely and appropriate manner in defense of, any of the actions described in this Section 9.4;

9.5

If an Insolvency Proceeding is commenced against a Loan Party or any of its Subsidiaries and any of the following events occur: (a) such Loan Party or such Subsidiary consents to the commencement of such Insolvency Proceeding against it, (b) the case, action, application, petition, or other proceeding commencing the Insolvency Proceeding is not timely controverted by the Loan Party or its Subsidiaries, or (c) the case, action, application, petition, or other proceeding commencing the Insolvency Proceeding continues undismissed, or unstayed and in effect for a period of 60 calendar days after the commencement thereof; provided, however, that the Lender shall have no obligation to provide any extension of credit to the Loan Party or any of its Subsidiaries during such 60 calendar day period (and such 60 day period shall immediately cease to apply if an order or judgment is granted or entered against any Loan Party or any of its Subsidiaries, or if any Loan Party or any of its Subsidiaries files an answer admitting the material allegations in any such Insolvency Proceedings);

9.6

If any other event occurs which, under the laws of any applicable jurisdiction, has an effect on any Loan Party or any of its Subsidiaries equivalent or with similar effect to any of the events referred to in either Section 9.4, or Section 9.5;

9.7

If any Loan Party or any of its Subsidiaries is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of the business affairs of such Loan Party and its Subsidiaries, taken as a whole;

9.8

If there is (a) a default in one or more agreements to which a Loan Party or any of its Subsidiaries is a party with one or more third Persons relative to the Indebtedness of such Loan Party or such Subsidiary involving an aggregate amount of $50,000 or more, and such default (i) occurs at the final maturity of the obligations thereunder, or (ii) results in a right by such third Person, irrespective of whether exercised, to accelerate the maturity of such Loan Party’s or its Subsidiary’s obligations thereunder, or (b) a default in or an involuntary early termination of one or more Hedge Agreements to which a Loan Party or any of its Subsidiaries is a party involving an aggregate amount of $100,000 or more;

9.9

If any warranty, representation, certificate, statement, or Record made herein or in any other Loan Document or delivered in writing to Lender in connection with this Agreement or any other Loan Document proves to be untrue in any material respect (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of the date of issuance or making or deemed making thereof;

9.10

If the obligation of any Guarantor under its Guaranty or any other Loan Document to which any Guarantor is a party is limited or terminated by operation of law or by such Guarantor (other than in accordance with the terms of this Agreement), or if any Guarantor fails to perform any obligation under its Guaranty or under any such Loan Document, or repudiates or revokes or purports to repudiate or revoke any obligation under its Guaranty, or under any such Loan Document, or any individual Guarantor dies or becomes incapacitated, or any other Guarantor ceases to exist for any reason;

9.11

If this Agreement or any other Loan Document that purports to create a Lien shall, for any reason, fail or cease to create a valid and perfected and, except to the extent of Permitted Liens which are permitted purchase money Liens or the interests of lessors under Capital Leases, first priority Lien on the Collateral covered thereby, as a result of a disposition of the applicable Collateral in a transaction permitted under this Agreement;

9.12

If a Material Adverse Change occurs;

9.13

If any event or circumstance shall occur which, in the Permitted Discretion of Lender exercised in good faith, would be reasonably likely to cause Lender to suspect that any Loan Party has engaged in fraudulent activity with respect to the Collateral or other matters;

9.14

Any director, officer or owner of at least 20% of the issued and outstanding ownership interests of a Loan Party is indicted for a felony offense under state, provincial or federal law, or a Loan Party hires an officer or appoints a director who has been convicted of any such felony offense, or a Person becomes an owner of at least 20% of the issued and outstanding ownership interests of a Loan Party who has been convicted of any such felony offense; provided however that, for the avoidance of doubt, the parties agree and acknowledge that the proceedings against Alan Levan by the Securities and Exchange Commission styled as Securities and Exchange Commission v. BankAtlantic Bancorp, Inc. and Alan B. Levan, Case No. 12-60082-CV-SCOLA, United States District Court, Southern District of Florida and any charges, convictions, findings of wrongdoing or penalties assessed pursuant to such proceedings shall not constitute an Event of Default hereunder so long as: (i) Alan B. Levan is not a director or officer of any Loan Party at

any time during the term of this Agreement; and (ii) the aggregate amount of any and all fines, penalties or like payments imposed pursuant to such proceedings is not greater than $5,000,000.

9.15

If any Loan Party fails to pay any indebtedness or obligation owed to Lender or its Affiliates which is unrelated to the Credit Facility or this Agreement as it becomes due and payable or the occurrence of any default or event of default under any agreement between any Loan Party and Lender or its Affiliates unrelated to the Loan Documents; or

9.16

The validity or enforceability of any Loan Document shall at any time for any reason be declared to be null and void, or a proceeding shall be commenced by a Loan Party or any of its Subsidiaries, or by any Governmental Authority having jurisdiction over a Loan Party or any of its Subsidiaries, seeking to establish the invalidity or unenforceability thereof, or a Loan Party or any of its Subsidiaries shall deny that such Loan Party or such Subsidiary has any liability or obligation purported to be created under any Loan Document.

10. Rights and Remedies

10.1

Rights and Remedies

(a)

declare the Obligations (other than the Hedge Obligations, which may be accelerated in accordance with the terms of the applicable Hedge Agreement), whether evidenced by this Agreement or by any of the other Loan Documents, immediately due and payable, whereupon the same shall become and be immediately due and payable and Borrowers shall be obligated to repay all of such Obligations in full, without presentment, demand, protest, or further notice or other requirements of any kind, all of which are hereby expressly waived by each Borrower and each other Loan Party;

(b)

declare the funding obligations of Lender under this Agreement terminated, whereupon such funding obligations shall immediately be terminated together with any obligation of Lender hereunder to make Advances, extend any other credit hereunder or issue, or arrange the issuance of, Letters of Credit;

(c)

give notice to an account debtor or other Person obligated to pay an Account, an Intangible, Negotiable Collateral, or other amount due, notice that the Account, Intangible, Negotiable Collateral or other amount due has been assigned to Lender for security and must be paid directly to Lender and Lender may collect the Accounts, Intangible and Negotiable Collateral of each Borrower and each other Loan Party directly, and any collection costs and expenses shall constitute part of the Obligations under the Loan Documents;

(d)

in Lender’s name or in each Loan Party’s name, as such Loan Party’s agent and attorney-in-fact, notify Canada Post to change the address for delivery of mail to

any address designated by Lender, otherwise intercept mail, and receive, open and dispose of such Loan Party’s mail, applying all Collateral as permitted under this Agreement and holding all other mail for such Loan Party’s account or forwarding such mail to such Loan Party’s last known address;

(e)

without notice to or consent from any Loan Party or any of its Subsidiaries, and without any obligation to pay rent or other compensation, take exclusive possession of all locations where any Loan Party or any of its Subsidiaries conduct its business or has any rights of possession and use the locations to store, process, manufacture, sell, use, and liquidate or otherwise dispose of items that are Collateral, and for any other incidental purposes deemed appropriate by Lender in good faith; and

(f)

exercise in respect of the Collateral, in addition to other rights and remedies provided for herein, in the other Loan Documents, or otherwise available to it, all the rights and remedies of a secured party or a hypothecary creditor on default under the PPSA, the Civil Code, the Code or any other applicable law.

10.2

Additional Rights and Remedies

(a)

Lender, without demand of performance or other demand, advertisement or notice of any kind (except a notice specified below of time and place of public or private sale) to or upon any Borrower, any other Loan Party or any other Person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent permitted by the PPSA, the Civil Code, the Code or any other applicable law), may take immediate possession of all or any portion of the Collateral and (i) require Loan Parties to, and each Borrower and each other Loan Party hereby agrees that it will at its own expense and upon request of Lender forthwith, assemble all or part of the Collateral as directed by Lender and make it available to Lender at one or more locations designated by Lender where such Borrower or other Loan Party conducts business, and (ii) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of Lender’s or Loan Party’s offices or elsewhere, for cash, on credit, and upon such other terms as Lender may deem commercially reasonable. Each Borrower and each other Loan Party agrees that, to the extent notice of sale shall be required by law, at least 10 days’ notice to such Borrower or such other Loan Party of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notice.  Such notice shall constitute a reasonable “authenticated notification of disposition” within the meaning of Section 9-611 of the Code.  Lender shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Lender may adjourn any public or private sale from time to time, and such sale may be made at the time and place to which it was so adjourned. Each Loan Party agrees that the internet shall constitute a “place” for purposes of Section 9-610(b) of the Code.  Each Loan Party agrees that any sale of Collateral to a licensor pursuant to

the terms of a license agreement between such licensor and such Loan Party is sufficient to constitute a commercially reasonable sale (including as to method, terms, manner, and time) within the meaning of Section 9-610 of the Code.  

(b)

Lender may, in addition to other rights and remedies provided for herein, in the other Loan Documents, or otherwise available to it under applicable law and without the requirement of notice to or upon any Loan Party or any other Person (which notice is hereby expressly waived to the maximum extent permitted by the PPSA, the Civil Code, the Code or any other applicable law), (i) with respect to any Loan Party’s Deposit Accounts (including Deposit Accounts in which Lender’s Liens are perfected by control under Section 9-104 of the Code), instruct the bank maintaining such Deposit Account for the applicable Loan Party to pay the balance of such Deposit Account to or for the benefit of Lender, and (ii) with respect to any Loan Party’s securities accounts (including securities accounts in which Lender’s Liens are perfected by control under Section 9-106 of the Code), instruct the securities intermediary maintaining such securities account for the applicable Loan Party to (A) transfer any cash in such securities account to or for the benefit of Lender, or (B) liquidate any financial assets in such securities account that are customarily sold on a recognized market and transfer the cash proceeds thereof to or for the benefit of Lender;

(c)

any cash held by Lender as Collateral and all cash proceeds received by Lender in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied against the Obligations in the order set forth in Section 10.5. In the event the proceeds of Collateral are insufficient to satisfy all of the Obligations in full, each Borrower and each other Loan Party shall remain solidarily, jointly and severally liable for any such deficiency; and

(d)

the Obligations arise out of a commercial transaction, and that if an Event of Default shall occur Lender shall have the right to an immediate writ of possession without notice of a hearing. Lender shall have the right to the appointment of a receiver for each Loan Party or for the properties and assets of each Loan Party, and each Borrower and each other Loan Party hereby consents to such rights and such appointment and hereby waives any objection such Borrower or such Loan Party may have thereto or the right to have a bond or other security posted by Lender.