Amendment No. 3 to Loan and Security Agreement dated September 17, 2021

This Loan and Security Agreement (as it may be amended, restated or otherwise modified from time to time, this “Agreement”) is entered into on February 20, 2020, by and among KASPIEN INC., a Washington corporation (f/k/a Etailz Inc.) (“Kaspien”, and together with any other Borrower party hereto from time to time, collectively, “Borrowers”), any Loan Party Obligor or Other Obligor party hereto from time to time, as Loan Party Obligors (as defined herein), the Lenders party hereto from time to time, and ECLIPSE BUSINESS CAPITAL LLC (f/k/a Encina Business Credit, LLC), as agent for the Lenders (in such capacity, “Agent”).  The Annexes and Exhibits to this Agreement, as well as the Perfection Certificate attached to this Agreement, are an integral part of this Agreement and are incorporated herein by reference.

1.           DEFINITIONS.

1.1.        Certain Defined Terms.

Unless otherwise defined herein, the following terms are used herein as defined in the UCC:  Accounts, Account Debtor, Certificated Security, Chattel Paper, Commercial Tort Claims, Debtor, Deposit Accounts, Documents, Electronic Chattel Paper, Equipment, Financing Statement, Fixtures, General Intangibles, Goods, Instruments, Inventory, Letter-of-Credit Rights, Money, Payment Intangible, Proceeds, Secured Party, Securities Accounts, Security Agreement, Supporting Obligations and Tangible Chattel Paper.

As used in this Agreement, the following terms have the following meanings:

“ABLSoft” means the electronic and/or internet-based system approved by Agent for the purpose of making notices, requests, deliveries, communications and for the other purposes contemplated in this Agreement or otherwise approved by Agent, whether such system is owned, operated or hosted by Agent, any of its Affiliates or any other Person.

“Accounts Advance Rate” means the percentage set forth in Section 1(b)(iii) of Annex I.

“Advance Rates” means, collectively, the Accounts Advance Rate, the Credit Card Advance Rate, the Specified Customer Advance Rate, and the Inventory Advance Rate.

“Affiliate” means, with respect to any Person, any other Person in control of, controlled by, or under common control with the first Person, and any other Person who has a substantial interest, direct or indirect, in the first Person or any of its Affiliates, including, any officer or director of the first Person or any of its Affiliates; provided that neither Agent, any Lender nor any of their respective Affiliates shall be deemed an “Affiliate” of Borrowers for any purposes of this Agreement.  For the purpose of this definition, a “substantial interest” shall mean the direct or indirect legal or beneficial ownership of more than ten (10%) percent of any class of equity or similar interest.

“Agent” has the meaning set forth in the preamble to this Agreement, and includes any successor agent appointed in accordance with Section 14.6.

“Agent Fee Letter” means that certain Amended and Restated Fee Letter agreement dated as of the Amendment No. 3 Effective Date between Agent and Borrowers.

“Agent-Related Persons” means Agent, together with its Affiliates, officers, directors, employees, members, managers, attorneys, and agents.

“Agent Professionals” means attorneys, accountants, appraisers, auditors, business valuation experts, liquidation agents, collection agencies, auctioneers, environmental engineers or consultants, turnaround consultants, and other professionals and experts retained by Agent.

“Agreement” and “this Agreement” have the meaning set forth in the preamble to this Agreement.

“Alimco Subordinated Debt” means that certain Indebtedness evidenced by the Alimco Subordinated Loan Agreement and the other Alimco Subordinated Debt Documents, which Indebtedness has an outstanding principal balance of $5,224,800.00 as of the Amendment No. 1 Effective Date, after giving effect to the transactions to occur on or about the Amendment No. 1 Effective Date.

“Alimco Subordinated Debt Documents” means the Alimco Subordinated Loan Agreement and any other documents, instruments or agreements which evidence the Alimco Subordinated Debt or pursuant to which the Alimco Subordinated Debt was issued or is governed, in each case as amended, modified, supplemented or restated from time to time, in accordance with the terms of this Agreement and the Alimco Subordinated Debt Subordination Agreement.

“Alimco Subordinated Debt Subordination Agreement” means (a) that certain Subordination and Intercreditor Agreement dated as of the Amendment No. 1 Effective Date between Agent, TWEC Loan Collateral Agent, LLC, as agent for the Alimco Subordinated Lenders, and the Alimco Subordinated Lenders and (b) any other subordination agreement in form and substance satisfactory to Agent between Agent and any holder of Alimco Subordinated Debt.

“Alimco Subordinated Lenders” means Alimco Re Ltd., Kick-Start III, LLC, Kick-Start IV, LLC, RJHDC, LLC and any other Person that becomes a holder of Alimco Subordinated Debt.

“Alimco Subordinated Loan Agreement” means that certain Subordinated Loan and Security Agreement, dated as of the Amendment No. 1 Effective Date, and issued by Borrowers in favor of Alimco in an original principal amount equal to $5,224,800.00, as amended, modified, supplemented or restated from time to time, in accordance with the terms of this Agreement and the Alimco Subordinated Debt Subordination Agreement.

“Amazon” means Amazon Services LLC.

“Amendment No. 1 Effective Date” means March 30, 2020.

“Amendment No. 3 Effective Date” means September 17, 2021.

“Applicable Margin” has the meaning set forth in Section 2 of Annex I.

“Approved Electronic Communication” means each notice, demand, communication, information, document and other material transmitted, posted or otherwise made or communicated by e-mail, facsimile, ABLSoft or any other equivalent electronic service, whether owned, operated or hosted by Agent, any of its Affiliates or any other Person, that any party is obligated to, or otherwise chooses to, provide to Agent pursuant to this Agreement or any other Loan Document, including any financial statement, financial and other report, notice, request, certificate and other information or material; provided that Approved Electronic Communications shall not include any notice, demand, communication, information, document or other material that Agent specifically instructs a Person to deliver in physical form.

“Approved Specified Customer Agreement” means, (i) with respect to Amazon, the Amazon Services Business Solutions Agreement as in effect on the Closing Date, or similar standard Amazon agreement approved in writing by Agent in its sole discretion, from time to time in effect between any Borrower and Amazon or one of its affiliated contracting parties thereunder, (ii) with respect to Walmart, the Walmart Marketplace Program Retailer Agreement as in effect on the Closing Date, or similar standard Walmart agreement, as approved in writing by Agent in its sole discretion, from time to time in effect between any Borrower and Walmart or one of its affiliated contracting parties thereunder, and (iii) such other similar customer agreements as approved in writing by Agent in its sole discretion.

“Approved Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the Ordinary Course of Business, in each case that is administered, managed, advised or underwritten by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“Assignee” has the meaning set forth in Section 15.9(a).

“Assignment and Assumption” means an assignment and assumption agreement substantially in the form of Exhibit G.

“Assignment of Claims Act”, means the Assignment of Claims Act of 1940, as amended, currently codified at 31 U.S.C. 3727 and 41 U.S.C. 6305, and includes the prior historically referenced Federal Anti-Claims Act (31 U.S.C. 3727) and the Federal Anti-Assignment Act (41 U.S.C. 6305).

“Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. § 101 et seq.).

“Base Rate” means, for any day, the greatest of (a) the Federal Funds Rate plus ½%, (b) the LIBOR Rate (which rate shall be calculated based upon a one (1) month period and shall be determined on a daily basis), (c) one percent (1.0%), and (d) the rate of interest announced, from time to time, within Wells Fargo Bank, N.A. at its principal office in San Francisco as its “prime rate”, with the understanding that the “prime rate” is one of Wells Fargo Bank, N.A.’s base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto and is evidenced by the recording thereof after its announcement in such internal publications as Wells Fargo Bank, N.A. may designate (or, if such rate ceases to be so published, as quoted from such other generally available and recognizable source as Agent may select).

“Base Rate Loan” means any Loan which bears interest at or by reference to the Base Rate.

“Blocked Account” has the meaning set forth in Section 6.1(a).

“Borrower” and “Borrowers” have the meaning set forth in the preamble to this Agreement.

“Borrower Representative” means Kaspien, in such capacity pursuant to the provisions of Section 2.9, or any permitted successor Borrower Representative selected by Borrowers and approved by Agent.

“Borrowing Base” means, as of any date of determination, the Dollar Equivalent Amount as of such date of determination of the sum of the following:

(a) the aggregate amount of Eligible Accounts (other than Eligible Specified Customer Accounts and Eligible Credit Card Receivables) multiplied by the Accounts Advance Rate, plus

(b) the aggregate amount of Eligible Specified Customer Accounts multiplied by the Specified Customer Advance Rate, plus

(c) the aggregate amount of Eligible Credit Card Receivables multiplied by the Credit Card Advance Rate, plus

(d) the lesser of (i) the lower of cost or market value of Eligible Inventory multiplied by the applicable Inventory Advance Rate and (ii) NOLV of Eligible Inventory multiplied by the applicable Inventory Advance Rate, plus

(e) the lesser of (i) the lower of cost or market value of Eligible In-Transit Inventory multiplied by the applicable Inventory Advance Rate and (ii) NOLV of Eligible In-Transit Inventory multiplied by the applicable Inventory Advance Rate, but in no event to exceed the In-Transit Inventory Sublimit, minus

(f) all Reserves which Agent has established pursuant to Section 2.1(b) (including those to be established in connection with any requested Revolving Loan).

“Borrowing Base Certificate” means a certificate in the form provided by Agent to Borrower Representative for use in reporting the Borrowing Base.

“Borrowing Base Inclusion Requirement” means that the applicable Accounts or Inventory of a Borrower (in each case, where such applicable Accounts or such Borrower have been acquired through a Permitted Acquisition) have been the subject of a collateral audit examination and an appraisal (in the case of Inventory), in each case ordered by Agent and the results of any such such collateral audit examination and appraisal as to such Borrower’s Accounts and/or Inventory were sufficiently satisfactory to Agent in its Permitted Discretion to qualify the Accounts and/or Inventory of such Borrower for potential inclusion in the Borrowing Base.

“Business Day” means a day other than a Saturday or Sunday or any other day on which Agent or banks in New York are authorized to close and, in the case of a Business Day which relates to a LIBOR Loan, any day on which dealings are carried on in the London Interbank Eurodollar market.

“Capital Expenditures” means all expenditures which, in accordance with GAAP, would be required to be capitalized and shown on the consolidated balance sheet of Borrowers, but excluding expenditures made in connection with the acquisition, replacement, substitution or restoration of assets to the extent financed (a) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored or (b) with cash awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced.

“Capitalized Lease” means any lease which is or should be capitalized on the balance sheet of the lessee thereunder in accordance with GAAP.

“Closing Date” means February 20, 2020.

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

“Collateral” means all property and interests in property in or upon which a security interest, mortgage, pledge or other Lien is granted pursuant to this Agreement or the other Loan Documents, including all of the property of each Loan Party Obligor and Parent described in Section 5.1.   For the avoidance of doubt, the Collateral shall not include any Excluded Property.

“Collateral Assignment” means the Collateral Assignment of Agreements, dated as of the Closing Date, by Kaspien in favor of Agent.

“Collections” has the meaning set forth in Section 6.1(a).

“Commitment” means the Revolving Loan Commitment.

“Commitment Schedule” means the Commitment Schedule attached hereto as Annex III.

“Compliance Certificate” means a compliance certificate substantially in the form of Exhibit F hereto to be signed by the Chief Financial Officer or President of Borrower Representative.

“Confidential Information” means confidential information that any Loan Party furnishes to Agent pursuant to any Loan Document concerning any Loan Party’s business, but does not include any such information once such information has become, or if such information is, generally available to the public or available to Agent (or other applicable Person) from a source other than the Loan Parties which is not, to Agent’s knowledge, bound by any confidentiality agreement in respect thereof.

“Credit Bid” has the meaning set forth in Section 14.9.

“Credit Card Advance Rate” means the percentage set forth in Section 1(b)(i) of Annex I.

“Credit Card Agreements” means all agreements now or hereafter entered into by a Borrower or for the benefit of a Borrower, in each case with any Credit Card Issuer or any Credit Card Processor with respect to sales transactions involving credit card or debit card purchases, including, but not limited to, the agreements set forth on Schedule 1 hereto.

“Credit Card Issuer” shall mean any person (other than a Borrower or other Loan Party Obligor) who issues or whose members issue credit cards, including, without limitation, MasterCard or VISA bank credit cards or other bank credit cards issued through MasterCard International, Inc., Visa, U.S.A., Inc. or Visa International and American Express, Discover, Diners Club, Carte Blanche, and other non-bank credit cards, including, without limitation, credit cards issued by or through American Express Travel Related Services Company, Inc., Novus Services, Inc., PayPal, Inc., and Bill Me Later, Inc., and other issuers approved by Agent.

“Credit Card Notifications” means notifications in form and substance reasonably satisfactory to Agent which have been executed on behalf of a Borrower and the applicable Credit Card Issuer or Credit Card Processor and delivered to a Borrower’s credit card clearinghouses and processors listed on Schedule 2.

“Credit Card Processor” shall mean any servicing or processing agent or any factor or financial intermediary who facilitates, services, processes, or manages the credit authorization, billing transfer and/or payment procedures with respect to a Borrower’s sales transactions involving credit card or debit card purchases by customers using credit cards or debit cards issued by any Credit Card Issuer.

“Credit Card Receivables” means each Payment Intangible, together with all income, payments, and proceeds thereof, owed by a Credit Card Issuer or Credit Card Processor to a Borrower resulting from charges by a customer of a Borrower on credit or debit cards issued by such Credit Card Issuer in connection with the sale of goods by a Borrower, or services performed by a Borrower, in each case in the Ordinary Course of Business.

“Default” means any event or circumstance which with notice or passage of time, or both, would constitute an Event of Default.

“Default Rate” has the meaning set forth in Section 3.1.

“Defaulting Lender” means any Lender that (a) has failed, within one (1) Business Day of the date required to be funded or paid, to (i) fund any portion of its Loans or (ii) pay over to Agent or any other Lender any other amount required to be paid by it hereunder, (b) has notified Borrower Representative or Agent in writing, or it or its parent has made a public statement, to the effect that it does not intend or expect to comply with any of its funding obligations under this Agreement or generally under other agreements in which it or its parent commits to extend credit, (c) has failed, within two (2) Business Days after request by Agent, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans under this Agreement; provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon Agent’s receipt of such certification in form and substance satisfactory to Agent, (d) had an involuntary proceeding commenced or an involuntary petition filed seeking (i) liquidation, reorganization or other relief in respect of such Lender or its parent or its or its parent’s debts, or of a substantial part of its or its parent’s assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Lender or its parent or for a substantial part of its or its parent’s assets, or (e) shall have or whose parent shall have (i) voluntarily commenced any proceeding or filed any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consented to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (d) of this definition, (iii) applied for or consented to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for it or a substantial part of its assets, (iv) filed an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) made a general assignment for the benefit of creditors or (vi) taken any action for the purpose of effecting any of the foregoing.

“Dilution” means, as of any date of determination, a percentage, based upon the experience of the immediately prior twelve (12) months, that is the result of dividing the Dollar Equivalent Amount of (a) bad debt write-downs, discounts, advertising allowances, credits, or other dilutive items with respect to a Borrower’s Accounts during such period by (b) such Borrower’s billings with respect to Accounts during such period.

“Dilution Reserve” has the meaning set forth in Section 1(b)(iii) of Annex I.

“Division” in reference to any Person which is an entity, means the division of such Person into two (2) or more separate Persons, with the dividing Person either continuing or terminating its existence as part of such division, including as contemplated under Section 18-217 of the Delaware Limited Liability Act for limited liability companies formed under Delaware law, or any analogous action taken pursuant to any other applicable law with respect to any corporation, limited liability company, partnership or other entity.  The word “Divide” when capitalized, shall have a correlative meaning.

“Dollar Equivalent Amount” means, at any time, (a) as to any amount denominated in Dollars, the amount hereof at such time, and (b) as to any amount denominated in a currency other than Dollars, the equivalent amount in Dollars as determined by Agent at such time that such amount could be converted into Dollars by Agent according to prevailing exchange rates selected by Agent.

“Dollars” or “$” means United States Dollars.

“E-Signature” means the process of attaching to or logically associating with an Approved Electronic Communication an electronic symbol, encryption, digital signature or process (including the name or an abbreviation of the name of the party transmitting the Approved Electronic Communication) with the intent to sign, authenticate or accept such Approved Electronic Communication.

“Early Termination Fee” has the meaning set forth in the Agent Fee Letter.

“EBITDA” means, for the applicable period, for the Loan Parties on a consolidated basis, the sum of (a) Net Income, plus (b) Interest Expense deducted in the calculation of such Net Income, plus (c) taxes on income, including franchise and similar taxes and any amounts paid or payable under Section 8(a)(xi)(2), whether paid, payable or accrued, deducted in the calculation of such Net Income, plus (d) depreciation expense deducted in the calculation of such Net Income, plus (e) amortization expense deducted in the calculation of such Net Income, plus (f) any other non-cash charges that have been deducted in the calculation of such Net Income, minus (g) any other non-cash gains that have been added in the calculation of such Net Income.

“Eligible Account” means, at any time of determination and subject to the criteria below, an Account (other than a Specified Customer Account) of a Borrower, which was generated and billed by a Borrower in the Ordinary Course of Business, and which Agent, in its Permitted Discretion, deems to be an Eligible Account.  The net amount of an Eligible Account at any time shall be the face amount of such Eligible Account as originally billed minus all customer deposits, unapplied cash collections and other Proceeds of such Account received from or on behalf of the Account Debtor thereunder as of such date and any and all returns, rebates, discounts (which may, at Agent’s option, be calculated on shortest terms), credits, allowances or excise taxes of any nature at any time issued, owing, claimed by Account Debtors, granted, outstanding or payable in connection with such Account at such time. Without limiting the generality of the foregoing, the following Accounts shall not be Eligible Accounts:

(i)          the Account Debtor or any of its Affiliates is a Loan Party or an Affiliate of any Loan Party;

(ii)         it remains unpaid longer than the earlier to occur of (A) the number of days after the original invoice date set forth in Section (f)(i) of Annex I or (B) the number of days after the original invoice due date set forth in Section (f)(ii) of Annex I;

(iii)        the Account Debtor or its Affiliates are past any of the applicable dates referenced in clause (ii) above on other Accounts owing to a Borrower comprising more than twenty-five (25%) percent of all of the Accounts owing to a Borrower by such Account Debtor or its Affiliates;

(iv)        all Accounts owing by the Account Debtor or its Affiliates represent more than ten (10%) percent of all other Accounts; provided that Accounts which are deemed to be ineligible solely by reason of this clause (iv) shall be considered Eligible Accounts to the extent of the amount thereof which does not exceed ten (10%) percent of all other Accounts;

(v)         a covenant, representation or warranty contained in this Agreement or any other Loan Document with respect to such Account (including any of the representations set forth in Section 7.4) has been breached;

(vi)      the Account is subject to any contra relationship, counterclaim, dispute or set-off; provided that Accounts which are deemed to be ineligible by reason of this clause (vi) shall be considered ineligible only to the extent of such applicable contra relationship, counterclaim, dispute or set-off;

(vii)       the Account Debtor’s chief executive office or principal place of business is located outside of the United States;

(viii)      it is payable in a currency other than Dollars;

(ix)        it (a) is not absolutely owing to a Borrower or (b) arises from a sale on a bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval, consignment, retainage or any other repurchase or return basis or (c) consist of progress billings or other advance billings that are due prior to the completion of performance by a Borrower of the subject contract for goods or services;

(x)         the Account Debtor is the United States of America or any state or political subdivision (or any department, agency or instrumentality thereof), unless such Borrower has complied with the Assignment of Claims Act or other applicable similar state or local law in a manner reasonably satisfactory to Agent;

(xi)        it is not at all times subject to Agent’s duly perfected, first-priority security interest or is subject to any other Lien that is not a Permitted Lien, or the goods giving rise to such Account were, at the time of sale, subject to any Lien that is not a Permitted Lien;

(xii)       it is evidenced by Chattel Paper or an Instrument of any kind (unless such Chattel Paper or Instrument is delivered to Agent in accordance with Section 5.2) or has been reduced to judgment;

(xiii)     the Account Debtor’s total indebtedness to Borrowers exceeds the amount of any credit limit established by Borrowers or Agent or the Account Debtor is otherwise deemed not to be creditworthy by Agent in its Permitted Discretion; provided that Accounts which are deemed to be ineligible solely by reason of this clause (xiii) shall be considered Eligible Accounts to the extent the amount of such Accounts does not exceed the lower of such credit limits;

(xiv)      there are facts or circumstances existing, or which could reasonably be anticipated to occur, which might result in an adverse change in the Account Debtor’s financial condition or impair or delay the collectability of all or any portion of such Account;

(xv)       Agent has not been furnished with all documents and other information pertaining to such Account which Agent has requested, or which any Borrower is obligated to deliver to Agent, pursuant to this Agreement;

(xvi)      a Borrower has made an agreement with the Account Debtor to extend the time of payment thereof beyond the time periods set forth in clause (ii) above;

(xvii)     a Borrower has posted a surety or other bond in respect of the contract or transaction under which such Account arose;

(xviii)    the Account Debtor is subject to any proceeding seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar applicable law;

(xix)      the sale giving rise to such Account is on cash in advance or cash on delivery terms;

(xx)       the goods giving rise to such Account have been sold by a Borrower to the Account Debtor outside such Borrower’s Ordinary Course of Business or the services giving rise to such Account have been performed by a Borrower outside such Borrower’s Ordinary Course of Business;

(xxi)      Accounts with respect to which (i) the goods giving rise to such Account have not been shipped and billed to the Account Debtor, or (ii) the services giving rise to such Account have not been performed and billed to the Account Debtor; or

(xxii)     Accounts arising from a Permitted Acquisition unless such Accounts have met the Borrowing Base Inclusion Requirement.

“Eligible Credit Card Receivables” means, at the time of any determination thereof, each Credit Card Receivable that satisfies the following criteria at the time of its creation and continues to meet the same at the time of such determination, such that each such Credit Card Receivable: (i) has been earned by performance and represents the bona fide amounts due to a Borrower from a Credit Card Issuer or Credit Card Processor, and in each case is originated in the Ordinary Course of Business of a Borrower, and (ii) is acceptable to Agent in its Permitted Discretion, and is not ineligible for inclusion in the calculation of the Borrowing Base pursuant to any of clauses (i) through (xi) below. Without limiting the foregoing, to qualify as an Eligible Credit Card Receivable, such Credit Card Receivable shall indicate no Person other than a Borrower as payee or remittance party. In determining the amount to be so included, the face amount of a Credit Card Receivable shall be reduced by, without duplication, to the extent not reflected in such face amount, (i) the amount of all accrued and actual discounts, claims, credits or credits pending, promotional program allowances, price adjustments, finance charges or other allowances (including any amount that a Borrower may be obligated to rebate to a customer, a Credit Card Issuer or Credit Card Processor pursuant to the terms of any agreement or understanding (written or oral)), and (ii) the aggregate amount of all cash received in respect of such Credit Card Receivable but not yet applied by the Loan Parties to reduce the amount of such Credit Card Receivable.  Except as otherwise agreed by Agent, any Credit Card Receivable included within any of the following categories shall not constitute an Eligible Credit Card Receivable:

(i)          Credit Card Receivables which do not constitute a Payment Intangible;

(ii)         Credit Card Receivables that have been outstanding for more than six (6) Business Days from the date of sale;

(iii)        Credit Card Receivables that are not subject to a perfected first-priority Lien in favor of Agent;

(iv)        Credit Card Receivables which are disputed, are with recourse, or with respect to which a claim, counterclaim, offset, or chargeback has been asserted (to the extent of such claim, counterclaim, offset, or chargeback);

(v)         Credit Card Receivables as to which a Credit Card Issuer or a Credit Card Processor has the right under certain circumstances to require a Borrower to repurchase the Credit Card Receivables from such Credit Card Issuer or Credit Card Processor;

(vi)        Credit Card Receivables due from a Credit Card Issuer or a Credit Card Processor of the applicable credit card which Credit Card Issuer or Credit Card Processor is the subject of any bankruptcy or insolvency proceedings;

(vii)       Credit Card Receivables which are not a valid, legally enforceable obligation of the applicable Credit Card Issuer or a Credit Card Processor with respect thereto;

(viii)      Credit Card Receivables which do not conform to all representations, warranties, or other provisions in the Loan Documents relating to Credit Card Receivables;

(ix)        Credit Card Receivables representing invoicing for items that have not yet been shipped;

(x)         Credit Card Receivables with respect to which Agent shall have received a field examination satisfactory to Agent; or

(xi)        Credit Card Receivables which Agent determines in its Permitted Discretion to be uncertain of collection or which do not meet such other reasonable eligibility criteria for Credit Card Receivables as Agent may determine.

"Eligible In-Transit Inventory" shall mean, at any time of determination, without duplication of other Eligible Inventory, Inventory owned by a Borrower consisting of finished goods, merchantable and readily saleable in Borrowers’ Ordinary Course of Business which Agent, in its Permitted Discretion, deems to be Eligible In-Transit Inventory:

(i)          for which a Borrower has retained title or for which title has passed to a Borrower (as determined by Agent in accordance with documentation provided by a Borrower to Agent);

(ii)         which has been paid for by a Borrower, if purchased from a Person who is not a Borrower;

(iii)        which is insured to the full value thereof with loss payable to Agent, in form, substance and amount satisfactory to Agent;

(iv)        (A) with respect to Inventory which is in transit from a location outside the United States, for which (x) Agent shall have in its possession true and correct copies of all applicable negotiable bills of lading covering such Inventory or (y) (i) Agent shall be named as the consignee on non-negotiable bills of lading covering such Inventory and (ii) the Agent shall have received a duly executed bailee agreement from each applicable broker, freight forwarder, bailee or carrier for such Inventory, in form and substance satisfactory to Agent or (B) with respect to Inventory which is in transit from a location within the United States, which Inventory is reported as in-transit (consistent with Borrowers’ weekly in-transit inventory reporting methodology as of the Closing Date) for a period not to exceed sixty (60) days to any of Borrowers’ facilities listed on Sections 1(c) and 1(d) of the Perfection Certificate or other location of which Agent has been notified as required by Section 7.8; and

(v)         which would otherwise constitute Eligible Inventory, but for clauses (x) and (xi) of the definition of “Eligible Inventory”.

Eligible In-Transit Inventory shall not include Inventory being acquired pursuant to a trade letter of credit to the extent such trade letter of credit for the specific Inventory being claimed as collateral remains outstanding.

“Eligible Inventory” means, at any time of determination and subject to the criteria below, Inventory owned by a Borrower consisting of finished goods, merchantable and readily saleable in Borrowers’ Ordinary Course of Business which Agent, in its Permitted Discretion, deems to be Eligible Inventory.  Without limiting the generality of the foregoing, the following Inventory will not be Eligible Inventory:

(i)          it consists of work-in-progress;

(ii)         it is not in good, new and saleable condition;

(iii)        it is slow-moving, obsolete, damaged, contaminated, unmerchantable, returned, rejected, discontinued or repossessed;

(iv)        it is in the possession of a processor, consignee or bailee (other than Amazon), or located on premises leased or subleased to a Borrower, or on premises subject to a mortgage in favor of a Person other than Agent, unless (x) such processor, consignee, bailee or mortgagee or the lessor or sublessor of such premises, as the case may be, has executed and delivered all documentation which Agent shall require to evidence the subordination or other limitation or extinguishment of such Person’s rights with respect to such Inventory and Agent’s right to gain access thereto or (y) a rent or other similar Reserve satisfactory to Agent in its sole discretion has been established with respect to such Inventory;

(v)         it consists of fabricated parts, consigned items, supplies or packaging;

(vi)        it fails to meet all standards imposed by any Governmental Authority;

(vii)       it does not conform in all respects to any covenants, warranties and representations set forth in this Agreement and each other Loan Document;

(viii)      it is not at all times subject to Agent’s duly perfected, first priority security interest and no other Lien except a Permitted Lien;

(ix)        it is purchased or manufactured pursuant to a license agreement that is not assignable to each of Agent and its transferees, unless such license agreement is satisfactory to Agent or Agent is in receipt of a licensor consent in form and substance satisfactory to Agent;

(x)         it is situated at a Collateral location not listed in Sections 1(c) or 1(d) of the Perfection Certificate or other location of which Agent has been notified as required by Section 7.8; provided that, notwithstanding anything to the contrary contained herein, Collateral situated at the distribution center located in Albany, New York shall not be “Eligible Inventory”;

(xi)        it is located outside of the continental United States or Canada; or

(xii)       it is Inventory arising from a Permitted Acquisition unless such Inventory has met the Borrowing Base Inclusion Requirement.

“Eligible Specified Customer Account” means, at any time of determination and subject to the criteria below, a Specified Customer Account of a Borrower, which was generated and billed by a Borrower in the Ordinary Course of Business, and which Agent, in its Permitted Discretion, deems to be an Eligible Specified Customer Account.  The net amount of an Eligible Specified Customer Account at any time shall be the face amount of such Eligible Specified Customer Account as originally billed minus all customer deposits, unapplied cash collections and other Proceeds of such Account received from or on behalf of the Account Debtor thereunder as of such date and any and all returns, rebates, discounts (which may, at Agent’s option, be calculated on shortest terms), credits, allowances or excise taxes of any nature at any time issued, owing, claimed by Account Debtors, granted, outstanding or payable in connection with such Accounts at such time. Without limiting the generality of the foregoing, the following Accounts shall not be Eligible Specified Customer Accounts:

(i)          it remains unpaid more than thirty (30) days after it is due under an Approved Specified Customer Agreement;

(ii)         a covenant, representation, or warranty contained in this Agreement or any other Loan Document with respect to such Account (including any of the representations set forth in Section 7.4) has been breached;

(iii)      the Account is subject to any contra relationship, counterclaim, dispute or set-off; provided that Accounts which are deemed to be ineligible by reason of this clause (iii) shall be considered ineligible only to the extent of such applicable contra relationship, counterclaim, dispute or set-off;

(iv)        the Account Debtor’s chief executive office or principal place of business becomes located outside of the United States;

(v)         it is payable in a currency other than Dollars;

(vi)        it is not at all times subject to Agent’s duly perfected, first-priority security interest or is subject to any other Lien that is not a Permitted Lien, or the goods giving rise to such Account were, at the time of sale, subject to any Lien that is not a Permitted Liens;

(vii)       it is evidenced by Chattel Paper or an Instrument of any kind (unless such Chattel Paper or Instrument is delivered to Agent in accordance with Section 5.2) or has been reduced to judgment;

(viii)      there are facts or circumstances existing which are reasonably likely to result in an adverse change in the Account Debtor’s financial condition or impair or delay the collectability of all or any portion of such Account;

(ix)        Agent has not been furnished with all documents and other information pertaining to such Account which Agent has requested, or which a Borrower is obligated to deliver to Agent, pursuant to this Agreement;

(x)         a Borrower has made an agreement with the Account Debtor to extend the time of payment thereof beyond the time periods set forth in clause (i) above;

(xi)        a Borrower has posted a surety or other bond in respect of the contract or transaction under which such Account arose;

(xii)       the Account Debtor is subject to any proceeding seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar applicable law;

(xiii)      the sale giving rise to such Account is on cash in advance or cash on delivery terms; or

(xiv)      the goods giving rise to such Account have been sold by a Borrower to the Account Debtor outside Borrowers’ Ordinary Course of Business or the services giving rise to such Account have been performed by a Borrower outside Borrowers’ Ordinary Course of Business.

“Enforcement Action” means any action to enforce any Obligations or Loan Documents or to exercise any rights or remedies relating to any Collateral, whether by judicial action, self-help, notification of Account Debtors, setoff or recoupment, credit bid, deed in lieu of foreclosure, action in any proceeding seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar applicable law or otherwise.

“ERISA” means the Employee Retirement Income Security Act of 1974 and all rules, regulations and orders promulgated thereunder.

“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with a Loan Party within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code and Section 302 of ERISA).

“ERISA Event” means: (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of any Loan Party or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by a Loan Party or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate a Pension Plan under Section 4041 of ERISA or the treatment of a Multiemployer Plan amendment as a termination under Section 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan under Section 430 of the Code or a Multiemployer Plan is in endangered or critical status within the meaning of Section 432 of the Code; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon a Loan Party or any ERISA Affiliate.

“Event of Default” has the meaning set forth in Section 11.1.

“Excess Availability” means the amount, as determined by Agent, calculated at any date, equal to (a) the lesser of (i) the Maximum Revolving Facility Amount minus Reserves, and (ii) the Borrowing Base (including any reductions for Reserves) as of such date, minus (b) the sum of (i) the outstanding balance of all Revolving Loans plus (ii) fees and expenses which are due and payable by any Borrower under this Agreement but which have not been paid or charged to the Loan Account; provided that if any of the Loan Limits for Revolving Loans is exceeded as of the date of calculation, then Excess Availability shall be zero.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

“Excluded Property” means (i) any rights or interest in any non-material contract, lease, permit, license, or license agreement covering personal property of any Loan Party or any lease of real property if under the terms of such contract, lease, permit, license, or license agreement, or applicable law with respect thereto, the grant of a security interest or lien therein is prohibited as a matter of law or under the terms of such contract, lease, permit, license, or license agreement and such prohibition or restriction has not been waived or the consent of the other party to such contract, lease, permit, license, or license agreement has not been obtained (provided that, (A) the foregoing exclusions of clause (i) shall in no way be construed (1) to apply to the extent that any described prohibition or restriction is ineffective under Section 9-406, 9-407, 9-408, or 9-409 of the UCC or other applicable law, or (2) to apply to the extent that any consent or waiver has been obtained that would permit Agent’s security interest or lien to attach notwithstanding the prohibition or restriction on the pledge of such contract, lease, permit, license, or license agreement and (B) any such contract, lease, permit, license, or license agreement referred to in the foregoing exclusions of clause (i) shall cease to be treated as “Excluded Property” (and shall constitute Collateral) immediately and without further action on the part of Agent or any Loan Party at such time as the contractual or legal prohibition shall not longer be applicable and to the extent severable, such security interest shall attach immediately to any portion of such contract, lease, permit, license, or license agreement and (C) the foregoing exclusions of clause (i) shall in no way be construed to limit, impair, or otherwise affect Agent’s continuing security interests in and liens upon any rights or interests of any Loan Party in or to (1) monies due or to become due under or in connection with any described contract, lease, permit, license, license agreement or (2) any proceeds from the sale, license, lease, or other dispositions of any such contract, lease, permit, license, or license agreement); (ii) any United States intent-to-use trademark applications to the extent that, and solely during the period in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark applications under applicable federal law; provided that upon submission and acceptance by the PTO of an amendment to allege use pursuant to 15 U.S.C. Section 1060(a) (or any successor provision), such intent-to-use trademark application shall be considered Collateral, (iii) any Restricted Accounts, (iv) any assets owned by any Loan Party that are subject to a Permitted Lien securing Capitalized Leases or purchase money Indebtedness permitted to be incurred hereunder to the extent and for so long as the contract or other agreement in which such Lien is granted (or the documentation providing for such Capitalized Lease or purchase money Indebtedness) validly prohibits the creation of any other Lien on such assets and (v) solely with respect to the Parent, any rabbi trust, any equity or other interests in any rabbi trust and any property or assets owned by or held in a rabbi trust.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of the Agent or any Lender, its lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes; (b) in the case of a Recipient, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Recipient with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which such Recipient (i) acquires such applicable interest (other than pursuant to an assignment request by the Borrower) or (ii) changes its applicable lending office, except in each case to the extent that, pursuant to Section 13 amounts with respect to such Taxes were payable to such Recipient’s assignor (or Lender granting such participation) immediately before such assignment or grant of participation, or to such Recipient immediately before it changed its lending office; (c) United States federal withholding Taxes that would not have been imposed but for such Recipient’s failure to comply with Section 13(e) and (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof, any agreements entered into pursuant to current Section 1471(b)(1) of the Code (or any amended or successor version described above) and any intergovernmental agreement (and related legislation, official rules or other administrative guidance) implementing the foregoing.

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

“Fiscal Year” means the fiscal year of Borrowers which ends on the Saturday closest to January 31 of each year.

“Fixed Charge Coverage Ratio” means the ratio of (a) EBITDA for the twelve-month period ending on the last day of the most recently ended fiscal month for which financial statements have been delivered, minus unfinanced Capital Expenditures of the Loan Parties on a consolidated basis for such period, to (b) Fixed Charges for such period.

“Fixed Charges” means, for the period in question, on a consolidated basis, the sum of (a) all principal payments scheduled or required to be made during or with respect to such period in respect of Indebtedness of the Loan Parties, plus (b) all Interest Expense of the Loan Parties for such period paid or required to be paid in cash attributable to such period, plus (c) all taxes of the Loan Parties paid or required to be paid for such period and plus (d) all cash distributions, dividends, redemptions and other cash payments made or required to be made during such period with respect to equity securities or subordinated debt issued by any Loan Party.

“FRB” means the Board of Governors of the Federal Reserve System or any successor thereto.

“Funding Account” has the meaning set forth in Section 2.3(a).

“GAAP” means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the United States accounting profession) which are applicable to the circumstances as of the date of determination, in each case consistently applied.

“Governing Documents” means, with respect to any Person, the certificate of incorporation, articles of incorporation, certificate of formation, certificate of limited partnership, by-laws, operating agreement, limited liability company agreement, limited partnership agreement or other similar governance document of such Person.

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

“Guarantor Payment” has the meaning set forth in Section 2.12(f)(i).

“Guaranty” or “Guaranteed”, as applied to any Indebtedness, liability or other obligation, means (a) a guaranty, directly or indirectly, in any manner, including by way of endorsement (other than endorsements of negotiable instruments for collection in the Ordinary Course of Business), of any part or all of such Indebtedness, liability or obligation and (b) an agreement, contingent or otherwise, and whether or not constituting a guaranty, assuring, or intended to assure, the payment or performance (or payment of damages in the event of non-performance) of any part or all of such Indebtedness, liability or obligation by any means (including the purchase of securities or obligations, the purchase or sale of property or services or the supplying of funds).

“In-Transit Inventory Sublimit” means the amount set forth in Section 1(d) of Annex I.

“Indebtedness” means (without duplication), with respect to any Person, (a) all obligations or liabilities of such Person, contingent or otherwise, for borrowed money, (b) all obligations of such Person represented by promissory notes, bonds, debentures or the like, or on which interest charges are customarily paid, (c) all liabilities secured by any Lien on such Person’s property owned or acquired, whether or not such liability shall have been assumed by such Person, (d) all obligations of such Person under conditional sale or other title-retention agreements relating to property or assets purchased by such Person, (e) all obligations of such Person issued or assumed as the deferred purchase price of property or services (excluding trade payables which are less than ninety days past the invoice date incurred in the Ordinary Course of Business, but including the maximum potential amount payable under any earn-out or similar obligations), (f) all Capitalized Leases of such Person, (g) all obligations (contingent or otherwise) of such Person as an account party or applicant in respect of letters of credit and bankers’ acceptances or in respect of financial or other hedging obligations, (h) all equity interests issued by such Person subject to repurchase or redemption at any time on or prior to the Scheduled Maturity Date (valued at, in the case of redeemable preferred equity interests, the greater of the voluntary liquidation preference and the involuntary liquidation preference of such equity interests plus accrued and unpaid dividends), other than voluntary repurchases or redemptions that are at the sole option of such Person, (i) all principal outstanding under any synthetic lease, off-balance sheet loan or similar financing product of such Person and (j) all Guaranties, endorsements (other than for collection in the Ordinary Course of Business) and other contingent obligations of such Person in respect of the obligations of others.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.

“Intellectual Property” means the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses, trademarks and trademark licenses and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

“Intercompany Subordinated Debt” means that certain Indebtedness evidenced by the Intercompany Subordinated Note and the other Intercompany Subordinated Debt Documents, which Indebtedness has an outstanding principal balance of $10,356,140.65 as of the Amendment No. 1 Effective Date, after giving effect to the transactions to occur on or about the Amendment No. 1 Effective Date.

“Intercompany Subordinated Debt Documents” means the Intercompany Subordinated Note and any other documents, instruments or agreements which evidence the Intercompany Subordinated Debt or pursuant to which the Intercompany Subordinated Debt was issued or is governed, in each case as amended, modified, supplemented or restated from time to time, in accordance with the terms of this Agreement.

“Intercompany Subordinated Debt Subordination Agreement” means (a) that certain Intercompany Subordination Agreement dated as of the date hereof between Agent and Parent and (b) any other subordination agreement in form and substance satisfactory to Agent between Agent and any holder of Intercompany Subordinated Debt.

“Intercompany Subordinated Note” means that certain Promissory Note dated as of the date hereof and issued by Borrowers in favor of Parent in an original principal amount equal to $13,956,001.82.

“Interest Expense” means, for the applicable period, for the Loan Parties on a consolidated basis, total interest expense (including interest attributable to Capitalized Leases in accordance with GAAP) and fees with respect to outstanding Indebtedness.

“Inventory Advance Rate” means the applicable percentage(s) set forth in Section 1(c) of Annex I.

“Investment Property” means the collective reference to (a) all “investment property” as such term is defined in Section 9-102 of the UCC, (b) all “financial assets” as such term is defined in Section 8-102(a)(9) of the UCC and (c) whether or not constituting “investment property” as so defined, all Pledged Equity.

“Issuers” means the collective reference to each issuer of Investment Property.

“Lender” means each Person listed on the Commitment Schedule and any other Person that shall have become a Lender hereunder pursuant to an Assignment and Assumption, other than any such Person that ceases to be a Lender hereunder pursuant to an Assignment and Assumption.  Unless the context expressly provides otherwise, “Lender” shall include the Swingline Lender.

“LIBOR Loan” means any Loan which bears interest at a rate determined by reference to the LIBOR Rate.

“LIBOR Rate” means, for any calendar month, the rate (expressed as a percentage per  annum and rounded upward, if necessary, to the next nearest 1/100 of 1%) for deposits in Dollars, for a one-month period, that appears on Bloomberg Screen US0001M (or the successor thereto) as the London interbank offered rate for deposits in Dollars as of 11:00 a.m., London time, as of two (2) Business Days prior to the first day of such calendar month (and, in no event shall the LIBOR Rate shall be less than 1.00%), which determination shall be made by Agent and shall be conclusive in the absence of manifest error.  For the sake of clarity, the LIBOR Rate shall be adjusted monthly on the first day of each month.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit arrangement, encumbrance, easement, lien (statutory or other), security interest or other security arrangement and any other preference, priority, or preferential arrangement in the nature of a security interest of any kind or nature whatsoever, including any conditional sale contract or other title-retention agreement, the interest of a lessor under a Capitalized Lease and any synthetic or other financing lease having substantially the same economic effect as any of the foregoing.

“Loan Account” has the meaning set forth in Section 3.4.

“Loan Documents” means, collectively, this Agreement (including the Perfection Certificate and all other attachments, annexes and exhibits hereto) and all notes, guaranties, security agreements, mortgages, Borrowing Base Certificates, Compliance Certificates, other certificates, pledge agreements, landlord’s agreements, Lock Box and Blocked Account agreements, the Credit Card Notifications, the Collateral Assignment, the Agent Fee Letter, the Parent Guaranty, the Parent Pledge Agreement, the Intercompany Subordinated Debt Subordination Agreement, the Alimco Subordinated Debt Subordination Agreement and all other agreements, documents and instruments now or hereafter executed or delivered by any Borrower, any Loan Party, or any Other Obligor in connection with, or to evidence the transactions contemplated by, this Agreement.

“Loan Guaranty” means the obligations of Obligors pursuant to Section 12.

“Loan Limits” means, collectively, the Loan Limits for Revolving Loans set forth in Section 1(a) of Annex I and all other limits on the amount of Loans set forth in this Agreement.

“Loan Party” means, individually, each Borrower, or any domestic Subsidiary; and “Loan Parties” means, collectively, each Borrower and all domestic Subsidiaries.

“Loan Party Obligor” means, individually, each Borrower or any Obligor that is a Loan Party and each Person identified in the Preamble as a Loan Party Obligor; and “Loan Party Obligors” means, collectively, each Borrower, and each Obligor that is a Loan Party.

“Loans” means, collectively, the Revolving Loans (including any Protective Advances and Overadvances) and the Swingline Loans.

“Lock Box” has the meaning set forth in Section 6.1.

“Material Adverse Effect” means any event, act, omission, condition or circumstance which, which individually or in the aggregate, has or could reasonably be expected to have a material adverse effect on (a) the business, operations, properties, assets or condition, financial or otherwise, of any Loan Party, (b) the ability of any Loan Party to perform any of its obligations under any of the Loan Documents, (c) the validity or enforceability of, or Agent’s or any Lender’s rights and remedies under, any of the Loan Documents, (d) the ability of Agent and Lenders realize upon a material portion of Collateral in which Agent has previously perfected a Lien or (e) the existence, perfection or priority of any security interest granted in any Loan Document and covering a material portion of Collateral in which Agent has previously perfected a Lien.

“Material Contract” means has the meaning set forth in Section 7.18.

“Maturity Date” means the earliest of (i) Scheduled Maturity Date, (ii) the Termination Date, or (iii) such earlier date as the Obligations may be accelerated in accordance with the terms of this Agreement (including pursuant to Section 11.2).

“Maximum Lawful Rate” has the meaning set forth in Section 3.5.

“Maximum Liability” has the meaning set forth in Section 12.9.

“Maximum Revolving Facility Amount” means the amount set forth in Section 1(a)(i) of Annex I.

“Measurement Period” means, at any date of determination, the most recently completed twelve (12) consecutive fiscal months of Borrowers ended on or prior to such time (taken as one accounting period) in respect of which financial statements for each fiscal month or Fiscal Year, as applicable, in such period have been or are required to be delivered to Agent in accordance with Section 7.15.

“Minimum Excess Availability Amount” means, as of any date of determination, the greater of (i) ten percent (10%) of the Borrowing Base in effect as of such date and (ii) $750,000.

“Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which a Loan Party or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

“Net Income” means, for the applicable period, for Borrowers individually or for the Loan Parties on a consolidated basis, as applicable, the net income (or loss) of Borrowers individually or of the Loan Parties on a consolidated basis, as applicable, for such period, excluding any gains or non-cash losses from dispositions, any extraordinary gains or extraordinary non-cash losses and any gains or non-cash losses from discontinued operations, in each case of Borrowers individually or of the Loan Parties on a consolidated basis, as applicable, for such period.

“NOLV” means the applicable ‘Net Orderly Liquidation Value’ as set forth in and determined by the most current third-party appraisal report, performed by an appraisal firm retained by Agent for such appraisal project with respect to Eligible Inventory and Eligible In-Transit Inventory, and in form and substance acceptable to Agent.

“Non-Consenting Lender” has the meaning set forth in Section 15.5(b).

“Non-Paying Guarantor” has the meaning set forth in Section 12.10.

“Non-U.S. Recipient” has the meaning set forth in Section 13(e)(ii).

“Notice of Borrowing” has the meaning set forth in Section 2.3(a).

“Obligations” means all present and future Loans, advances, debts, liabilities, fees, expenses, obligations, guaranties, covenants, duties and indebtedness at any time owing by any Borrower or any Loan Party Obligor to Agent and Lenders, whether evidenced by this Agreement, any other Loan Document or otherwise, whether arising from an extension of credit, guaranty, indemnification or otherwise, whether direct or indirect (including those acquired by assignment and any participation by any Lender in any Borrower’s indebtedness owing to others), whether absolute or contingent, whether due or to become due and whether arising before or after the commencement of a proceeding under the Bankruptcy Code or any similar statute.

“Obligor” means any guarantor, endorser, acceptor, surety or other Person liable on, or with respect to, any of the Obligations or who is the owner of any property which is security for any of the Obligations, other than Borrower.

“Ordinary Course of Business” means, in respect of any transaction involving any Person, the ordinary course of business of such Person, as conducted by such Person as of the Closing Date and any practices that are utilized to improve past practices or to conform with customary operating procedures for a similar business, as reasonably determined by such Person.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising solely from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

“Other Obligor” means any Obligor other than any Loan Party Obligor, including, without limitation, Parent.

“Other Taxes” means all present or future stamp, court or documentary intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.6(c)), participation or change in applicable lending office as a result of a present or former connection between the assignor, assignee, participating Lender, participant or Lender and the jurisdiction imposing such Taxes (other than connections arising solely from such person having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, or engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

“Overadvances” has the meaning set forth in Section 2.2(b).

“Parent” means Trans World Entertainment Corporation, a New York corporation.

“Parent Guaranty” means that certain Amended and Restated Limited Guaranty, dated of the Amendment No. 1 Effective Date, made by Parent in favor of Agent.

“Parent Pledge Agreement” means that certain Pledge Agreement, dated of the date hereof, made by Parent in favor of Agent.

“Participant” has the meaning set forth in Section 15.10(b).

“Paying Guarantor” has the meaning set forth in Section 12.10.

“Payment Conditions” means, as to the making of any payment or distribution in respect of the Intercompany Subordinated Debt or the Alimco Subordinated Debt, the satisfaction as of the making of each such payment or distribution and after giving pro forma effect thereto, of each of the following conditions: (a) no Default or Event of Default exists or has occurred and is continuing, (b) the Fixed Charge Coverage Ratio for the most recent Measurement Period is greater than 1.20:1.00, and (c) Excess Availability is greater than the greater of (x) twenty percent (20%) of the average Borrowing Base in effect on each day during the 30-day period immediately preceding the date of such payment or distribution and (y) $1,500,000.

“PBGC” means the Pension Benefit Guaranty Corporation.

“PCI Standards” means the then applicable Payment Card Industry Data Security Standards.

“Pension Act” means the Pension Protection Act of 2006.

“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and Multiemployer Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA, and any sections of the Code or ERISA related thereto that are enacted after the date of this Agreement.

“Pension Plan” means any employee pension benefit plan (other than a Multiemployer Plan) that is maintained or is contributed to by a Loan Party and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.

“Perfection Certificate” means the Perfection Certificate attached to this Agreement as of the Closing Date, together with any updates thereto as contemplated by this Agreement or otherwise permitted by Agent from time to time.

“Permitted Acquisition” means any acquisition of all or substantially all of the assets of any Person, or any acquisition of a business line or division of any Person, or the acquisition of at least a majority of the issued and outstanding equity interests of any Person that is an operating business (the “Target Assets”), so long as:

(a)          (i) the assets, Person, division or line of business to be acquired is located in the United States, in a similar or complementary or ancillary or related line of business as the Loan Parties, or a reasonable extension thereof;

(b)          all transactions related to such acquisition shall be consummated in accordance in all material respects with applicable law;

(c)          the board of directors or equivalent governing body of the acquiree has not at any time notified the Parent or the Borrowers that it opposes such action or, if it had done so, such opposition has been withdrawn;

(d)          immediately after giving effect to such acquisition, the Permitted Acquisition Payment Conditions are satisfied;

(e)          no additional Indebtedness (other than Permitted Indebtedness of the type described and in the amounts permitted in clauses (c) and (d) of the definition thereof) is incurred in connection therewith, other than Revolving Loans; and

(f)        the aggregate consideration expended by the Loan Parties and their Subsidiaries in connection with such acquisition (including the amount of any Indebtedness assumed in connection with such transaction), when taken together with all other Permitted Acquisitions otherwise consummated hereunder, does not exceed $3,000,000 since the Amendment No. 3 Effective Date.

“Permitted Acquisition Payment Conditions” means, with respect to any acquisition transaction, each of the following conditions: (a) no Default or Event of Default exists or has occurred and is continuing and (b) Borrower Representative shall have delivered to Agent a pro forma Compliance Certificate demonstrating (with reasonable detail and in form and substance acceptable to Agent) that (i) the pro forma combined Loan Parties and the Target Assets’ Fixed Charge Coverage Ratio for the most recently ended Measurement Period is greater than 1.20:1.00 and (ii) as of the date of consummation of such acquisition and on each of the 30 days immediately preceding such date, the pro forma combined Loan Parties and the Target Assets’ Excess Availability following such acquisition was greater than the greater of (x) twenty percent (20%) of the average Borrowing Base in effect on each such day and (y) $1,500,000.

“Permitted Discretion” means a determination made by Agent in good faith and in the exercise of reasonable (from the perspective of an asset-based secured lender) business judgment.

“Permitted Holders” means each of (i) The Robert J. Higgins TWMC Trust and (ii) Neil S. Subin.

“Permitted Indebtedness” means: (a) the Obligations; (b) the Indebtedness existing on the date hereof described in Section 7 of the Perfection Certificate; in each case along with extensions, refinancings, modifications, amendments and restatements thereof; provided that (i) the principal amount thereof is not increased, (ii) if secured by a Permitted Lien, no additional collateral beyond that existing as of the Closing Date is granted to secure such Indebtedness; (iii) if such Indebtedness is subordinated to any or all of the Obligations, the applicable subordination terms shall not be modified without the prior written consent of Agent and (iv) the terms thereof are not modified to impose more burdensome terms upon any Loan Party; (c) Capitalized Leases and purchase-money Indebtedness secured by Permitted Liens in an aggregate amount not exceeding $250,000 at any time outstanding; (d) Indebtedness incurred as a result of endorsing negotiable instruments received in the Ordinary Course of Business; (e) the Intercompany Subordinated Debt owing by Borrowers in an aggregate amount not exceeding $13,956,001.82 at any time outstanding and then solely to the extent the Intercompany Subordinated Debt is subject to, and permitted by, the Intercompany Subordinated Debt Subordination Agreement; (f) the Alimco Subordinated Debt owing by Borrowers in an aggregate amount not exceeding $5,224,800.00 plus the amount of all accrued interest on the Alimco Subordinated Debt (including interest paid in kind by capitalizing such interest to principal) at any time outstanding and then solely to the extent the Alimco Subordinated Debt is subject to, and permitted by, the Alimco Subordinated Debt Subordination Agreement; and (g) any other unsecured Indebtedness in an aggregate amount of up to $1,000,000 outstanding from time to time, so long as such Indebtedness is subject to a subordination agreement in form and substance satisfactory to Agent in its sole discretion, in each case under this clause (g) along with extensions, refinancings, modifications, amendments and restatements thereof; provided that (i) the principal amount thereof is not increased, (ii) the final scheduled maturity date is no earlier than 91 days after the Scheduled Maturity Date, (iii) the applicable subordination terms shall not be modified without the prior written consent of Agent, and (iv) the terms thereof are not modified to impose more burdensome terms upon any Loan Party.

“Permitted Liens” means (a) purchase-money security interests in specific items of Equipment securing Permitted Indebtedness described under clause (b) of the definition of “Permitted Indebtedness”; (b) liens for taxes, fees, assessments, or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings (which proceedings have the effect of preventing the enforcement of such lien) for which adequate reserves in accordance with GAAP are being maintained provided the same have no priority over any of Agent’s security interests; (c) liens of materialmen, mechanics, carriers, or other similar liens arising in the Ordinary Course of Business and securing obligations which are not delinquent or are being contested in good faith by appropriate proceedings (which proceedings have the effect of preventing the enforcement of such lien) for which adequate reserves in accordance with GAAP are being maintained; (d) liens which constitute banker’s liens, rights of set-off, or similar rights as to deposit accounts or other funds maintained with a bank or other financial institution (but only to the extent such banker’s liens, rights of set-off or other rights are in respect of customary service charges relative to such deposit accounts and other funds, and not in respect of any loans or other extensions of credit by such bank or other financial institution to any Loan Party); (e) cash deposits or pledges of an aggregate amount not to exceed $50,000 to secure the payment of worker’s compensation, unemployment insurance, or other social security benefits or obligations, public or statutory obligations, surety or appeal bonds, bid or performance bonds, or other obligations of a like nature incurred in the Ordinary Course of Business; (f) judgment Liens in respect of judgments that do not constitute an Event of Default; (g) Liens or rights of setoff against credit balances of Borrowers with Credit Card Issuers or Credit Card Processors or amounts owing by such Credit Card Issuers or Credit Card Processors to Borrowers in the Ordinary Course of Business, but not Liens on or rights of setoff against any other property or assets of Borrowers, pursuant to the Credit Card Agreements to secure the obligations of Borrowers to the Credit Card Issuers or Credit Card Processors as a result of fees and chargebacks; and (h) Liens securing the Alimco Subordinated Debt to the extent such Liens are subject to the Alimco Subordinated Debt Subordination Agreement.

“Person” means any individual, sole proprietorship, partnership, joint venture, limited liability company, trust, unincorporated organization, association, corporation, government or any agency or political division thereof, or any other entity.

“Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan) maintained for employees of any Loan Party or any such plan to which any Loan Party (or with respect to any plan subject to Section 412 of the Code or Section 302 or Title IV of ERISA, any ERISA Affiliate) is required to contribute on behalf of any of its employees.

“Pledged Equity” means the equity interests listed on Sections 1(f) and 1(g) of the Perfection Certificate, together with any other equity interests, certificates, options, or rights or instruments of any nature whatsoever in respect of the equity interests of any Person that may be issued or granted to, or held by, any Loan Party Obligor or Other Obligor while this Agreement is in effect, and including, to the extent attributable to, or otherwise related to, such pledged equity interests, all of such Loan Party Obligor’s or Other Obligor’s (a) interests in the profits and losses of each Issuer, (b) rights and interests to receive distributions of each Issuer’s assets and properties and (c) rights and interests, if any, to participate in the management of each Issuer related to such pledged equity interests.

“Pro Rata Share” means with respect to all matters relating to any Lender the percentage obtained by dividing (i) the Loan Commitment of that Lender by (ii) the aggregate Loan Commitments of all Lenders, in each case as any such percentages may be adjusted by assignments pursuant to an Assignment and Assumption.

“Protective Advances” has the meaning set forth in Section 2.2(a).

“Recipient” means any Agent, any Lender, any Participant, or any other recipient of any payment to be made by or on account of any Obligation of any Loan Party under this Agreement or any other Loan Document, as applicable.

“Register” has the meaning set forth in Section 15.9(c).

“Released Parties” has the meaning set forth in Section 10.1.

“Relevant Percentage” has the meaning set forth in Section 12.10.

“Replacement Lender” has the meaning set forth in Section 3.6(c).

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty-day notice period has been waived.

“Required Lenders” means at any time Lenders (other than Defaulting Lenders) then holding at least fifty-one (51%) percent of the sum of the aggregate Loan Commitment then in effect.

“Reserves” has the meaning set forth in Section 2.1(b).

“Restricted Accounts” means Deposit Accounts (a) established and used (and at all times will be used) solely for the purpose of paying current payroll obligations of Loan Parties or the Parent, payroll taxes, worker’s compensation or unemployment compensation, pension benefits and other similar expenses to or for the benefit of any employees and accrued and unpaid employee compensation (including salaries, wages, benefits and expense reimbursement) (and which do not (and will not at any time) contain any deposits other than those necessary to fund current payroll or expenses to or for the benefit of employees), in each case in the Ordinary Course of Business, (b) maintained (and at all times will be maintained) solely in connection with an employee benefit plan, but solely to the extent that all funds on deposit therein are solely held for the benefit of, and owned by, employees (and will continue to be so held and owned) pursuant to such plan, (c) used specifically and exclusively for taxes required to be collected or withheld (including, without limitation, federal and state withholding taxes (including the employer’s share thereof), taxes owing to any governmental unit thereof, sales, use and excise taxes, customs duties, import duties and independent customs brokers’ charges) for which the Loan Parties or Parent may become liable, (d) which, individually or in the aggregate with all other accounts under this clause (d), does not have an aggregate balance which exceeds $100,000 at any time, or (e) solely with respect to the Parent, used solely in connection with a rabbi trust.

“Revolving Loan Commitment” means (a) as to any Lender, the aggregate commitment of such Lender to make Revolving Loans as set forth in the Commitment Schedule or in the most recent Assignment and Assumption to which it is a party (as adjusted to reflect any assignments as permitted hereunder) and (b) as to all Lenders, the aggregate commitment of all Lenders to make Revolving Loans, which aggregate commitment shall be in an amount equal to the Maximum Revolving Facility Amount.

“Revolving Loans” has the meaning set forth in Section 2.1(a).

“Scheduled Maturity Date” means the date set forth in Section 1(h) of Annex I.

“Securities Act” means the Securities Act of 1933, as amended.

“Settlement” has the meaning set forth in Section 2.4(c).

“Settlement Date” has the meaning set forth in Section 2.4(c).

“Specified Customer Account” means an Account arising under an Approved Specified Customer Agreement.

“Specified Customer Advance Rate” means the percentage set forth in Section 1(b)(ii) of Annex I.

“Specified Customer Dilution Reserve” has the meaning set forth in Section 1(b)(ii) of Annex I.

“Stated Rate” has the meaning set forth in Section 3.5.

“Subsidiary” means any corporation or other entity of which a Person owns, directly or indirectly, through one or more intermediaries, more than 50% of the capital stock or other equity interest at the time of determination.  Unless the context indicates otherwise, references to a Subsidiary shall be deemed to refer to a Subsidiary of a Borrower.

“Swingline Lender” means Eclipse Business Capital SPV, LLC (f/k/a Encina Business Capital SPV, LLC), in its capacity as lender of Swingline Loans hereunder.

“Swingline Loans” has the meaning set forth in Section 2.4(a).

“Target Assets” has the meaning set forth in the definition of “Permitted Acquisition”.

“Taxes” means all present or future taxes, levies, imposts, duties, assessments, withholdings (including backup withholding) or similar fees or charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Termination Date” means the date on which all of the Obligations (other than contingent obligations for which no claims have been made) have been paid in full in cash and all of Agent’s and Lenders’ lending commitments under this Agreement and under each of the other Loan Documents have been terminated.

“UCC” means, at any given time, the Uniform Commercial Code as adopted and in effect at such time in the State of New York or other applicable jurisdiction.

“Walmart” means Walmart, Inc.

1.2.        Accounting Terms and Determinations.

Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder (including determinations made pursuant to the exhibits hereto) shall be made, and all financial statements required to be delivered hereunder shall be prepared on a consolidated basis in accordance with GAAP consistently applied.  If at any time any change in GAAP would affect the computation of any financial ratio or financial requirement set forth in any Loan Document, and either Borrower Representative or Agent shall so request, Required Lenders and Borrower Representative shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP; provided that, until so amended, (a) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (b) Borrower Representative shall provide to Agent and Lenders financial statements and other documents required under this Agreement and the other Loan Documents which include a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.  Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under Statement of Financial Accounting Standards 159 (Codification of Accounting Standards 825-10) to value any Indebtedness or other liabilities of any Loan Party at “fair value”, as defined therein.

Notwithstanding anything to the contrary contained in the paragraph above or the definitions of “Capital Expenditures” or “Capitalized Leases”, only those leases (assuming for purposes hereof that such leases were in existence on January 1, 2015) that would have constituted Capitalized Leases or financing leases in conformity with GAAP on January 1, 2015, shall be considered Capitalized Leases or financing leases hereunder, and all calculations and deliverables under this Agreement or any other Loan Document shall be made or delivered, as applicable, in accordance therewith (other than the financial statements delivered pursuant to this Agreement; provided that all such financial statements delivered to Agent and Lenders in accordance with the terms of this Agreement shall contain a schedule showing the adjustments necessary to reconcile such financial statements with GAAP as in effect on January 1, 2015, with respect to such leases).

1.3.        Other Definitional Provisions and References.

References in this Agreement to “Articles”, “Sections”, “Annexes”, “Exhibits” or “Schedules” shall be to Articles, Sections, Annexes, Exhibits or Schedules of or to this Agreement unless otherwise specifically provided.  Any term defined herein may be used in the singular or plural.  “Include”, “includes” and “including” shall be deemed to be followed by “without limitation”.  “Or” shall be construed to mean “and/or”.  Except as otherwise specified or limited herein, references to any Person include the successors and assigns of such Person.  References “from” or “through” any date mean, unless otherwise specified, “from and including” or “through and including”, respectively.  No provision of any Loan Documents shall be construed against any party by reason of such party having, or being deemed to have, drafted the provision. Unless otherwise specified herein, the settlement of all payments and fundings hereunder between or among the parties hereto shall be made in lawful money of the United States and in immediately available funds.  Time is of the essence for each performance obligation of the Loan Parties under this Agreement and each Loan Document.  All amounts used for purposes of financial calculations required to be made herein shall be without duplication.  References to any statute or act shall include all related current regulations and all amendments and any successor statutes, acts and regulations.  References to any agreement, instrument or document (a) shall include all schedules, exhibits, annexes and other attachments thereto and (b) shall be construed as referring to such agreement, instrument or other document as from time to time amended, amended and restated, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein or in any other Loan Document).  The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.  Unless otherwise specified herein Dollar ($) baskets set forth in the representations and warranty, covenants and event of default provisions of this Agreement (and other similar baskets) are calculated as of each date of measurement by the Dollar Equivalent Amount thereof as of such date of measurement. Reference to a Loan Party’s “knowledge” or similar concept means actual knowledge of a senior officer, or knowledge that a senior officer would have obtained if he or she had engaged in good faith and diligent performance of his or her duties, including reasonably specific inquiries of employees or agents and a good faith attempt to ascertain the matter.

2.           LOANS.

2.1.         Amount of Loans.

(a)          Revolving Loans.  Subject to the terms and conditions of this Agreement, each Lender with a Revolving Loan Commitment will severally (and not jointly), from time to time prior to the Maturity Date, at Borrower Representative’s request, make revolving loans to Borrowers (“Revolving Loans”); provided that after giving effect to each such Revolving Loan, (A) the outstanding balance of all Revolving Loans plus fees and expenses which are due and payable by Borrowers under this Agreement but which have not been paid or charged to the Loan Account will not exceed the lesser of (x) the Maximum Revolving Facility Amount minus the amount of Reserves established against the Maximum Revolving Facility Amount and (y) the Borrowing Base, (B) the sum of each Lender’s outstanding balance of Revolving Loans will not exceed such Lender’s Revolving Loan Commitment and (C) none of the other Loan Limits for Revolving Loans will be exceeded.  All Revolving Loans shall be made in and repayable in Dollars.

(b)         Reserves.  Agent may, with concurrent written notice (absent exigent circumstances) to Borrower Representative, from time to time establish and revise reserves against the Borrowing Base and the Maximum Revolving Facility Amount in such amounts and of such types as Agent deems appropriate in its Permitted Discretion (“Reserves”) to reflect (i) events, conditions, contingencies or risks which affect or may affect (A) the Collateral or its value, or the enforceability, perfection or priority of the security interests and other rights of Agent in the Collateral or (B) the assets, business or prospects of any Borrower or any Loan Party Obligor (including the Dilution Reserve and the Specified Customer Dilution Reserve), (ii) Agent’s good faith concern that any Collateral report or financial information furnished by or on behalf of any Borrower or any Loan Party Obligor to Agent is or may have been incomplete, inaccurate or misleading in any material respect, (iii) any fact or circumstance which Agent determines in good faith constitutes, or could constitute, a Default or Event of Default, or (iv) past due Taxes, or (v) any other events or circumstances which Agent determines in good faith make the establishment or revision of a Reserve prudent.  In no event shall the establishment of a Reserve in respect of a particular actual or contingent liability obligate Agent to make advances to pay such liability or otherwise obligate Agent with respect thereto.

2.2.         Protective Advances; Overadvances.

(a)         Notwithstanding any contrary provision of this Agreement or any other Loan Document, at any time (i) after the occurrence and during the continuance of a Default or Event of Default or (ii) that any of the other applicable conditions precedent set forth in Section 4 or otherwise are not satisfied, Agent is authorized by each Borrower and each Lender, from time to time, in Agent’s sole discretion, to make such Revolving Loans to, or for the benefit of, any Borrower, as Agent in its sole discretion deems necessary or desirable (1) to maintain, preserve or protect the Collateral, or any portion thereof, or (2) to enhance the likelihood of repayment of the Obligations (the Revolving Loans described in this Section 2.2 shall be referred to as “Protective Advances”).  Notwithstanding any contrary provision of this Agreement or any other Loan Document, Agent may disburse the proceeds of any Protective Advance to any Borrower or to such other Person(s) as Agent determines in its sole discretion.  All Protective Advances shall be payable immediately upon demand.  Notwithstanding the foregoing, without the consent of the Required Lenders, (i) the aggregate amount of all Protective Advances outstanding at any time shall not exceed an amount equal to ten percent (10%) of the Maximum Revolving Facility Amount (without giving effect to any Reserves established against the Maximum Revolving Facility Amount) and (ii) after giving effect to any such Protective Advances, the outstanding balance of all Revolving Loans will not exceed the Maximum Revolving Facility Amount.

(b)         Notwithstanding any contrary provision of this this Agreement, at the request of Borrower Representative, Agent may in its sole discretion (but with absolutely no obligation), make Revolving Loans to any Borrower, on behalf of the Lenders with a Revolving Loan Commitment, in amounts that exceed Excess Availability (any such excess Revolving Loans are herein referred to herein, collectively, as “Overadvances”); provided that, no Overadvance shall result in a Default due to any Borrower’s failure to comply with Section 2.1(a) for so long as such Overadvance remains outstanding in accordance with the terms of this paragraph, but solely with respect to the amount of such Overadvance.  Overadvances may be made even if the conditions precedent set forth in Section 4.2 have not been satisfied.  Absent consent of the Required Lenders, the authority of Agent to make Overadvances is limited to an aggregate amount not to exceed an amount equal to ten percent (10%) of the Maximum Revolving Facility Amount (without giving effect to any Reserves established against the Maximum Revolving Facility Amount) at any time.  No Overadvance may remain outstanding for more than thirty (30) days and no Overadvance shall cause any Lender’s outstanding balance of Revolving Loans to exceed its Revolving Loan Commitment.  Required Lenders may, at any time, revoke Agent’s authorization to make Overadvances; provided that any such revocation must be in writing and shall become effective prospectively upon Agent’s receipt thereof.

(c)        Upon the making of any Protective Advance or Overadvance (whether before or after the occurrence of a Default or Event of Default), each Lender with a Revolving Loan Commitment shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably purchased from Agent, without recourse or warranty, an undivided interest and participation in such Protective Advance or Overadvance, as applicable, in proportion to its Pro Rata Share of the Revolving Loan Commitment.  Agent may, at any time, require the applicable Lenders to fund their participations.  From and after the date, if any, on which any Lender is required to fund its participation in any Protective Advance or Overadvance, as applicable, purchased hereunder, Agent shall promptly distribute to such Lender, such Lender’s Pro Rata Share of all payments of principal and interest and all proceeds of Collateral received by such Agent in respect of such Loan.  Each Lender acknowledges and agrees that (i) Agent may elect to fund a Protective Advance or Overadvance through one or more of its Affiliates (including, without limitation, Eclipse Business Capital SPV, LLC) on behalf of Agent for administrative convenience and (ii) any such funding shall constitute a Protective Advance or Overadvance, as applicable, as if made by Agent subject to the terms and conditions of this Agreement.

2.3.         Notice of Borrowing; Manner of Revolving Loan Borrowing.

(a)          Borrower Representative shall request each Revolving Loan by submitting such request by ABLSoft (or, if requested by Agent, by delivering, in writing or by an Approved Electronic Communication, a Notice of Borrowing substantially in the form of Exhibit A hereto) (each such request a “Notice of Borrowing”).  Subject to the terms and conditions of this Agreement, Agent shall, except as provided in Section 2.2, deliver the amount of the Revolving Loan requested in the Notice of Borrowing for credit to any account of Borrowers as Borrower Representative may specify at a bank acceptable to Agent (provided that such account must be one identified on Section 3 of the Perfection Certificate and approved by Agent as an account to be used for funding of Loan proceeds) (any such account, a “Funding Account”) by wire transfer of immediately available funds (i) on the same day if the Notice of Borrowing is received by Agent on or before 10:00 a.m. Central Time on a Business Day or (ii) on the immediately following Business Day if the Notice of Borrowing is received by Agent after 10:00 a.m. Central Time on a Business Day or on a day that is not a Business Day.  Agent shall charge to the Revolving Loan Agent’s usual and customary fees for the wire transfer of each Loan.

(b)         Promptly following receipt of a Notice of Borrowing in accordance with this Section, Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Revolving Loan to be made as part of the requested borrowing.  Each Lender shall make each Revolving Loan to be made by such Lender hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 p.m., Central Time, to the account of Agent most recently designated by it for such purpose by notice to the Lenders in an amount equal to such Lender’s Pro Rata Share.  Unless Agent shall have received notice from a Lender prior to the proposed date of any borrowing that such Lender will not make available to Agent such Lender’s share of such borrowing, Agent may assume that such Lender has made (or will make) such share available on such date in accordance with this Section and may, in reliance upon such assumption, make available to Borrowers a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable borrowing available to Agent, then the applicable Lender and Borrowers severally agree to pay to Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to Borrowers to but excluding the date of payment to Agent, at the interest rate applicable to such Revolving Loans.  If such Lender pays such amount to Agent, then such amount shall constitute such Lender’s Revolving Loan included in such borrowing.

2.4.          Swingline Loans.

(a)          Agent, Swingline Lender and the Lenders agree that in order to facilitate the administration of this Agreement and the other Loan Documents, promptly after Borrower Representative requests a Revolving Loan, the Swingline Lender may elect to have the terms of this Section 2.4 apply to such borrowing request by advancing, on behalf of the Lenders with a Revolving Loan Commitment and in the amount requested, same day funds to Borrowers (each such Loan made solely by the Swingline Lender pursuant to this Section 2.4 is referred to in this Agreement as a “Swingline Loan”), with settlement among them as to the Swingline Loans to take place on a periodic basis as set forth in Section 2.4(c).  Each Borrower hereby authorizes the Swingline Lender to, and Swingline Lender shall, subject to the terms and conditions set forth herein (but without any further written notice required), deliver the amount of the Swingline Loan requested to the applicable Funding Account (i) on the same day if the Notice of Borrowing is received by Agent on or before 10:00 a.m. Central Time on a Business Day or (ii) on the immediately following Business Day if the Notice of Borrowing is received by Agent after 10:00 a.m. Central Time on a Business Day or on a day that is not a Business Day.  The aggregate amount of Swingline Loans outstanding at any time shall not exceed $5,000,000.  Swingline Lender shall not make any Swingline Loan if the requested Swingline Loan exceeds Excess Availability (before giving effect to such Swingline Loan).

(b)         Upon the making of a Swingline Loan (whether before or after the occurrence of a Default and regardless of whether a Settlement has been requested with respect to such Swingline Loan), each Lender with a Revolving Loan Commitment shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably purchased from the Swingline Lender, without recourse or warranty, an undivided interest and participation in such Swingline Loan in proportion to its Pro Rata Share of the Revolving Loan Commitment.  The Swingline Lender may, at any time, require the applicable Lenders to fund their participations.  From and after the date, if any, on which any Lender is required to fund its participation in any Swingline Loan purchased hereunder, Agent shall promptly distribute to such Lender, such Lender’s Pro Rata Share of all payments of principal and interest and all proceeds of Collateral received by such Agent in respect of such Loan.

(c)         Agent, on behalf of Swingline Lender, shall request settlement (a “Settlement”) with respect to Swingline Loans with the Lenders holding a Revolving Loan Commitment on at least a weekly basis or on any date that Agent elects, by notifying the applicable Lenders of such requested Settlement by facsimile, telephone, or e-mail no later than 12:00 p.m. Central Time on the date of such requested Settlement (the “Settlement Date”).  Each applicable Lender (other than the Swingline Lender) shall transfer the amount of such Lender’s Pro Rata Share of the outstanding principal amount of the Swingline Loan with respect to which Settlement is requested to Agent, to such account of Agent as Agent may designate, not later than 2:00 p.m., Central Time, on such Settlement Date.  Settlements may occur during the existence of a Default and whether or not the applicable conditions precedent set forth in Section 4.2 have then been satisfied.  Such amounts transferred to Agent shall be applied against the amounts of the Swingline Lender’s Swingline Loans and, together with such Swingline Lender’s Pro Rata Share of such Swingline Loan, shall constitute Revolving Loans of such Lenders, respectively.  If any such amount is not transferred to Agent by any applicable Lender on such Settlement Date, the Swingline Lender shall be entitled to recover such amount on demand from such Lender together with interest thereon.

2.5.         Repayments.

(a)          Revolving Loans.  If at any time for any reason whatsoever (including as a result of currency fluctuations) (i) the outstanding balance of all Revolving Loans exceeds the lesser of (x) the Maximum Revolving Facility Amount minus Reserves established against the Maximum Revolving Facility Amount and (y) the Borrowing Base or (ii) any of the Loan Limits for Revolving Loans are exceeded, then, in each case, Borrowers will immediately pay to Agent such amounts as shall cause Borrowers to eliminate such excess.

(b)          Reserved.

(c)          Maturity Date Payments.  All remaining outstanding monetary Obligations (including, all accrued and unpaid fees described in the Agent Fee Letter) shall be payable in full on the Maturity Date.

2.6.         Prepayments / Voluntary Termination / Application of Prepayments.

(a)         Voluntary Termination of Loan Facilities.  Borrower Representative may, on at least thirty (30) days’ prior written notice received by Agent (which notice may be conditioned upon the closing of another transaction), permanently terminate the Loan facilities and the Revolving Loan Commitments by repaying all of the outstanding Obligations, including all principal, interest and fees with respect to the Revolving Loans, and an Early Termination Fee in the amount specified in the Agent Fee Letter.  From and after such date of termination, Agent shall have no obligation whatsoever to extend any additional Loans, and all of its lending commitments hereunder shall be terminated.

(b)        Voluntary Reduction of Loan Facilities.  Borrower Representative may, at its option from time to time (but in no event more than five (5) times prior to the Maturity Date), permanently reduce the aggregate Maximum Revolving Facility Amount and the Revolving Loan Commitments (by a corresponding amount) upon at least thirty (30) days’ prior written notice to Agent, which notice shall specify the amount and effective date of the reduction and may be conditioned upon the closing of another transaction.  Each reduction (i) shall be in a minimum amount of $2,500,000, (ii) shall not reduce the Maximum Revolving Facility Amount and the Revolving Loan Commitments to an amount less than the aggregate principal amount of Revolving Loans outstanding at such time (unless accompanied by a corresponding prepayment of such outstanding Revolving Loans), and (iii) shall not reduce the Maximum Revolving Facility Amount and the Revolving Loan Commitments to an amount less than $10,000,000.  On the effective date of each permanent reduction of the Maximum Revolving Facility Amount and the Revolving Loan Commitments, Borrowers will be required to pay the Early Termination Fee with respect to the amount by which the Maximum Revolving Facility Amount and the Revolving Loan Commitments are reduced.

2.7.         Obligations Unconditional.

(a)         The payment and performance of all Obligations shall constitute the absolute and unconditional obligations of each Loan Party Obligor, and shall be independent of any defense or right of set-off, recoupment or counterclaim that any Loan Party Obligor or any other Person might otherwise have against Agent, any Lender or any other Person.  All payments required by this Agreement or the other Loan Documents shall be made in Dollars (unless payment in a different currency is expressly provided otherwise in the applicable Loan Document) and paid without abatement, diminution or set-off.

(b)          If, at any time and from time to time after the Closing Date (or at any time before or after the Closing Date with respect to the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines or directives thereunder or issued in connection therewith), (a) any change in any existing law, regulation, treaty or directive or in the interpretation or application thereof, (b) any new law, regulation, treaty or directive enacted or application thereof or (c) compliance by Agent with any request or directive (whether or not having the force of law) from any Governmental Authority, central bank or comparable agency (i) subjects Agent or any Lender to any Tax (other than (x) Indemnified Taxes or (y) Excluded Taxes) on its loans, loan principal, letters of credit, commitments or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto or (ii) imposes, modifies or deems applicable any reserve (including any reserve imposed by the FRB, but excluding any reserve included in the determination of the LIBOR Rate), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by Agent or any Lender or imposes on Agent or any Lender any other condition affecting its LIBOR Loans or its obligation to make LIBOR Loans, the result of which is to increase the cost to (or to impose a cost on) Agent or any Lender of making or maintaining any LIBOR Loan or (iii) imposes on Agent or any Lender any other condition or increased cost in connection with the transactions contemplated thereby or participations therein, and the result of any of the foregoing is to increase the cost to Agent or any Lender of making or continuing any Loan or to reduce any amount receivable hereunder or under any other Loan Documents, then, in each such case, Borrowers shall promptly pay to Agent or such Lender, when notified to do so by Agent or such Lender, any additional amounts necessary to compensate Agent or such Lender for such additional cost or reduced amount as determined by Agent or such Lender.  Each such notice of additional amounts payable pursuant to this Section 2.7(b) submitted by Agent or any Lender, as applicable, to Borrower Representative shall, absent manifest error, be final, conclusive and binding for all purposes.

(c)          This Section 2.7 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.

2.8.         Reversal of Payments.  To the extent that any payment or payments made to or received by Agent or any Lender pursuant to this Agreement or any other Loan Document are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to any trustee, receiver or other Person under any state, federal or other bankruptcy or other such applicable law, then, to the extent thereof, such amounts (and all Liens, rights and remedies relating thereto) shall be revived as Obligations (secured by all such Liens) and continue in full force and effect under this Agreement and under the other Loan Documents as if such payment or payments had not been received by Agent or such Lender.  This Section 2.8 shall remain operative even after the Termination Date and shall survive the payment in full of all of the Loans.

2.9.         Notes.  The Loans and Commitments shall, at the request of any Lender, be evidenced by one or more promissory notes in form and substance reasonably satisfactory to such Lender.  However, if such Loans are not so evidenced, such Loans may be evidenced solely by entries upon the books and records maintained by Agent.

2.10.      Defaulting Lenders.  Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, the following provisions shall apply for so long as such Lender is a Defaulting Lender:

(a)          Unused Line Fees pursuant to the Agent Fee Letter shall cease to accrue on the unfunded portion of the Revolving Loan Commitment of such Defaulting Lender;

(b)          Any amount payable to a Defaulting Lender hereunder (whether on account of principal, interest, fees or otherwise) shall, in lieu of being distributed to such Defaulting Lender, be retained by Agent in a segregated account and, subject to any applicable requirements of law, be applied at such time or times as may be determined by Agent (i) first, to the payment of any amounts owing by such Defaulting Lender to Agent hereunder, (ii) second, to the funding of any Revolving Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by Agent, (iii) third, if so determined by Agent and Borrowers, held in such account as cash collateral for future funding obligations of the Defaulting Lender under this Agreement, (iv) fourth, pro rata, to the payment of any amounts owing to Borrowers or the Lenders as a result of any judgment of a court of competent jurisdiction obtained by Borrowers or any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement, and (v) fifth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if such payment is made at a time when the conditions set forth in Section 4.2 are satisfied, such payment shall be applied solely to prepay the Revolving Loans of all Lenders that are not Defaulting Lenders pro rata prior to being applied to the prepayment of any Loans, or reimbursement obligations owed to, any Defaulting Lender.

(c)          No Defaulting Lender shall have any right to approve or disapprove any amendment, waiver, consent or any other action the Lenders or the Required Lenders have taken or may take hereunder; provided that any waiver, amendment or modification requiring the consent of all Lenders or each directly affected Lender which affects such Defaulting Lender differently than other affected Lenders shall require the consent of such Defaulting Lender.

2.11.       Appointment of Borrower Representative.

(a)          Each Borrower hereby irrevocably appoints and constitutes Borrower Representative as its agent and attorney-in-fact to request and receive Loans in the name or on behalf of such Borrower and any other Borrowers, deliver Notices of Borrowing, and Borrowing Base Certificates, give instructions with respect to  the disbursement of the proceeds of the Loans, giving and receiving all other notices and consents hereunder or under any of the other Loan Documents and taking all other actions (including in respect of compliance with covenants) in the name or on behalf of any Borrower or Borrowers pursuant to this Agreement and the other Loan Documents. Agent may disburse the Loans to such bank account of Borrower Representative or a Borrower or otherwise make such Loans to a Borrower, in each case as Borrower Representative may designate or direct, without notice to any other Borrower. Notwithstanding anything to the contrary contained herein, Agent may at any time and from time to time require that Loans to or for the account of any Borrower be disbursed directly to an operating account of such Borrower.

(b)          Borrower Representative hereby accepts the appointment by Borrowers to act as the agent and attorney-in-fact of Borrowers pursuant to this Section 2.11. Borrower Representative shall ensure that the disbursement of any Loans that are at any time requested by or to be remitted to or for the account of a Borrower requested on behalf of a Borrower hereunder, shall be remitted or issued to or for the account of such Borrower.

(c)        Each Borrower hereby irrevocably appoints and constitutes Borrower Representative as its agent to receive statements on account and all other notices from Agent and Lenders with respect to the Obligations or otherwise under or in connection with this Agreement and the other Loan Documents.

(d)          Any notice, election, representation, warranty, agreement or undertaking made or delivered by or on behalf of any Borrower by Borrower Representative shall be deemed for all purposes to have been made or delivered by such Borrower, as the case may be, and shall be binding upon and enforceable against such Borrower to the same extent as if made or delivered directly by such Borrower.

(e)        No resignation by or termination of the appointment of Borrower Representative as agent and attorney-in-fact as aforesaid shall be effective, except after ten (10) Business Days’ prior written notice to Agent. If Borrower Representative resigns under this Agreement, Borrowers shall be entitled to appoint a successor Borrower Representative (which shall be a Borrower and shall be reasonably acceptable to Agent as such successor). Upon the acceptance of its appointment as successor Borrower Representative hereunder, such successor Borrower Representative shall succeed to all the rights, powers and duties of the resigning Borrower Representative and the term “Borrower Representative” shall mean such successor Borrower Representative for all purposes of this Agreement and the other Loan Documents, and the resigning or terminated Borrower Representative’s appointment, powers and duties as Borrower Representative shall be thereupon terminated.

2.12.      Joint and Several Liability

(a)          Joint and Several.  Each Borrower hereby agrees that such Borrower is jointly and severally liable for the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all Obligations owed or hereafter owing to Agent and Lenders by each other Borrower.  Each Borrower agrees that its obligation hereunder shall not be discharged until payment and performance, in full, of the Obligations has occurred, and that its obligations under this Section 2.12 shall be absolute and unconditional, irrespective of, and unaffected by,

(i)          the genuineness, validity, regularity, enforceability or any future amendment of, or change in, this Agreement, any other Loan Document or any other agreement, document or instrument to which any Borrower is or may become a party;

(ii)         the absence of any action to enforce this Agreement (including this Section 2.12) or any other Loan Document or the waiver or consent by Agent or any Lender with respect to any of the provisions thereof;

(iii)        the existence, value or condition of, or failure to perfect Agent’s Lien against, any security for the Obligations or any action, or the absence of any action, by Agent in respect thereof (including the release of any such security);

(iv)        the insolvency of any Loan Party or Other Obligor; or

(v)          any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor.

(b)         Waivers by Borrowers.  Each Borrower expressly waives all rights it may have now or in the future under any statute, or at common law, or at law or in equity, or otherwise, to compel Agent to marshal assets or to proceed in respect of the Obligations against any other Loan Party or Other Obligor, any other party or against any security for the payment and performance of the Obligations before proceeding against, or as a condition to proceeding against, such Borrower.  It is agreed among each Borrower, Agent and Lenders that the foregoing waivers are of the essence of the transaction contemplated by this Agreement and the other Loan Documents and that, but for the provisions of this Section 2.12 and such waivers, Agent and Lenders would decline to enter into this Agreement.

(c)          Benefit of Joint and Several Obligations.  Each Borrower agrees that the provisions of this Section 2.12 are for the benefit of Agent and Lenders and their successors, transferees, endorsees and assigns, and nothing herein contained shall impair, as between any other Borrower, Agent and any Lender, the obligations of such other Borrower under the Loan Documents.

(d)          Subordination of Subrogation, Etc.  Notwithstanding anything to the contrary in this Agreement or in any other Loan Document, each Borrower hereby expressly and irrevocably subordinates to payment of the Obligations any and all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off and any and all defenses available to a surety, guarantor or accommodation co-obligor with respect to any other Loan Party or any Other Obligor until the Obligations are indefeasibly paid in full in cash.  Each Borrower acknowledges and agrees that this subordination is intended to benefit Agent and Lenders and shall not limit or otherwise affect such Borrower’s liability hereunder or the enforceability of this Section 2.12, and that Agent and Lenders and their successors and assigns are intended third party beneficiaries of the waivers and agreements set forth in this Section 2.12(d).

(e)         Election of Remedies.  If Agent may, under applicable law, proceed to realize its benefits under any of the Loan Documents giving Agent a Lien upon any Collateral, whether owned by any Borrower or by any other Person, either by judicial foreclosure or by non-judicial sale or enforcement, Agent may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this Section 2.12.  If, in the exercise of any of its rights and remedies, Agent shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Borrower or any other Person, whether because of any applicable laws pertaining to “election of remedies” or the like, each Borrower hereby consents to such action by Agent and waives any claim based upon such action, even if such action by Agent shall result in a full or partial loss of any rights of subrogation that each Borrower might otherwise have had but for such action by Agent.

(f)          Contribution with Respect to Guaranty Obligations.

(i)          To the extent that any Borrower shall make a payment under this Section 2.12 of all or any of the Obligations (other than Loans made to that Borrower for which it is primarily liable) (a “Guarantor Payment”) that, taking into account all other Guarantor Payments then previously or concurrently made by any other Borrower, exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied by such Guarantor Payment in the same proportion that such Borrower’s “Allocable Amount” (as defined below) (as determined immediately prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each of the Borrowers as determined immediately prior to the making of such Guarantor Payment, then, following indefeasible payment in full in cash of the Obligations and termination of the Commitments, such Borrower shall be entitled to receive contribution and indemnification payments from, and be reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment.

(ii)         As of any date of determination, the “Allocable Amount” of any Borrower shall be equal to the maximum amount of the claim that could then be recovered from such Borrower under this Section 2.12 without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law.

(iii)       This Section 2.12(f) is intended only to define the relative rights of Borrowers and nothing set forth in this Section 2.12(f) is intended to or shall impair the obligations of Borrowers, jointly and severally, to pay any amounts as and when the same shall become due and payable in accordance with the terms of this Agreement, including Section 2.12(a).  Nothing contained in this Section 2.12(f) shall limit the liability of any Borrower to pay the Loans made directly or indirectly to that Borrower and accrued interest, fees and expenses with respect thereto for which such Borrower shall be primarily liable.

(iv)        The parties hereto acknowledge that the rights of contribution and indemnification hereunder shall constitute assets of each Borrower to which such contribution and indemnification is owing.

(v)         The rights of the indemnifying Borrowers against other Loan Parties under this Section 2.12(f) shall be exercisable upon the full and indefeasible payment of the Obligations and the termination of the Commitments.

(g)          Liability Cumulative.  The liability of Borrowers under this Section 2.12 is in addition to and shall be cumulative with all liabilities of each Borrower to Agent and Lenders under this Agreement and the other Loan Documents to which such Borrower is a party or in respect of any Obligations or obligation of the other Borrower, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.

3.           INTEREST AND FEES; LOAN ACCOUNT.

3.1.        Interest.  All Loans and other monetary Obligations shall bear interest at the interest rate(s) set forth in Section 1(e) of Annex I, and accrued interest shall be payable (a) on the first day of each month in arrears, (b) upon a prepayment of Loan in accordance with Section 2.6 and (c) on the Maturity Date; provided that after the occurrence and during the continuation of an Event of Default, all Loans and other monetary Obligations shall bear interest at a rate per annum equal to two (2) percentage points (2.00%) in excess of the rate otherwise applicable thereto (the “Default Rate”), and all such interest shall be payable on demand.  Changes in the interest rate shall be effective as of the first day of each month based on the LIBOR Rate or Base Rate, as applicable, in effect on such date.  Subject to Section 3.6 and so long as no Event of Default shall have occurred and be continuing, all Loans shall constitute LIBOR Loans.  Upon the occurrence and during the continuance of an Event of Default, at the election of Agent, all Loans shall constitute Base Rate Loans.

3.2.        Fees.  Borrowers shall pay Agent the fees set forth in the Agent Fee Letter on the dates provided therefor, which fees are in addition to all fees and other sums payable by Borrowers or any other Person to Agent under this Agreement or under any other Loan Document and, in each case, are not refundable once paid.

3.3.        Computation of Interest and Fees.  All interest and fees shall be calculated daily on the outstanding monetary Obligations based on the actual number of days elapsed in a year of 360 days.

3.4.        Loan Account; Monthly Accountings.  Agent shall maintain a loan account for Borrowers reflecting all outstanding Loans, along with interest accrued thereon and such other items reflected therein (the “Loan Account”), and shall provide Borrower Representative with a monthly accounting reflecting the activity in the Loan Account, viewable by Borrowers on ABLSoft.  Each accounting shall be deemed correct, accurate and binding on Borrowers and an account stated (except for reverses and reapplications of payments made and corrections of errors discovered by Agent), unless Borrower Representative notifies Agent in writing to the contrary within thirty days after such account is rendered, describing the nature of any alleged errors or omissions.  However, Agent’s failure to maintain the Loan Account or to provide any such accounting shall not affect the legality or binding nature of any of the Obligations.  Interest, fees and other monetary Obligations due and owing under this Agreement may, in Agent’s discretion, be charged to the Loan Account, and will thereafter be deemed to be Revolving Loans and will bear interest at the same rate as other Revolving Loans.

3.5.        Further Obligations; Maximum Lawful Rate.  With respect to all monetary Obligations for which the interest rate is not otherwise specified herein (whether such Obligations arise hereunder or under any other Loan Document, or otherwise), such Obligations shall bear interest at the rate(s) in effect from time to time with respect to the Revolving Loans and shall be payable upon demand by Agent.  In no event shall the interest charged with respect to any Loan or any other Obligation exceed the maximum amount permitted under applicable law.  Notwithstanding anything to the contrary herein or elsewhere, if at any time the rate of interest payable or other amounts hereunder or under any other Loan Document (the “Stated Rate”) would exceed the highest rate of interest or other amount permitted under any applicable law to be charged (the “Maximum Lawful Rate”), then for so long as the Maximum Lawful Rate would be so exceeded, the rate of interest and other amounts payable shall be equal to the Maximum Lawful Rate; provided that if at any time thereafter the Stated Rate is less than the Maximum Lawful Rate, Borrowers shall, to the extent permitted by applicable law, continue to pay interest and such other amounts at the Maximum Lawful Rate until such time as the total interest and other such amounts received is equal to the total interest and other such amounts which would have been received had the Stated Rate been (but for the operation of this provision) the interest rate payable or such other amounts payable.  Thereafter, the interest rate and such other amounts payable shall be the Stated Rate unless and until the Stated Rate again would exceed the Maximum Lawful Rate, in which event this provision shall again apply.  In no event shall the total interest or other such amounts received by Agent exceed the amount which it could lawfully have received had the interest and other such amounts been calculated for the full term hereof at the Maximum Lawful Rate. If, notwithstanding the prior sentence, Agent has received interest or other such amounts hereunder in excess of the Maximum Lawful Rate, such excess amount shall be applied to the reduction of the principal balance of the Loans or to other Obligations (other than interest) payable hereunder, and if no such principal or other Obligations are then outstanding, such excess or part thereof remaining shall be paid to Borrowers.  In computing interest payable with reference to the Maximum Lawful Rate applicable to any Lender, such interest shall be calculated at a daily rate equal to the Maximum Lawful Rate divided by the number of days in the year in which such calculation is made.

3.6.        Certain Provisions Regarding LIBOR Loans; Replacement of Lenders.

(a)          Inadequate or Unfair Basis.  If Agent or any Lender reasonably determines (which determination shall be binding and conclusive on Borrowers) that, by reason of circumstances affecting the interbank Eurodollar market, adequate and reasonable means do not exist for ascertaining the applicable LIBOR Rate, then Agent or such Lender shall promptly notify Borrower Representative (and Agent, if applicable) thereof and, so long as such circumstances shall continue, (i) Agent and/or such Lender shall be under no obligation to make any LIBOR Loans and (ii) on the last day of the current calendar month, each LIBOR Loan shall, unless then repaid in full, automatically convert to a Base Rate Loan.

(b)         Change in Law.  If any change in, or the adoption of any new, law, treaty or regulation, or any change in the interpretation of any applicable law or regulation by any Governmental Authority charged with the administration thereof, would make it (or in the good faith judgment of Agent or the applicable Lender cause a substantial question as to whether it is) unlawful for Agent or such Lender to make, maintain or fund LIBOR Loans, then Agent or such Lender shall promptly notify Borrower Representative and, so long as such circumstances shall continue, (i) Agent or such Lender shall have no obligation to make any LIBOR Loan and (ii) on the last day of the current calendar month for each LIBOR Loan (or, in any event, on such earlier date as may be required by the relevant law, regulation or interpretation), such LIBOR Loan shall, unless then repaid in full, automatically convert to a Base Rate Loan.

(c)          If any Borrower becomes obligated to pay additional amounts to any Lender pursuant to Section 2.7(b), or any Lender gives notice of the occurrence of any circumstances described in Section 2.7(b), or if Lender becomes a Defaulting Lender, Borrowers may designate another Person engaged in the making of commercial loans in the Ordinary Course of Business which is acceptable to Agent in its Permitted Discretion (such other Person being called a “Replacement Lender”) to purchase the Loans and Commitments of such Lender and such Lender’s rights hereunder, without recourse to or warranty by, or expense to, such Lender, for a purchase price equal to the outstanding principal amount of the Loans payable to such Lender plus any accrued but unpaid interest on such Loans and all accrued but unpaid fees owed to such Lender and any other amounts payable to such Lender under this Agreement, and to assume all the obligations of such Lender hereunder, and, upon such purchase and assumption (pursuant to an Assignment and Assumption), such Lender shall no longer be a party hereto or have any rights hereunder (other than rights with respect to indemnities and similar rights applicable to such Lender prior to the date of such purchase and assumption) and shall be relieved from all obligations to Borrowers hereunder, and the Replacement Lender shall succeed to the rights and obligations of such Lender hereunder.

(d)         LIBOR Discontinuation.  Notwithstanding anything contained herein to the contrary, if Agent reasonably determines after the Closing Date that the LIBOR Rate has been discontinued or is no longer available as a benchmark interest rate, Agent shall select a comparable successor rate in its reasonable discretion (in consultation with Borrowers), which successor rate shall be applied in a manner consistent with market practice taking into account the benchmark interest rates applicable to funding sources for the Lenders, and will promptly so notify each Lender.

4.           CONDITIONS PRECEDENT.

4.1.        Conditions to Initial Loans.

Each Lender’s obligation to fund Loans on the Closing Date under this Agreement is subject to the following conditions precedent (as well as any other conditions set forth in this Agreement or any other Loan Document), all of which must be satisfied in a manner acceptable to Agent (and as applicable, pursuant to documentation which in each case is in form and substance acceptable to Agent):

(a)         each Loan Party Obligor shall have duly executed and/or delivered, or, as applicable, shall have caused such other applicable Persons to have duly executed and or delivered, to Agent such agreements, instruments, documents, proxies, financial statements, projections, lien searches, legal opinions, title insurances, assessments, appraisals, and certificates as Agent may require, including such other agreements, payoff letters, lien terminations, instruments, documents, proxies, financial statements, projections, lien searches, legal opinions, title insurance, assessments, appraisals, and certificates listed on the closing checklist attached hereto as Exhibit B;

(b)          Agent shall have completed its business and legal due diligence pertaining to the Loan Parties and their respective businesses and assets, with results thereof satisfactory to Agent in its sole discretion;

(c)          each Lender’s obligations and commitments under this Agreement shall have been approved by such Lender’s Credit Committee;

(d)          after giving effect to such Loans, as well as to the payment of all trade payables older than sixty days past due and the consummation of all transactions contemplated hereby to occur on the Closing Date, closing costs and any book overdraft, Excess Availability shall be no less than $1,400,000;

(e)          since February 2, 2019, no event shall have occurred which has had, or could reasonably be expected to have, a Material Adverse Effect on any Loan Party; and

(f)          Borrowers shall have paid to Agent all fees and expenses payable in the amounts and at the times separately agreed in writing between the Borrowers and the Agent, including those set forth in the Agent Fee Letter.

4.2.        Conditions to all Loans.  No Lender shall be obligated to fund any Loans, unless the following conditions are satisfied:

(a)          Borrower Representative shall have provided to Agent such information as Agent may require in order to determine the Borrowing Base (including the items set forth in Section 7.15(a), (b) and (c) (as applicable)), as of such borrowing or issue date, after giving effect to such Loans;

(b)         each of the representations and warranties set forth in this Agreement and in the other Loan Documents shall be true and correct in all respects as of the date such Loan is made (or, to the extent any representations or warranties are expressly made solely as of an earlier date, such representations and warranties shall be true and correct as of such earlier date), both before and after giving effect thereto; and

(c)          no Default or Event of Default shall be in existence, both before and after giving effect thereto.

Each request (or deemed request) by Borrowers for funding of a Loan shall constitute a representation by each Borrower that the foregoing conditions are satisfied on the date of such request and on the date of such funding or issuance.  As an additional condition to any funding, issuance or grant, Agent shall have received such other information, documents, instruments and agreements as it deems appropriate in connection therewith.

5.           COLLATERAL.

5.1.        Grant of Security Interest.  To secure the full payment and performance of all of the Obligations, each Loan Party Obligor and the Parent hereby assigns to Agent and grants to Agent, for itself and on behalf of the Lenders, a continuing security interest in all property of each Loan Party Obligor and the Parent, whether tangible or intangible, real or personal, now or hereafter owned, existing, acquired or arising and wherever now or hereafter located, and whether or not eligible for lending purposes, including:  (a) all Accounts (whether or not Eligible Accounts or Eligible Specified Customer Accounts) and Credit Card Receivables (whether or not Eligible Credit Card Receivables) and all Goods whose sale, lease or other disposition by any Loan Party Obligor or the Parent has given rise to Accounts and have been returned to, or repossessed or stopped in transit by, any Loan Party Obligor or the Parent; (b) all Chattel Paper (including Electronic Chattel Paper), Instruments, Documents, and General Intangibles (including all patents, patent applications, trademarks, trademark applications, trade names, trade secrets, goodwill, copyrights, copyright applications, registrations, licenses, software, franchises, customer lists, tax refund claims, claims against carriers and shippers, guaranty claims, contracts rights, payment intangibles, security interests, security deposits and rights to indemnification); (c) all Inventory (whether or not Eligible Inventory or Eligible In-Transit Inventory); (d) all Goods (other than Inventory), including Equipment, vehicles, and Fixtures; (e) all Investment Property, including all rights, privileges, authority, and powers of each Loan Party Obligor and the Parent as an owner or as a holder of Pledged Equity, including all economic rights, all control rights, authority and powers, and all status rights of each Loan Party Obligor and the Parent as a member, equity holder or shareholder, as applicable, of each Issuer; (f) all Deposit Accounts, bank accounts, deposits, money and cash; (g) all Letter-of-Credit Rights; (h) all Commercial Tort Claims, including those listed in Section 2 of the Perfection Certificate (if any); (i) all Supporting Obligations; (j) [reserved]; (k) [reserved]; (l) all Intellectual Property; (m) any other property of any Loan Party Obligor now or hereafter in the possession, custody or control of Agent or any agent or any parent, Affiliate or Subsidiary of Agent, any Lender or any Participant with Lender in the Loans, for any purpose (whether for safekeeping, deposit, collection, custody, pledge, transmission or otherwise); and (n) all additions and accessions to, substitutions for, and replacements, products and Proceeds of the foregoing property, including proceeds of all insurance policies insuring the foregoing property (including hazard, flood and credit insurance), and all of each Loan Party Obligor’s and the Parent’s books and records relating to any of the foregoing and to any Loan Party’s business.   Notwithstanding anything to the contrary contained in clauses (a) through (n) above, the security interest created by this Agreement shall not extend to, and the term “Collateral” shall not include, any Excluded Property.

5.2.        Possessory Collateral.  Promptly, but in any event no later than thirty (30) days after any Loan Party Obligor’s or Parent’s receipt of any portion of the Collateral in an amount in excess of $100,000 in the aggregate evidenced by an agreement, Instrument or Document, including any Tangible Chattel Paper and any Investment Property consisting of certificated securities, such Loan Party Obligor or the Parent shall deliver the original thereof to Agent together with an appropriate endorsement or other specific evidence of assignment thereof to Agent (in form and substance reasonably acceptable to Agent).  If an endorsement or assignment of any such items shall not be made for any reason, Agent is hereby irrevocably authorized, as attorney and agent-in-fact (coupled with an interest) for each Loan Party Obligor and the Parent, to endorse or assign the same on such Loan Party Obligor’s or the Parent’s behalf.

5.3.        Further Assurances.  Each Loan Party Obligor and the Parent shall, at its own cost and expense, promptly and duly take, execute, acknowledge and deliver (and/or use commercially reasonable efforts to cause each other applicable Person to take, execute, acknowledge and deliver) all such further acts, documents, agreements and instruments as Agent may from time to time reasonably require in order to (a) carry out the intent and purposes of the Loan Documents and the transactions contemplated thereby, (b) establish, create, preserve, protect and perfect a first priority lien (subject only to Permitted Liens) in favor of Agent in all the Collateral (wherever located) from time to time owned by the Loan Party Obligors and in all capital stock and other equity from time to time issued by the Loan Parties (other than Parent) constituting Collateral (including appraisals of real property in compliance with FIRREA), (c) cause each domestic Subsidiary of a Borrower to guaranty all of the Obligations, all pursuant to documentation that is in form and substance reasonably satisfactory to Agent and (d) facilitate the collection of the Collateral.  Without limiting the foregoing, each Loan Party Obligor and the Parent shall, at its own cost and expense, promptly and duly take, execute, acknowledge and deliver (and/or use commercially reasonable efforts to cause each other applicable Person to take, execute, acknowledge and deliver) to Agent all promissory notes, security agreements, agreements with landlords, mortgagees and processors and other bailees, subordination and intercreditor agreements, credit card processor agreements, credit card notification agreements and other agreements, instruments and documents, in each case in form and substance reasonably acceptable to Agent, as Agent may reasonably request from time to time to perfect, protect and maintain Agent’s security interests in the Collateral, including the required priority thereof, and to fully carry out the transactions contemplated by the Loan Documents.

5.4.       UCC Financing Statements.  Each Loan Party Obligor and the Parent authorizes Agent to file, transmit or communicate, as applicable, from time to time, UCC Financing Statements, along with amendments and modifications thereto, in all filing offices selected by Agent, listing such Loan Party Obligor or the Parent as the Debtor and Agent as the Secured Party, and describing the collateral covered thereby in such manner as Agent may elect, including using descriptions such as “all personal property of debtor” or “all assets of debtor,” or words of similar effect, in each case without such Loan Party Obligor’s signature.  Each Loan Party Obligor also hereby ratifies its authorization for Agent to have filed, in any filing office, any Financing Statements filed prior to the date hereof.

5.5.        Releases. Upon (i) any sale or other disposition of Collateral to a Person that is not a Loan Party Obligor that is not prohibited by this Agreement, (ii) the Termination Date or (iii) the release of any Loan Party as a Loan Party Obligor pursuant to this Agreement, the security interests in favor of the Agent on such Collateral being disposed of (or, in the case of clause (ii), all of the Collateral or, in the case of clause (iii), the Collateral owned or held by such Loan Party) shall automatically be released and, at the request of the relevant Loan Party, the Agent shall execute and deliver a release of such assets in form reasonably satisfactory to the Agent and Borrower.

6.           CERTAIN PROVISIONS REGARDING ACCOUNTS, INVENTORY, COLLECTIONS AND APPLICATIONS OF PAYMENTS.

6.1.        Lock Boxes and Blocked Accounts.

(a)          Each Loan Party Obligor and the Parent hereby represents and warrants that all Deposit Accounts and all other depository and other accounts maintained by each Loan Party Obligor and the Parent as of the Amendment No. 1 Effective Date are described in Section 3 of the Perfection Certificate, which description includes for each such account the name of the Loan Party Obligor or Parent maintaining the account, the name of the financial institution at which the account is maintained, the account number and the purpose of the account.  After the Amendment No. 1 Effective Date, neither Parent nor any Loan Party Obligor shall open any new Deposit Account or any other depository or other account without the prior written consent of Agent and without updating Section 3 of the Perfection Certificate to reflect such Deposit Account or other account.  No Deposit Account or other account of any Loan Party Obligor or Parent shall at any time constitute a Restricted Account other than accounts expressly indicated on Section 3 of the Perfection Certificate as being Restricted Accounts (and each Loan Party Obligor hereby represents and warrants that each such account shall at all times meet the requirements set forth in the definition of “Restricted Account” to qualify as a Restricted Account).  Each Loan Party Obligor will, at its expense, establish (and revise from time to time as Agent may reasonably require) procedures acceptable to Agent, in Agent’s Permitted Discretion, for the collection of checks, wire transfers and all other proceeds of all of such Loan Party Obligor’s Accounts and other Collateral (“Collections”), which shall include (a) directing all Account Debtors to send all Account proceeds directly to a post office box designated by Agent either in the name of such Loan Party Obligor (but as to which Agent has exclusive access) or, at Agent’s option, in the name of Agent (a “Lock Box”) and (b) depositing all Collections received by such Loan Party Obligor into one or more bank accounts maintained in the name of such Loan Party Obligor (but as to which Agent has exclusive access) or, at Agent’s option, in the name of Agent (each, a “Blocked Account”), under an arrangement reasonably acceptable to Agent with a depository bank reasonably acceptable to Agent, pursuant to which all funds deposited into each Blocked Account are to be transferred to Agent in such manner, and with such frequency, as Agent shall specify, and/or (c) a combination of the foregoing.  Each Loan Party Obligor agrees to execute, and to cause its depository banks and other account holders to execute, such Lock Box and Blocked Account control agreements and other documentation as Agent shall require from time to time in connection with the foregoing, all in form and substance reasonably satisfactory to Agent, and in any event such arrangements and documents must be in place on the date hereof with respect to accounts in existence on the date hereof, or prior to any such account being opened with respect to any such account opened after the date hereof, in each case excluding Restricted Accounts.  Prior to the Closing Date, Borrowers shall deliver to Agent a complete and executed Authorized Accounts Form regarding each Borrower’s operating account(s) into which the proceeds of Loans are to be paid in the form of Exhibit D annexed hereto.

(b)         Section 8 of the Perfection Certificate also describes all arrangements as of the Closing Date to which any Loan Party Obligor is a party with respect to the processing and/or payment to such Loan Party of the proceeds of any credit card charges for sales made by such Loan Party.  Section 8 of the Perfection Certificate further lists each deposit account to which all payments due from all Credit Card Issuers and Credit Card Processors are made as of the Closing Date.  On or prior to (i) the date that is thirty (30) days after the Closing Date, with respect to arrangements in place as of the Closing Date, and (ii) on or within 10 Business Days of entering into any new arrangement with any Credit Card Issuer or Credit Card Processor, Borrower Representative shall deliver to Agent copies of notifications (each, a “Credit Card Notification”) reasonably satisfactory in form and substance to Agent which have been executed on behalf of such Loan Party Obligor and the applicable Credit Card Issuer or Credit Card Processor and delivered to such Loan Party Obligor’s credit card clearinghouses and processors listed in Section 8 of the Perfection Certificate (provided that, for the avoidance of doubt, prior to such date, (y) all payments due from all Credit Card Issuers and Credit Card Processors shall be deposited into the Blocked Accounts listed on Schedule 6.1(b), and (z) on a weekly basis, Borrower Representative shall provide Agent reports setting forth in reasonable detail the cash receipts from each Credit Card Issuer and Credit Card Processor; provided, however, that, if the average daily balance of Credit Card Receivables exceeds $25,000 for a period of 10 consecutive Business Days, Borrower Representative shall provide such reports on a daily basis beginning with the first business day after such 10 consecutive Business Day period until the date that the average daily balance of Credit Card Receivables is equal to or less than $25,000 for a period of 10 consecutive Business Days).  No Loan Party Obligor shall maintain any bank accounts or enter into any agreements with Credit Card Issuers or Credit Card Processors other than the ones expressly contemplated herein or in this Section 6.1.

(c)         Notwithstanding anything herein to the contrary, including, without limitation, the limitations on perfection actions set forth in Section 7.3, the Loan Parties and their Subsidiaries shall not maintain more than $125,000 in the aggregate at any time in non-U.S. depository, securities and/or other similar accounts.

6.2.        Application of Payments.  All amounts paid to or received by Agent in respect of monetary Obligations, from whatever source (whether from any Borrower or any other Loan Party Obligor pursuant to such other Loan Party Obligor’s guaranty of the Obligations, any realization upon any Collateral or otherwise) shall be applied by Agent to the Obligations in such order as Agent may elect, and absent such election shall be applied as follows:

(i)          FIRST, to reimburse Agent for all out-of-pocket costs and expenses, and all indemnified losses, incurred by Agent which are reimbursable to Agent in accordance with this Agreement or any of the other Loan Documents;

(ii)         SECOND, to any accrued but unpaid interest on any Protective Advances;

(iii)        THIRD, to the outstanding principal of any Protective Advances;

(iv)        FOURTH, to any accrued but unpaid fees owing to Agent and Lenders under this Agreement and/or any other Loan Documents;

(v)         FIFTH, to any unpaid accrued interest on the Obligations;

(vi)        SIXTH, to the outstanding principal of the Loans; and

(vii)       SEVENTH, to the payment of any other outstanding Obligations; and after payment in full in cash of all of the outstanding monetary Obligations, any further amounts paid to or received by Agent in respect of the Obligations (so long as no monetary Obligations are outstanding) shall be paid over to Borrowers or such other Person(s) as may be legally entitled thereto.

For purposes of determining the Borrowing Base, such amounts will be credited to the Loan Account and the Collateral balances to which they relate upon Agent’s receipt of an advice from Agent’s Bank (set forth in Section (g) of Annex I) that such items have been credited to Agent’s account at Agent’s Bank (or upon Agent’s deposit thereof at Agent’s Bank in the case of payments received by Agent in kind), in each case subject to final payment and collection.  However, for purposes of computing interest on the Obligations, such items shall be deemed applied by Agent three (3) Business Days after Agent’s receipt of advice of deposit thereof at Agent’s Bank.

6.3.       Notification; Verification.  Agent or its designee may, from time to time:  (a) whether or not a Default or Event of Default has occurred, verify directly with the Account Debtors of the Loan Party Obligors (or by any reasonable manner and through any reasonable medium Agent considers advisable in the exercise of its Permitted Discretion) the validity, amount and other matters relating to the Accounts and Chattel Paper of the Loan Party Obligors, by means of mail, telephone or otherwise, either in the name of the applicable Loan Party Obligor or Agent or such other name as Agent may choose; (b) following the occurrence and during the continuance of a Default or Event of Default, notify Account Debtors of the Loan Party Obligors that Agent has a security interest in the Accounts of the Loan Party Obligors and direct such Account Debtors to make payment thereof directly to Agent; each such notification to be sent on the letterhead of such Loan Party Obligor and substantially in the form of Exhibit E annexed hereto; and (c) following the occurrence and during the continuance of a Default or Event of Default, demand, collect or enforce payment of any Accounts and Chattel Paper (but without any duty to do so) and, in furtherance of the foregoing, each Loan Party Obligor hereby authorizes Account Debtors to make payments directly to Agent and to rely on notice from Agent without further inquiry. Agent may on behalf of each Loan Party Obligor endorse all items of payment received by Agent that are payable to such Loan Party Obligor for the purposes described above.

6.4.        Power of Attorney.

Without limiting any of Agent’s and the other Lenders’ other rights under this Agreement or any other Loan Document, each Loan Party Obligor hereby grants to Agent an irrevocable power of attorney, coupled with an interest, authorizing and permitting Agent (acting through any of its officers, employees, attorneys or agents), at Agent’s option (and using its Permitted Discretion) but without obligation, with or without notice to such Loan Party Obligor, and at each Loan Party Obligor’s expense, to do any or all of the following, in such Loan Party Obligor’s name or otherwise:

(a)          at any time, while an Event of Default has occurred or is continuing,  (i) execute on behalf of such Loan Party Obligor any documents that Agent may, in its Permitted Discretion, deem advisable in order to perfect, protect and maintain Agent’s security interests, and priority thereof, in the Collateral and to fully consummate all the transactions contemplated by this Agreement and the other Loan Documents (including such Financing Statements and continuation Financing Statements, and amendments or other modifications thereto, as Agent shall reasonably deem necessary or appropriate) and to notify Account Debtors of the Loan Party Obligors in the manner contemplated by Section 6.3, (ii) endorse such Loan Party Obligor’s name on all checks and other forms of remittances received by Agent, (iii) pay any sums required on account of such Loan Party Obligor’s taxes or to secure the release of any Liens therefor, (iv) pay any amounts necessary to obtain, or maintain in effect, any of the insurance described in Section 7.14, (v) receive and otherwise take control in any manner of any cash or non-cash items of payment or Proceeds of Collateral, (vi) receive, open and dispose of all mail addressed to such Loan Party Obligor at any post office box or lockbox maintained by Agent for such Loan Party Obligor or at any other business premises of Agent and (vii) endorse or assign to Agent on such Loan Party Obligor’s behalf any portion of Collateral evidenced by an agreement, Instrument or Document if an endorsement or assignment of any such items is not made by such Loan Party Obligor pursuant to Section 5.2; and

(b)         at any time, after the occurrence and during the continuance of an Event of Default, (i) execute on behalf of such Loan Party Obligor any document exercising, transferring or assigning any option to purchase, sell or otherwise dispose of or lease (as lessor or lessee) any real or personal property which is part of the Collateral or in which Agent has an interest, (ii) execute on behalf of such Loan Party Obligor any invoices relating to any Accounts, any draft against any Account Debtor, any proof of claim in bankruptcy, any notice of Lien or claim, and any assignment or satisfaction of mechanic’s, materialman’s or other Lien, (iii) execute on behalf of such Loan Party Obligor any notice to any Account Debtor, (iv) pay, contest or settle any Lien, charge, encumbrance, security interest and adverse claim in or to any of the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same, (v) grant extensions of time to pay, compromise claims relating to, and settle Accounts, Chattel Paper and General Intangibles for less than face value and execute all releases and other documents in connection therewith, (vi) settle and adjust, and give releases of, any insurance claim that relates to any of the Collateral and obtain payment therefor, (vii) instruct any third party having custody or control of any Collateral or books or records belonging to, or relating to, such Loan Party Obligor to give Agent the same rights of access and other rights with respect thereto as Agent has under this Agreement or any other Loan Document, (viii) change the address for delivery of such Loan Party Obligor’s mail, (ix) vote any right or interest with respect to any Investment Property, and (x) instruct any Account Debtor to make all payments due to any Loan Party Obligor directly to Agent.

Any and all sums paid, and any and all costs, expenses, liabilities, obligations and reasonable attorneys’ fees (external counsel) of Agent with respect to the foregoing shall be added to and become part of the Obligations, shall be payable on demand, and shall bear interest at a rate equal to the highest interest rate applicable to any of the Obligations.  Each Loan Party Obligor agrees that Agent’s rights under the foregoing power of attorney and any of Agent’s other rights under this Agreement or the other Loan Documents shall not be construed to indicate that Agent or any Lender is in control of the business, management or properties of any Loan Party Obligor.

6.5.       Disputes.  Each Loan Party Obligor shall promptly notify Agent of all disputes or claims relating to its Accounts, Credit Card Receivables and Chattel Paper in excess of $50,000.  Each Loan Party Obligor agrees that it will not, without Agent’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed), compromise or settle any of its Accounts, Credit Card Receivables or Chattel Paper for less than the full amount thereof, grant any extension of time for payment of any of its Accounts, Credit Card Receivables or Chattel Paper, release (in whole or in part) any Account Debtor or other person liable for the payment of any of its Accounts or Chattel Paper or grant any credits, discounts, allowances, deductions, return authorizations or the like with respect to any of its Accounts, Credit Card Receivables or Chattel Paper; except (unless otherwise directed by Agent during the existence of a Default or an Event of Default) such Loan Party Obligor may take any of such actions in the Ordinary Course of Business consistent with past practices, provided that Borrower Representative promptly reports the same to Agent if the aggregate amount in any month exceeds $10,000.

6.6.       Invoices.  At Agent’s request after the occurrence and during the continuance of a Default or Event of Default, each Loan Party Obligor will cause all invoices and statements that it sends to Account Debtors or other third parties to be marked and authenticated, in a manner reasonably satisfactory to Agent, to reflect Agent’s security interest therein and payment instructions (including, but not limited to, in a manner to meet the requirements of Section 9-404(a)(2) of the UCC).

6.7.        Inventory.

(a)          Returns.  No Loan Party Obligor will accept returns of any Inventory from any Account Debtor except in the Ordinary Course of Business.

(b)          Third Party Locations.  No Loan Party Obligor will, without Agent’s prior written consent, at any time, store any Inventory with any warehouseman or other third party other than as set forth in Section 1(d) of the Perfection Certificate.

(c)          Sale on Return, etc.  No Loan Party Obligor will, without Agent’s prior written consent, at any time, sell any Inventory on a sale-or-return, guaranteed sale, consignment, or other contingent basis.

(d)          Fair Labor Standards Act.  Each Loan Party Obligor represents, warrants and covenants that, at all times, all of the Inventory of each Loan Party Obligor has been, at all times will be, produced only in accordance with the Fair Labor Standards Act of 1938 and all rules, regulations and orders promulgated thereunder.

(e)          Eligibility.  As of each date reported by any Borrower, all Inventory which such Borrower has then reported to Agent as then being Eligible Inventory or Eligible In-Transit Inventory comply in all respects with the criteria for eligibility set forth in the definition of “Eligible Inventory” or “Eligible In-Transit Inventory”, as applicable.

7.           REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS.

To induce Agent and the Lenders to enter into this Agreement, each Loan Party Obligor represents, warrants and covenants as follows (it being understood and agreed that (a) each such representation and warranty (i) will be made as of the date hereof and be deemed remade as of each date on which any Loan is made (except to the extent any such representation or warranty expressly relates only to any earlier or specified date, in which case such representation or warranty will be made as of such earlier or specified date) and (ii) shall not be affected by any knowledge of, or any investigation by, Agent or any Lender and (b) each such covenant shall continuously apply with respect to all times commencing on the date hereof and continuing until the Termination Date):

7.1.        Existence and Authority.  Each Loan Party and Parent is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization (which jurisdiction is identified in Section 1(a) of the Perfection Certificate) and is qualified to do business in each jurisdiction in which the operation of its business requires that it be qualified (which each such jurisdiction is identified in Section 1(a) of the Perfection Certificate), except where the failure to be so qualified could not reasonably be expected to result in a Material Adverse Effect. Each Loan Party and Parent has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Loan Documents to which it is a party and to carry out the transactions contemplated thereby. The execution, delivery and performance by each Loan Party Obligor and Parent of this Agreement and all of the other Loan Documents to which such Loan Party Obligor and Parent is a party have been duly and validly authorized, do not violate such Loan Party Obligor’s and Parent’s Governing Documents or any law or any material agreement or instrument or any court order which is binding upon any Loan Party or its property, do not constitute grounds for acceleration of any Indebtedness or obligation under any material agreement or instrument which is binding upon  Parent or any Loan Party or their property. Neither Parent nor any Loan Party is required to obtain any government approval, consent, or authorization from, or to file any declaration or statement with, any Governmental Authority in connection with or as a condition to the execution, delivery or performance of any of the Loan Documents, except for such approvals, consents, authorizations or filings as have been obtained or made.  This Agreement and each of the other Loan Documents have been duly executed and delivered by, and are enforceable against, each of Parent and the Loan Party Obligors who have signed them, in accordance with their respective terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).  Section 1(f) of the Perfection Certificate sets forth the ownership of each Borrower and its Subsidiaries as of the Closing Date.

7.2.        Names; Trade Names and Styles.  The name of each Loan Party Obligor and Parent set forth on Section 1(b) of the Perfection Certificate is its correct and complete legal name as of the date hereof, and no Loan Party Obligor has used any other name at any time in the past five years, or at any time will use any other name (except pursuant to the notice provisions of this Section 7.2), in any tax filing made in any jurisdiction.  Listed in Section 1(b) of the Perfection Certificate are all prior names used by each Loan Party Obligor and Parent at any time in the past five years and all of the present and prior trade names used by any Loan Party Obligor or Parent at any time in the past five years.  Borrower Representative shall give Agent at least thirty days’ prior written notice (or such shorter period agreed to be the Agent in its reasonable discretion) (and within thirty (30) days of such change becoming effective, will deliver an updated Section 1(b) of the Perfection Certificate to reflect the same) before it or any other Loan Party Obligor or Parent changes its legal name or does business under any other name.

7.3.        Title to Collateral; Third Party Locations; Permitted Liens.  Each Loan Party Obligor and Parent has, and at all times will continue to have, good and marketable title to all of the Collateral.  The Collateral now is, and at all times will remain, free and clear of any and all Liens, except for Permitted Liens.  Agent now has, and will at all times continue to have, a first-priority perfected and enforceable security interest in all of the Collateral, subject only to the Permitted Liens, and each Loan Party Obligor and Parent will at all times defend Agent and the Collateral against all claims of others (other than holders of Permitted Liens); provided, however, no additional actions shall be required hereunder with respect to any assets that are located outside of the United States or assets that require action under the law of any non-U.S. jurisdiction to create or perfect a security interest in such assets; it being understood, for the avoidance of doubt, that there shall be no requirement to execute any security agreement or pledge agreement governed by the laws of any non-U.S. jurisdiction.  None of the Collateral which is Equipment with an aggregate value in excess of $100,000 is, or will at any time, be affixed to any real property that is not subject to a mortgage in favor of the Agent in such a manner, or with such intent, as to become a fixture.  Except for leases or subleases as to which Borrowers shall use commercially reasonable efforts to deliver to Agent a landlord’s waiver in form and substance reasonably satisfactory to Agent, neither Parent nor any Loan Party Obligor is or will be a lessee or sublessee under any real property lease or sublease where Collateral with an aggregate value in excess of $100,000 is located.  Except for warehouses as to which Borrowers shall use commercially reasonable efforts to deliver to Agent a warehouseman’s waiver in form and substance reasonably satisfactory to Agent, neither Parent nor any Loan Party Obligor is or will at any time be a bailor of any Goods with an aggregate value in excess of $100,000 at any warehouse or otherwise.  Prior to causing or permitting any Collateral with an aggregate value in excess of $100,000 to at any time be located upon premises in which any third party (including any landlord, warehouseman, or otherwise) has an interest, Borrower Representative shall notify Agent and the applicable Loan Party Obligor or Parent shall use commercially reasonable efforts to cause each such third party to execute and deliver to Agent, in form and substance reasonably acceptable to Agent, such waivers, collateral access agreements, and subordinations as Agent shall specify, so as to, among other things, ensure that Agent’s rights in the Collateral are, and will at all times continue to be, superior to the rights of any such third party and that Agent has access to such Collateral.  Each applicable Loan Party Obligor and Parent will keep at all times in full force and effect, and will comply in all material respects at all times with all the terms of, any lease of real property where any of the Collateral now or in the future may be located, except as could not reasonably be expected to result in a Material Adverse Effect.

7.4.       Accounts, Credit Card Receivables and Chattel Paper.  As of each date reported by Borrowers, all Accounts and Credit Card Receivables which any Borrower has then reported to Agent as then being Eligible Accounts, Eligible Specified Customer Accounts or Eligible Credit Card Receivables, as the case may be, comply in all respects with the criteria for eligibility set forth in the definition of “Eligible Accounts”, “Eligible Specified Customer Accounts” or “Eligible Credit Card Receivables”, as applicable.  All such Accounts and Credit Card Receivables, and all Chattel Paper owned by any Loan Party Obligor, are genuine and in all respects what they purport to be, arise out of a completed, bona fide and unconditional and non-contingent sale and delivery of goods or rendition of services by a Borrower in the Ordinary Course of Business and in accordance with the terms and conditions of all purchase orders, contracts or other documents relating thereto, to the knowledge of the Borrower, each Account Debtor thereunder had the capacity to contract at the time any contract or other document giving rise to such Accounts, Credit Card Receivables and Chattel Paper were executed, and the transactions giving rise to such Accounts, Credit Card Receivables and Chattel Paper comply with all applicable laws and governmental rules and regulations.

7.5.        Electronic Chattel Paper.  To the extent that any Loan Party Obligor or Parent obtains or maintains any Electronic Chattel Paper in an aggregate amount in excess of $100,000, such Loan Party Obligor or Parent, as applicable, shall at all times create, store and assign the record or records comprising the Electronic Chattel Paper in such a manner that (a) a single authoritative copy of the record or records exists which is unique, identifiable and except as otherwise provided below, unalterable, (b) the authoritative copy identifies Agent as the assignee of the record or records, (c) the authoritative copy is communicated to and maintained by Agent or its designated custodian, (d) copies or revisions that add or change an identified assignee of the authoritative copy can only be made with the participation of Agent, (e) each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy and (f) any revision of the authoritative copy is readily identifiable as an authorized or unauthorized revision.

7.6.        Capitalization; Investment Property.

(a)         Neither Parent nor any Loan Party, directly or indirectly, owns, or shall at any time own, any capital stock or other equity interests of any other Person except as set forth in Sections 1(f) and 1(g) of the Perfection Certificate, which Sections list all Investment Property owned by each Loan Party Obligor and Parent as of the Amendment No. 1 Effective Date.

(b)         None of the Pledged Equity has been issued or otherwise transferred in violation of the Securities Act, or other applicable laws of any jurisdiction to which such issuance or transfer may be subject.  The Pledged Equity pledged by each Loan Party Obligor and Parent hereunder or under any other Loan Document constitutes all of the issued and outstanding equity interests of each Issuer owned by such Loan Party Obligor or Parent, as applicable.

(c)         All of the Pledged Equity has been duly and validly issued and is fully paid and non-assessable, and the holders thereof are not entitled to any preemptive, first refusal or other similar rights.  There are no outstanding options, warrants or similar agreements, documents, or instruments with respect to any of the Pledged Equity.

(d)         Parent and each Loan Party Obligor will take any and all actions required or reasonably requested by Agent, from time to time, to (i) cause Agent to obtain exclusive control of any Investment Property in a manner reasonably acceptable to Agent and (ii) obtain from any Issuers and such other Persons as Agent shall specify, for the benefit of Agent, written confirmation of Agent’s exclusive control over such Investment Property and take such other actions as Agent may reasonably request to perfect Agent’s security interest in any Investment Property.  For purposes of this Section 7.6, Agent shall have exclusive control of Investment Property if (A) pursuant to Section 5.2, such Investment Property consists of certificated securities and the Parent or applicable Loan Party Obligor delivers such certificated securities to Agent (with all appropriate endorsements), (B) such Investment Property consists of uncertificated securities and either (x) the Parent or applicable Loan Party Obligor delivers such uncertificated securities to Agent or (y) the Issuer thereof agrees, pursuant to documentation in form and substance reasonably satisfactory to Agent, that it will comply with instructions originated by Agent without further consent by the Parent or applicable Loan Party Obligor and (C) such Investment Property consists of security entitlements and either (x) Agent becomes the entitlement holder thereof or (y) the appropriate securities intermediary agrees, pursuant to documentation in form and substance reasonably satisfactory to Agent, that it will comply with entitlement orders originated by Agent without further consent by Parent or the applicable Loan Party Obligor.  Each Loan Party Obligor that is a limited liability company or a partnership hereby represents and warrants that it has not, and at no time will, elect pursuant to the provisions of Section 8-103 of the UCC to provide that its equity interests are securities governed by Article 8 of the UCC.

(e)         Neither Parent nor any Loan Party owns, or has any present intention of acquiring, any “margin security” or any “margin stock” within the meaning of Regulations T, U or X of the Board of Governors of the Federal Reserve System (herein called “margin security” and “margin stock”).  None of the proceeds of the Loans will be used, directly or indirectly, for the purpose of purchasing or carrying, or for the purpose of reducing or retiring any Indebtedness which was originally incurred to purchase or carry, any margin security or margin stock or for any other purpose which might constitute the transactions contemplated hereby a “purpose credit” within the meaning of said Regulations T, U or X, or cause this Agreement to violate any other regulation of the Board of Governors of the Federal Reserve System or the Exchange Act, or any rules or regulations promulgated under such statutes.

(f)         Neither Parent nor any Loan Party Obligor shall vote to enable, or take any other action to cause or to permit, any Issuer to issue any equity interests of any nature, or to issue any other securities or interests convertible into or granting the right to purchase or exchange for any equity interests of any nature of any Issuer.

(g)         Neither Parent nor any Loan Party Obligor shall take, or fail to take, any action that would in any manner impair the value or the enforceability of Agent’s Lien on any of the Investment Property, or any of Agent’s rights or remedies under this Agreement or any other Loan Document with respect to any of the Investment Property.

(h)        In the case of any Loan Party Obligor which is an Issuer, such Issuer agrees that the terms of Section 11.3(g)(iii) shall apply to such Loan Party Obligor with respect to all actions that may be required of it pursuant to such Section 11.3(g)(iii) regarding the Investment Property issued by it.

(i)          Parent and each Loan Party Obligor has made all capital contributions heretofore required to be made to the respective Issuer in respect of any Investment Property constituting limited liability company interests and no additional capital contributions are required to be made in respect of the respective limited liability company interests.

7.7.        Commercial Tort Claims.  Neither Parent nor any Loan Party Obligor has any Commercial Tort Claims in excess of $100,000 pending other than those listed in Section 2 of the Perfection Certificate, and each Loan Party Obligor shall promptly (but in any case, no later than thirty (30) Business Days thereafter or such longer period agreed to be the Agent in its reasonable discretion) notify Agent in writing upon incurring or otherwise obtaining a Commercial Tort Claim in excess of $100,000 after the date hereof against any third party.  Such notice shall constitute Parent’s and such Loan Party Obligor’s authorization to amend such Section 2 to add such Commercial Tort Claim and shall automatically be deemed to amend such Section 2 to include such Commercial Tort Claim.

7.8.        Jurisdiction of Organization; Location of Collateral.  Sections 1(c) and 1(d) of the Perfection Certificate set forth (a) each place of business of Parent and each Loan Party Obligor (including its chief executive office), (b) all locations where all Inventory, Equipment, and other Collateral owned by Parent and each Loan Party Obligor is kept other than Inventory in transit, Collateral at another location as contemplated by Section 7.3 or Collateral with an aggregate value not in excess of $100,000 and (c) whether each such Collateral location and place of business (including Parent’s and each Loan Party Obligor’s chief executive office) is owned by Parent or a Loan Party or leased (and if leased, specifies the complete name and notice address of each lessor).  No Collateral is located outside the United States or in the possession of any lessor, bailee, warehouseman or consignee, except as expressly indicated in Sections 1(c) and 1(d) of the Perfection Certificate or as contemplated by Section 7.3.  Parent and each Loan Party Obligor will give Agent at least thirty (30) days’ (or such shorter period agreed to be the Agent in its reasonable discretion) prior written notice before changing its jurisdiction of organization, opening any additional place of business, changing its chief executive office or the location of its books and records, or moving any of the Collateral to a location other than one of the locations set forth in Sections 1(c) and 1(d) of the Perfection Certificate, and will execute and deliver all Financing Statements, landlord waivers, collateral access agreements, mortgages, and all other agreements, instruments and documents which Agent shall require in connection therewith prior to making such change, all in form and substance reasonably satisfactory to Agent.  Without the prior written consent of Agent, neither Parent nor any Loan Party Obligor will at any time (i) change its jurisdiction of organization or (ii) allow any Collateral to be located outside of the continental United States of America.

7.9.        Financial Statements and Reports; Solvency.

(a)         All financial statements delivered to Agent and Lenders by or on behalf of any Loan Party have been, and at all times will be, prepared in conformity with GAAP (provided that interim financial statements may lack footnotes and will be subject to audit and year-end adjustments) and completely and fairly in all material respects reflect the financial condition of each Loan Party and its Subsidiaries covered thereby, at the times and for the periods therein stated.

(b)         As of the date hereof (after giving effect to the Loans to be made on the date hereof, and the consummation of the transactions contemplated hereby), and as of each other day that any Loan is made (after giving effect thereof), (i) the fair saleable value of all of the assets and properties of each Loan Party, individually, exceeds the aggregate liabilities and Indebtedness of each such Loan Party (including contingent liabilities), (ii) each Loan Party, individually, is solvent and able to pay its debts as they come due, (iii) each Loan Party, individually, has sufficient capital to carry on its business as now conducted and as proposed to be conducted, (iv) no Loan Party is contemplating either the liquidation of all or any substantial portion of its assets or property, or the filing of any petition under any state, federal, or other bankruptcy or insolvency law and (v) no Loan Party has knowledge of any Person contemplating the filing of any such petition against any Loan Party.

7.10.      Tax Returns and Payments; Pension Contributions.  Each Loan Party and Parent has timely filed all tax returns and reports required by applicable law to have been filed by it, has paid all applicable Taxes required to have been paid by it and will timely pay all such items in the future as they became due and payable, except for (a) any Taxes that are being contested in good faith by appropriate proceedings promptly and diligently instituted and conducted and for which such Loan Party and Parent maintains adequate reserves therefor in conformity with GAAP or (b) to the extent that any failure to file Tax returns or reports or pay Taxes could not reasonably be expected to result in a Material Adverse Effect.  Neither Parent nor any Loan Party is aware of any claims or adjustments proposed for any prior tax years that could result in additional taxes becoming due and payable by any Loan Party other than any claim or adjustment that could not reasonably be expected to result in a Material Adverse Effect.  Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other applicable laws.  Each Plan that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter or opinion letter from the Internal Revenue Service to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the Internal Revenue Service.  To the best knowledge of each Loan Party and Parent, nothing has occurred that would reasonably be expected to cause the loss of such tax-qualified status.  There are no pending or, to the best knowledge of any Loan Party or Parent, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to result in liabilities individually or in the aggregate in excess of $100,000 of any Loan Party or Parent.  There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in liabilities individually or in the aggregate of any Loan Party or Parent in excess of $100,000.  No ERISA Event has occurred, and neither Parent nor any Loan Party is aware of any fact, event or circumstance that could reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan, in each case that could reasonably be expected to result in liabilities individually or in the aggregate in excess of $100,000. Each Loan Party, Parent, and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained, in each case except as could not reasonably be expected to result in liabilities individually or in the aggregate to the Loan Parties or Parent in excess of $100,000.  As of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is sixty (60%) or higher and neither Parent nor any Loan Party knows of any facts or circumstances that could reasonably be expected to cause the funding target attainment percentage for any such plan to drop below sixty (60%) as of the most recent valuation date.  Neither Parent nor any Loan Party, nor any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid, except as could not reasonably be expected to result in liabilities individually or in the aggregate to the Loan Parties in excess of $100,000.  No Loan Party, Parent, or any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA except as could not reasonably be expected to result in liabilities individually or in the aggregate to the Loan Parties or Parent in excess of $100,000.  No Pension Plan has been terminated by the plan administrator thereof or by the PBGC, and no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan, except as could not reasonably be expected to result in liabilities individually or in the aggregate to the Loan Parties or Parent in excess of $100,000.

7.11.      Compliance with Laws; Intellectual Property; Licenses.

(a)          Except as could not reasonably be expected to have a Material Adverse Effect, each Loan Party and Parent has complied, and will continue at all times to comply, with all provisions of all applicable laws and regulations, including those relating to the ownership of real or personal property, the conduct and licensing of each Loan Party’s and Parent’s respective business, the payment and withholding of Taxes, ERISA and other employee matters, and safety and environmental matters.

(b)        Neither Parent nor any Loan Party has received written notice of default or violation, or is in default or violation, with respect to any material judgment, order, writ, injunction, decree, demand or assessment issued by any court or any federal, state, local, municipal or other Governmental Authority relating to any aspect of any Loan Party’s or Parent’s business, affairs, properties or assets.  Neither Parent nor any Loan Party has received written notice of or been charged with, or is, to the knowledge of any Loan Party or Parent, under investigation with respect to, any violation in any material respect of any provision of any applicable law.

(c)          Neither Parent nor any Loan Party Obligor owns any material registered (or applied for) Intellectual Property as of the Closing Date, except as set forth in Section 4 of the Perfection Certificate.  Except as set forth in Section 4 of the Perfection Certificate, none of the material Intellectual Property owned by any Loan Party Obligor or Parent is the subject of any licensing or franchise agreement pursuant to which such Loan Party Obligor or Parent is the licensor or franchisor, other than those entered into in the Ordinary Course of Business.  Each Loan Party Obligor and Parent shall promptly (but in any event within thirty (30) days thereafter) notify Agent in writing of any additional material Intellectual Property rights acquired or arising after the Closing Date and shall submit to Agent a supplement to Section 4 of the Perfection Certificate to reflect such additional rights with respect to registered or applied for Intellectual Property; provided that such Loan Party Obligor’s or Parent’s failure to do so shall not impair Agent’s security interest therein.  Each Loan Party Obligor and Parent shall execute a separate security agreement granting Agent a security interest in such Intellectual Property (whether owned on the Closing Date or thereafter), in form and substance reasonably acceptable to Agent and suitable for registering such security interest in such Intellectual Property with the United States Patent and Trademark Office and/or United States Copyright Office, as applicable; provided that such Loan Party Obligor’s or Parent’s failure to do so shall not impair Agent’s security interest therein.  Each Loan Party and Parent owns or has, and will at all times continue to own or have, the valid right to use all material patents, trademarks, copyrights, software, computer programs, equipment designs, network designs, equipment configurations, technology and other Intellectual Property used, marketed and sold in such Loan Party’s or Parent’s business, and each Loan Party and Parent is in compliance, and will continue at all times to comply, in all material respects with all licenses, user agreements and other such agreements regarding the use of material Intellectual Property.  Neither Parent nor any Loan Party has any knowledge that, or has received any notice claiming that, any of such material Intellectual Property infringes upon or violates the rights of any other Person.

(d)         Each Loan Party and Parent has and will continue at all times to have, all federal, state, local and other licenses and permits required to be maintained in connection with such Loan Party’s or Parent’s business operations, and all such licenses and permits are valid and in full force and effect, in each case except as could not reasonably be expected to result in a Material Adverse Effect.  Each Loan Party and Parent has, and will continue at all times to have, complied with the requirements of such licenses and permits in all material respects, and has received no written notice of any pending or threatened proceedings for the suspension, termination, revocation or limitation thereof.  Neither Parent nor any Loan Party is aware of any facts or conditions that could reasonably be expected to cause or permit any of such licenses or permits to be voided, revoked or withdrawn, except as could not reasonably be expected to result in a Material Adverse Effect.

(e)          Each Loan Party and Parent has complied, and will continue at all times to comply, in all material respects with all provisions of the PCI Standards.

7.12.      Litigation.  Section 1(e) of the Perfection Certificate discloses all claims, proceedings, litigation or investigations pending or threatened in writing against any Loan Party or Parent as of the Amendment No. 1 Effective Date.  Except as set forth in Section 1(e) of the Perfection Certificate, there is no claim, suit, litigation, proceeding or investigation pending or threatened in writing by or against or affecting any Loan Party or Parent in any court or before any Governmental Authority (or any basis therefor known to any Loan Party Obligor or Parent) which may reasonably be expected to result, either separately or in the aggregate, in liability in excess of $100,000 for the Loan Parties or Parent, in any Material Adverse Effect, or in any material impairment in the ability of any Loan Party or Parent to carry on its business in substantially the same manner as it is now being conducted.

7.13.      Use of Proceeds.  All proceeds of all Loans shall be used by Borrowers solely (a) with respect to Loans made on the Closing Date, to repay (on the Closing Date only) the Intercompany Subordinated Debt in an amount not greater than $6,000,000, (b) to pay the fees, costs, and expenses incurred in connection with this Agreement, the other Loan Documents and the transactions contemplated hereby and thereby, (c) to repay certain existing Indebtedness of Borrowers, (d) for Borrowers’ working capital purposes and (e) for such other purposes not prohibited by the terms of this Agreement.  All proceeds of all Loans will be used solely for lawful business purposes.

7.14.      Insurance.

(a)          Each Loan Party and Parent will at all times carry property, liability and other insurance, with insurers reasonably acceptable to Agent, in such form and amounts, and with such deductibles and other provisions, as Agent shall reasonably require, but in any event, in such amounts and against such risks as is usually carried by companies engaged in similar business and owning similar properties in the same general areas in which such Loan Party or Parent operates, and each Borrower will provide Agent with evidence reasonably satisfactory to Agent that such insurance is, at all times, in full force and effect; provided, for the avoidance of doubt, that Agent acknowledges that the insurer of any Loan Party as of the Closing Date is acceptable to Agent for so long as such insurer’s rating remains substantially the same as its rating on the Closing Date).  A true and complete listing of such insurance as of the Closing Date, including issuers, coverages and deductibles, is set forth in Section 5 of the Perfection Certificate.  Each property insurance policy shall name Agent as lender loss payee and mortgagee, if applicable, and shall contain a lender’s loss payable endorsement, and a mortgagee endorsement, if applicable, and each liability insurance policy shall name Agent as an additional insured, and each business interruption insurance policy shall be collaterally assigned to Agent, all in form and substance reasonably satisfactory to Agent.  All policies of insurance shall provide that they may not be cancelled or changed without at least thirty (30) days’ (or, with respect to nonpayment of premiums, ten (10) days’) prior written notice to Agent, and shall otherwise be in form and substance reasonably satisfactory to Agent.  Borrower Representative shall advise Agent promptly of any policy cancellation, non-renewal, reduction, or material amendment with respect to any insurance policies maintained by any Loan Party or Parent or any receipt by any Loan Party or Parent of any notice from any insurance carrier regarding any intended or threatened cancellation, non-renewal, reduction or material amendment of any of such policies, and Borrower Representative shall promptly deliver to Agent copies of all notices and related documentation received by any Loan Party or Parent in connection with the same.

(b)        Borrower Representative shall deliver to Agent no later than fifteen (15) days prior to the expiration of any then current insurance policies, insurance certificates evidencing renewal of all such insurance policies required by this Section 7.14.  Borrower Representative shall deliver to Agent, upon Agent’s reasonable request, certificates evidencing such insurance coverage in such form as Agent shall reasonably specify.

(c)         IF ANY LOAN PARTY OR PARENT AT ANY TIME OR TIMES HEREAFTER SHALL FAIL TO OBTAIN OR MAINTAIN ANY OF THE POLICIES OF INSURANCE REQUIRED ABOVE (AND PROVIDE EVIDENCE THEREOF TO AGENT) OR TO PAY ANY PREMIUM RELATING THERETO, THEN AGENT, WITHOUT WAIVING OR RELEASING ANY OBLIGATION OR DEFAULT BY ANY BORROWER HEREUNDER, MAY (BUT SHALL BE UNDER NO OBLIGATION TO) OBTAIN AND MAINTAIN SUCH POLICIES OF INSURANCE AND PAY SUCH PREMIUMS AND TAKE SUCH OTHER ACTIONS WITH RESPECT THERETO AS AGENT DEEMS ADVISABLE UPON NOTICE TO BORROWER REPRESENTATIVE.  SUCH INSURANCE, IF OBTAINED BY AGENT, MAY, BUT NEED NOT, PROTECT ANY LOAN PARTY’S OR PARENT’S INTERESTS OR PAY ANY CLAIM MADE BY OR AGAINST ANY LOAN PARTY OR PARENT WITH RESPECT TO THE COLLATERAL.  SUCH INSURANCE MAY BE MORE EXPENSIVE THAN THE COST OF INSURANCE ANY LOAN PARTY OR PARENT MAY BE ABLE TO OBTAIN ON ITS OWN AND MAY BE CANCELLED ONLY UPON THE APPLICABLE LOAN PARTY OR PARENT PROVIDING EVIDENCE THAT IT HAS OBTAINED THE INSURANCE AS REQUIRED ABOVE.  ALL SUMS DISBURSED BY AGENT IN CONNECTION WITH ANY SUCH ACTIONS, INCLUDING COURT COSTS, EXPENSES, OTHER CHARGES RELATING THERETO AND REASONABLE EXTERNAL ATTORNEY COSTS, SHALL CONSTITUTE LOANS HEREUNDER, SHALL BE PAYABLE ON DEMAND BY BORROWERS TO AGENT AND, UNTIL PAID, SHALL BEAR INTEREST AT THE HIGHEST RATE THEN APPLICABLE TO LOANS HEREUNDER.

7.15.      Financial, Collateral and Other Reporting / Notices.  Each Loan Party and Parent has kept, and will at all times keep, adequate records and books of account with respect to its business activities and the Collateral in which proper entries are made in accordance with GAAP reflecting all its financial transactions. The information provided in the Perfection Certificate is correct and complete in all respects. Each Loan Party Obligor and Parent will cause to be prepared and furnished to Agent, in each case in a form and in such detail as is reasonably acceptable to Agent the following items (the items to be provided under this Section 7.15 shall be delivered to Agent by posting on ABLSoft or, if reasonably requested by Agent, by another form of Approved Electronic Communication or in writing):

(a)          Annual Financial Statements.  Not later than one hundred twenty (120) days after the close of each Fiscal Year (commencing with the Fiscal Year ending February 1, 2020), unqualified, audited financial statements of Parent and its Subsidiaries as of the end of such Fiscal Year, including balance sheet, income statement, and statement of cash flow for such Fiscal Year, in each case on a consolidated and consolidating basis, certified by a firm of independent certified public accountants of recognized standing selected by Borrowers but acceptable to Agent, together with a copy of any management letter issued in connection therewith.  Concurrently with the delivery of such financial statements, Borrower Representative shall deliver to Agent a Compliance Certificate, indicating whether (i) Borrowers are in compliance with each of the covenants specified in Section 9, and setting forth a detailed calculation of such covenants and (ii) any Default or Event of Default is then in existence;

(b)          Interim Financial Statements.  Not later than (i) in the case of Kaspien and its Subsidiaries, thirty (30) days and (ii) in the case of Parent and its Subsidiaries, forty-five (45) days, in each case, after the end of each month hereafter, including the last fiscal month of each Fiscal Year, unaudited interim financial statements of Kaspien and its Subsidiaries and Parent and its Subsidiaries, as of the end of such month and of the portion of such Fiscal Year then elapsed, including balance sheet, income statement, statement of cash flow, and results of their respective operations during such month and the then-elapsed portion of the Fiscal Year, together with comparative figures for the same periods in the immediately preceding Fiscal Year and the corresponding figures from the budget for the Fiscal Year covered by such financial statements, in each case on a consolidated and consolidating basis, certified by an authorized officer of Borrower Representative as prepared in accordance with GAAP and fairly presenting the consolidated financial position and results of operations (including management discussion and analysis of such results) of Kaspien and its Subsidiaries and Parent and its Subsidiaries, as applicable, for such month and period subject only to changes from ordinary course year‑end audit adjustments and except that such statements need not contain footnotes.  Concurrently with the delivery of financial statements relating to Kaspien and its Subsidiaries, Borrower Representative shall deliver to Agent a Compliance Certificate, indicating whether (i) Borrowers are in compliance with each of the covenants specified in Section 9, and setting forth a detailed calculation of such covenants, and (ii) any Default or Event of Default is then in existence;

(c)          Borrowing Base / Collateral Reports / Insurance Certificates / Perfection Certificates / Other Items.  The items described on Annex II hereto by the respective dates set forth therein;

(d)          Projections, Etc.  Not later than thirty (30) days prior to the end of each Fiscal Year, monthly business projections for the following Fiscal Year for the Loan Parties on a consolidated and consolidating basis, which projections shall include for each such period Borrowing Base projections, profit and loss projections, balance sheet projections, income statement projections and cash flow projections;

(e)         Shareholder Reports, Etc.  To the extent the following are not publicly available on the Kaspien website or on the website of the Securities and Exchange Commission, promptly after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements or reports which each Loan Party has made available to its shareholders and copies of any regular, periodic and special reports or registration statements which any Loan Party files with the Securities and Exchange Commission or any Governmental Authority which may be substituted therefor, or any national securities exchange;

(f)          ERISA Reports.  Copies of any annual report to be filed pursuant to the requirements of ERISA in connection with each plan subject thereto promptly upon request by Agent and in addition, each Loan Party and Parent shall promptly notify Agent upon having knowledge of any ERISA Event that could reasonably be expected to result in a material liability to a Loan Party or Parent;

(g)         Tax Returns.  Each federal and state income tax return filed by any Loan Party promptly (but in no event later than ten (10) days following the filing of such return), together with such supporting documentation as is supplied to the applicable tax authority with such return and proof of payment of any amounts owing with respect to such return;

(h)          Notification of Certain Changes.  Promptly (and in no case later than the earlier of (i) five (5) Business Days after the occurrence of any of the following and (ii) such other date that such information is required to be delivered pursuant to this Agreement or any other Loan Document) notification to Agent in writing of (A) the occurrence of any Default or Event of Default, (B) the occurrence of any event that has had, or could reasonably be expected to have, a Material Adverse Effect, (C) any change in any Loan Party’s or Parent’s officers or directors, (D) any material investigation, action, suit, proceeding or claim (or any material development with respect to any existing investigation, action, suit, proceeding or claim) relating to any Loan Party or Parent, any officer or director of a Loan Party or Parent, the Collateral or which could reasonably be expected to result in a Material Adverse Effect, (E) any material loss or damage to the Collateral, (F) any event or the existence of any circumstance that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect, any Default, or any Event of Default, or which would make any representation or warranty previously made by any Loan Party or Parent to Agent untrue in any material respect or constitute a material breach if such representation or warranty was then being made, (G) any actual or alleged breaches of any Material Contract or early termination or written threat to terminate any Material Contract or any material amendment to or modification of a Material Contract, or the execution of any new Material Contract by any Loan Party or Parent and (H) any change in any Loan Party’s certified independent accountant.  In the event of each such notice under this Section 7.15(h), Borrower Representative shall give notice to Agent of the action or actions that each Loan Party and Parent has taken, is taking, or proposes to take with respect to the event or events giving rise to such notice obligation; and

(i)         Other Information.  Promptly upon request, such other data and information (financial and otherwise) as Agent, from time to time, may reasonably request, bearing upon or related to the Collateral or each Loan Party’s, Parent’s and each Other Obligor’s business or financial condition or results of operations.

7.16.      Litigation Cooperation.  Should any third-party suit, regulatory action, or any other judicial, administrative, or similar proceeding be instituted by or against Agent or any Lender with respect to any Collateral or in any manner relating to any Loan Party or Parent, this Agreement, any other Loan Document or the transactions contemplated hereby, each Loan Party Obligor and Parent shall, without expense to Agent or any Lender, make available for each Loan Party or Parent, as applicable, such Loan Party’s or Parent’s officers, employees and agents, and any Loan Party’s or Parent’s books and records, without charge, to the extent that Agent or such Lender may deem them reasonably necessary in order to prosecute or defend any such suit or proceeding.

7.17.      Maintenance of Collateral, Etc.  Each Loan Party Obligor and Parent will maintain all of the Collateral in good working condition, ordinary wear and tear excepted, and no Loan Party Obligor will use the Collateral for any unlawful purpose.

7.18.      Material Contracts.  Except as expressly disclosed in Section 1(h) of the Perfection Certificate, neither Parent nor any Loan Party is (a) a party to any contract which has had or could reasonably be expected to have a Material Adverse Effect or (b) in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in (x) any contract to which it is a party or by which any of its assets or properties is bound, which default, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or result in liabilities in excess of $250,000 or (y) any Material Contract.  Except for the contracts and other agreements listed in Section 1(h) of the Perfection Certificate, neither Parent nor any Loan Party is party, as of the Amendment No. 1 Effective Date, to any (i) employment agreements covering the management of any Loan Party or Parent, (ii) collective bargaining agreements or other labor agreements covering any employees of any Loan Party or Parent, (iii) agreements for managerial, consulting or similar services to which any Loan Party or Parent is a party or by which it is bound, (iv) agreements regarding any Loan Party or Parent, its assets or operations or any investment therein to which any of its equity holders is a party, (v) material patent licenses, trademark licenses, copyright licenses or other lease or license agreements to which any Loan Party or Parent is a party, either as lessor or lessee, or as licensor or licensee (but excluding any licenses of commercially available software or licenses entered into in the ordinary course of business), (vi) distribution, marketing or supply agreements to which any Loan Party or Parent is a party, (vii) customer agreements to which any Loan Party or Parent is a party (in each case with respect to any contract of the type described in the preceding clauses (i), (iii), (iv), (v), (vi) and (vii) requiring payments of more than $250,000 in the aggregate in any Fiscal Year), (viii) partnership agreements to which any Loan Party or Parent is a partner, limited liability company agreements to which any Loan Party or Parent is a member or manager, or joint venture agreements to which any Loan Party or Parent is a party, (ix) real estate leases, or (x) any other contract to which any Loan Party or Parent is a party, in each case with respect to this clause (x) the breach, nonperformance or cancellation of which, could reasonably be expected to have a Material Adverse Effect; (each such contract and agreement, described in the preceding clauses (i) to (x), a “Material Contract”).  All existing Material Contracts as of the Amendment No. 1 Effective Date are listed on Schedule 7.18, and each such Material Contract is in full force and effect and there are no events of defaults thereunder or any event which with notice or passage of time, or both, would constitute an event of default thereunder.

7.19.      No Default.  No Default or Event of Default has occurred and is continuing.

7.20.      No Material Adverse Change.  Since February 2, 2019, there has been no material adverse change in the business, operations, properties, assets or condition, financial or otherwise, of any Loan Party or Parent.

7.21.     Full Disclosure.  Excluding projections and other forward-looking information, pro forma financial information and information of a general economic or industry nature, no report, notice, certificate, information or other statement delivered or made (including, in electronic form) by or on behalf of any Loan Party or Parent or any of their respective Affiliates to Agent or Lender in connection with this Agreement or any other Loan Document (in each case, as modified or supplemented by other information so furnished) taken as a whole contains any untrue statement of a material fact, or omits to state any material fact necessary to make any statements contained herein or therein in the light of circumstances under which they were made not misleading; provided that with respect to projected financial information the Loan Parties or Parent report only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.  Except for matters of a general economic or political nature which do not affect any Loan Party or Parent uniquely, there is no fact presently known to any Loan Party Obligor or Parent which has not been disclosed to Agent, which has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Any projections and other forward-looking information and pro forma financial information contained in such materials were prepared in good faith based upon assumptions that were believed by such Loan Party or Parent to be reasonable at the time prepared and at the time furnished in light of conditions and facts then known (it being recognized that such projections and other forward-looking information and pro forma financial information are not to be viewed as facts and that actual results during the period or periods covered by any such projections or information may differ from the projected results, and such differences may be material).

7.22.      Sensitive Payments.  Neither Parent nor any Loan Party (a) has made or will at any time make any contributions, payments or gifts to or for the private use of any governmental official, employee or agent where either the payment or the purpose of such contribution, payment or gift is illegal under the applicable laws of the United States or the jurisdiction in which made or any other applicable jurisdiction, (b) has established or maintained or will at any time establish or maintain any unrecorded fund or asset for any purpose or made any false or artificial entries on its books, (c) has made or will at any time make any payments to any Person with the intention that any part of such payment was to be used for any purpose other than that described in the documents supporting the payment or (d) has engaged in or will at any time engage in any “trading with the enemy” or other transactions materially violating any rules or regulations of the Office of Foreign Assets Control or any similar applicable laws, rules or regulations.

7.23.      Subordinated Debt.

(a)        Borrower Representative has furnished Agent a true, correct and complete copy of each of the Intercompany Subordinated Debt Documents and the Alimco Subordinated Debt Documents.  No statement or representation made in any of the Intercompany Subordinated Debt Documents or the Alimco Subordinated Debt Documents by any Borrower, any other Loan Party, or Parent, or, to any Borrower Representative’s knowledge, any other Person, contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they are made, not misleading in any material respect as of the time that such statement or representation is made.  Each of the representations and warranties of the Loan Parties and Parent set forth in each of the Intercompany Subordinated Debt Documents and the Alimco Subordinated Debt Documents are true and correct in all respects.  No portion of the Intercompany Subordinated Debt is, or at any time shall be, (i) secured by any assets of any of the Loan Parties, Parent, or any other Person or any equity issued by any of the Loan Parties, Parent, or any other Person or (ii) Guaranteed by any Person.  Except as expressly permitted in the Alimco Subordinated Debt Subordination Agreement, no portion of the Alimco Subordinated Debt is, or at any time shall be, (i) secured by any assets of any of the Loan Parties or any other Person or any equity issued by any of the Loan Parties, Parent, or any other Person or (ii) Guaranteed by any Person.

(b)         The provisions of the Intercompany Subordinated Debt Subordination Agreement are enforceable against each holder of the Intercompany Subordinated Debt.  Each Borrower, each other Loan Party Obligor, and Parent acknowledges that Agent is entering into this Agreement and extending credit and making the Loans in reliance upon the Intercompany Subordinated Debt Subordination Agreement, the Alimco Subordinated Debt Subordination Agreement and this Section 7.23.  All Obligations constitute senior Indebtedness entitled to the benefits of the subordination provisions contained in the Intercompany Subordinated Debt Documents and the Alimco Subordinated Debt Documents.

7.24.      Access to Collateral, Books and Records.  At reasonable times and, so long as no Event of Default has occurred and is continuing, upon reasonable prior notice, Agent and its representatives or agents shall have the right to inspect the Collateral and to examine and copy each Loan Party’s and Parent’s books and records.  Each Loan Party Obligor and Parent agrees to give Agent access to any or all of such Loan Party Obligor’s, and each of its Subsidiaries’, premises to enable Agent to conduct such inspections and examinations.  Such inspections and examinations shall be at Borrowers’ expense and the charge therefor shall be $1,200 per person per day (or such higher amount as shall represent Agent’s then current standard charge), plus reasonable and documented out-of-pocket expenses; provided that Borrowers shall only be required to reimburse Agent for up to three (3) such inspections and examinations in any Fiscal Year plus any additional inspections and examinations that are conducted during the existence of an Event of Default and any inspections and examinations conducted prior to the Closing Date.  Upon the occurrence and during the continuance of an Event of Default Agent may, at Borrowers’ expense, use each Loan Party’s and Parent’s personnel, computer and other equipment, programs, printed output and computer readable media, supplies and premises for the collection, sale or other disposition of Collateral to the extent Agent, in its Permitted Discretion, deems appropriate.  Each Loan Party Obligor and Parent hereby irrevocably authorizes all accountants and third parties to disclose and deliver to Agent, at Borrowers’ expense, all financial information, books and records, work papers, management reports and other information in their possession regarding the Loan Parties.

7.25.      Appraisals.  Each Loan Party Obligor will permit Agent and each of its representatives or agents to conduct appraisals and valuations of the Collateral at such times and intervals as Agent may designate (including any appraisals that may be required to comply with FIRREA).  Such appraisals and valuations shall be at Borrowers’ expense; provided that absent an Event of Default, Borrowers shall only be responsible for the costs of up to two (2) such appraisals and valuations in any calendar year.

7.26.      Lender Meetings. Upon the request of any Agent or the Required Lenders (which request, so long as no Event of Default shall have occurred and be continuing, shall not be made more than once during each fiscal month), participate in a telephonic meeting with Agent and the Lenders at such time as may be agreed to by Borrower Representative and such Agent or the Required Lenders.

7.27.      [Reserved].

7.28.      [Reserved].

7.29.      Post-Closing Matters. Loan Party Obligors shall satisfy the requirements set forth on Schedule 7.29 hereof on or before the dates specified therein or such later date to be determined by Agent, at its sole option, each of which shall be completed or provided in form and substance reasonably satisfactory to Agent. The failure to satisfy any such requirement on or before the date when due (or within such longer period as Agent may agree at its sole option) shall be an Event of Default, except as otherwise agreed to by Agent at its sole option.

8.           NEGATIVE COVENANTS.

(a)          No Loan Party Obligor shall, and no Loan Party Obligor shall permit any other Loan Party to:

(i)          merge with or into another Person, Divide, consolidate with another Person, or form any new Subsidiary, including by any Division;

(ii)         acquire any interest in any Person or all or a material portion of the assets or the business of any Person, except for Permitted Acquisitions;

(iii)        acquire any assets except (A) in the Ordinary Course of Business, (B) in connection with Permitted Acquisitions, and (C) as otherwise expressly permitted by this Agreement;

(iv)        [reserved];

(v)        sell, lease, assign, transfer, return, liquidate, or dispose of any Collateral or other assets with an aggregate value in excess of $50,000 in any calendar month, except that each Loan Party may (i) sell finished goods Inventory in the Ordinary Course of Business, (ii) dispose of worn-out or surplus Equipment to the extent that such Equipment is exchanged for credit against the purchase price of similar replacement Equipment or the proceeds of such disposition are promptly applied to the purchase price of such replacement Equipment, (iii) any sale, lease, transfer or other disposition by a Loan Party to any other Loan Party in the Ordinary Course of Business and not otherwise prohibited by this Agreement and (iv) dispositions and transfers of cash and cash equivalents in the ordinary course of business and not in violation of this Agreement;

(vi)       make any loans to, or investments in, any Affiliate or other Person in the form of money or other assets; provided that (i) Borrowers may make loans and investments in its wholly-owned domestic Subsidiaries that are Loan Party Obligors, (ii) a Loan Party may make loans to, and investments in, another Loan Party, (iii) a Loan Party may receive minority investments in Persons given to such Loan Party by such Person in exchange for services provided by the applicable Loan Party, (iv) a Loan Party may make loans not involving the transfer of cash or cash equivalents to officers, directors, employees or consultants of such Loan Party for the purchase of equity interests, or rights to acquire equity interests, issued for compensatory purposes and (v) the Loan Parties may make other investments in an aggregate amount outstanding at any time not to exceed $100,000;

(vii)       incur any Indebtedness other than the Obligations and Permitted Indebtedness;

(viii)     create, incur, assume or suffer to exist any Lien or other encumbrance of any nature whatsoever or authorize under the UCC of any jurisdiction a Financing Statement naming the Loan Party as debtor, or execute any security agreement authorizing any secured party thereunder to file such Financing Statement, other than in favor of Agent to secure the Obligations, on any of its assets whether now or hereafter owned, other than Permitted Liens;

(ix)        authorize, enter into, or execute any agreement giving any Person control of a (i) Deposit Account as contemplated by Section 9-104 of the UCC or (ii) Securities Accounts as contemplated by Section 9-106 of the UCC, in each case other than in favor of Agent to secure the Obligations; provided, that nothing herein shall be deemed to prohibit a control agreement that is executed by both Agent and a subordinated creditor in form and substance reasonably acceptable to Agent;

(x)         guaranty or otherwise become liable with respect to the obligations (other than the Obligations and guarantees in respect of Permitted Indebtedness) of another Person;