UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934



Date of Report (Date of earliest event reported): December 28, 2016
 
 
Blonder Tongue Laboratories, Inc.
(Exact Name of registrant as specified in its charter)
 
 
 
Delaware
(State or other jurisdiction of incorporation)
 
 
 
1-14120
(Commission File Number)
 
 
 
52-1611421
(I.R.S. Employer Identification No.)
 
 
One Jake Brown Road, Old Bridge, New Jersey    08857
(Address of principal executive offices)  (Zip Code)
 
 
 
Registrant's telephone number, including area code:  (732) 679-4000
 
 
Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01
 
Entry into a Material Definitive Agreement

On December 28, 2016, Blonder Tongue Laboratories, Inc. (the "Company"), R. L. Drake Holdings, LLC, a wholly-owned subsidiary of the Company ("RLD" and with the Company, collectively, "Borrower"), Blonder Tongue Far East, LLC, a wholly-owned subsidiary of the Company ("Blonder Tongue Far East"), as a guarantor and a credit party, and Sterling National Bank (as lender and as administrative agent, "Sterling") entered into a Loan and Security Agreement (the "Loan Agreement").

The Loan Agreement provides the Company with a credit facility in an aggregate amount of $8,500,000 consisting of a $5,000,000 asset-based revolving line of credit and a $3,500,000 amortizing term loan.  The credit facility matures in December 2019.  Interest on the revolving line of credit is variable, based upon the 30-day LIBOR rate (currently 0.76%) plus a margin of 4.00%.  Interest on the term loan also is variable, based upon the 30-day LIBOR rate (currently 0.76%) plus a margin of 4.50%. The term loan will amortize at the rate of $19,444 per month. All outstanding indebtedness under the Loan Agreement is secured by all of the assets of the Company and its subsidiaries, and is guaranteed by Blonder Tongue Far East.

The Loan Agreement contains customary covenants, including restrictions on the incurrence of additional indebtedness, encumbrances on Borrower's assets, the payment of cash dividends or similar distributions, the repayment of any subordinated indebtedness and the sale or other disposition of Borrower's assets. In addition, the Company must maintain (i) a fixed charge coverage ratio of not less than 1.1 to 1.0 for any fiscal month (determined as of the last day of each fiscal month on a rolling twelve-month basis, as calculated for the Company and its consolidated subsidiaries) and (ii) a leverage ratio of not more than 2.0 to 1.0 for any fiscal month (determined as of the last day of each fiscal month, as calculated for the Company and its consolidated subsidiaries).  Events of default under the Loan Agreement include Borrower's payment defaults, material misrepresentations, uncured breaches of covenants, cross defaults with certain other indebtedness, bankruptcy and insolvency events, changes of control and the occurrence of certain material adverse events.

A portion of the proceeds received by the Company under the Loan Agreement has been used to repay all amounts outstanding under the Company's existing Revolving Credit, Term Loan and Security Agreement with Santander Bank, N.A. (as amended, the "Santander Agreement"), which was terminated on December 28, 2016.  The Santander Agreement was scheduled to expire December 31, 2016.  Other proceeds may be used for working capital in the ordinary course of Borrower's business.

Contemporaneously with the entry into the Loan Agreement, (i) the Company and Sterling also entered into a Mortgage, Assignment of Leases and Rents, Security Agreement, Fixture Filing and Financing Statement (the "Mortgage"), pursuant to which the obligations of the Borrowers under the Loan Agreement are secured by a mortgage on the Company's headquarters property in Old Bridge, New Jersey, (ii) Blonder Tongue Far East entered into a guaranty agreement (the "Guaranty Agreement") with Sterling whereby in the event of default by Borrower, Blonder Tongue Far East agrees to perform under the Loan Agreement, and (iii) Borrower, Sterling and the holders of the Company's outstanding senior subordinated convertible indebtedness, entered into a subordination agreement (the "Subordination Agreement"), pursuant to which such holders acknowledged and agreed that their rights to payment and the priority of their liens, will be subordinate to the rights of Sterling and the lenders under the Loan Agreement.
 
2


The foregoing summaries of the Loan Agreement, the Guaranty Agreement,  the Subordination Agreement, and the Mortgage are not complete and are qualified in their entirety by reference to the full text of those agreements, which are attached hereto as Exhibit 10.1, Exhibit 10.3 , Exhibit 10.4, and Exhibit 10.5, respectively, and are incorporated herein by reference.

Item 1.02
 
Termination of a Material Definitive Agreement

As described in Item 1.01 above, in connection with the entry into the Loan Agreement, on December 28, 2016, the Company repaid all amounts outstanding under the Santander Agreement and terminated such agreement.

Item 2.03
 
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information contained in Item 1.01 above is hereby incorporated by reference into this Item 2.03.  Upon a default under the Loan Agreement, including the non-payment of principal or interest, the obligations of Borrower may be accelerated and Sterling may pursue its rights under the Loan Agreement, the Guaranty Agreement, the Uniform Commercial Code and any other applicable law or in equity.
Item 8.01
 
Other Events

On January 3, 2017, the Company issued a press release regarding the entry into the Loan Agreement.  A copy of the press release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.

Item 9.01
 
Financial Statements and Exhibits

(d)   Exhibits.  The following exhibits are filed herewith:

Exhibit No.
Description
   
10.1
Loan and Security Agreement dated as of December 28, 2016 by and between Blonder Tongue Laboratories, Inc. and R. L. Drake Holdings, LLC, as Borrowers, Blonder Tongue Far East, LLC, as a Guarantor and a Credit Party and Sterling National Bank, as Administrative Agent and as a Lender, and the other Lenders from time to time party thereto.
   
10.2
Form of Term RE Note dated December 28, 2016.
 
3

 
   
10.3
Guaranty Agreement effective as of December 28, 2016 by and between Sterling National Bank, as administrative and collateral agent for the Lender Parties identified therein, and Blonder Tongue Far East, LLC, as Guarantor.
   
10.4
Subordination Agreement dated as of December 28, 2016 by and between Sterling National Bank, as administrative and collateral agent for the Senior Lenders identified therein, and the Junior Creditor identified therein.
   
10.5
Mortgage, Assignment of Leases and Rents, Security Agreement, Fixture Filing and Financing Statement made as of December 28, 2016 by Blonder Tongue Laboratories, Inc. to Sterling National Bank, as administrative agent for the benefit of itself and the other Lender Parties identified therein.
   
99.1
Press Release dated January 3, 2017.

 
4

 


SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
BLONDER TONGUE LABORATORIES, INC.



By: /s/ Eric Skolnik  
Eric Skolnik
Senior Vice President and Chief Financial Officer
Date: January 4, 2017

 
5




EXHIBIT INDEX

Exhibit No.
Description
   
10.1
Loan and Security Agreement dated as of December 28, 2016 by and between Blonder Tongue Laboratories, Inc. and R. L. Drake Holdings, LLC, as Borrowers, Blonder Tongue Far East, LLC, as a Guarantor and a Credit Party and Sterling National Bank, as Administrative Agent and as a Lender, and the other Lenders from time to time party thereto.
   
10.2
Form of Term RE Note dated December 28, 2016.
   
10.3
Guaranty Agreement effective as of December 28, 2016 by and between Sterling National Bank, as administrative and collateral agent for the Lender Parties identified therein, and Blonder Tongue Far East, LLC, as Guarantor.
   
10.4
Subordination Agreement dated as of December 28, 2016 by and between Sterling National Bank, as administrative and collateral agent for the Senior Lenders identified therein, and the Junior Creditor identified therein.
   
10.5
Mortgage, Assignment of Leases and Rents, Security Agreement, Fixture Filing and Financing Statement made as of December 28, 2016 by Blonder Tongue Laboratories, Inc. to Sterling National Bank, as administrative agent for the benefit of itself and the other Lender Parties identified therein.
   
99.1
Press Release dated January 3, 2017.


6
 
 
EXHIBIT 10.1

 

LOAN AND SECURITY AGREEMENT
by and between
BLONDER TONGUE LABORATORIES, INC.
and
R. L. DRAKE HOLDINGS, LLC
as Borrowers,
BLONDER TONGUE FAR EAST, LLC
as a Guarantor and a Credit Party
STERLING NATIONAL BANK
as Administrative Agent


and
THE LENDERS FROM TIME TO TIME PARTY HERETO
Dated as of December 28, 2016
 

 

 
Table of Contents
 
   
ARTICLE I
DEFINITIONS
1
 
   
 
Section 1.1.
Definitions
1
   
 
Section 1.2.
Interpretive Provisions
22
   
       
ARTICLE II
LOANS
23
     
     
 
Section 2.1.
Loans
23
     
 
Section 2.2.
Request for and Making of Revolving Loans; Swing Loans
24
     
 
Section 2.3.
Deemed Request for Revolving Loans
27
     
 
Section 2.4.
Protective Advances
27
     
 
Section 2.5.
Settlement of Swing Loans
28
     
 
Section 2.6.
Cross Guaranty
28
     
     
ARTICLE III
INTEREST, FEES, REIMBURSEMENTS30
   
     
 
Section 3.1.
Interest
30
 
 
Section 3.2.
Fees
30
 
 
Section 3.3.
Increased Costs and Reduced Return
31
 
 
Section 3.4.
Illegality
32
 
 
Section 3.5.
Taxes
32
 
 
Section 3.6.
Maximum Interest; Controlling Limitation
35
 
     
ARTICLE IV
PAYMENT
36
 
     
 
Section 4.1.
Interest
36
 
 
Section 4.2.
Prepayment; Mandatory Payment of Deficiencies
36
 
 
Section 4.3.
Mandatory Payments; Payment on the Termination Date
36
 
 
Section 4.4.
Mandatory Prepayment in Respect of Certain Events
37
 
 
Section 4.5.
Early Termination; Prepayment Penalty
37
 
 
Section 4.6.
General Payment Provisions
37
 
 
Section 4.7.
Application
37
 
 
Section 4.8.
Reinstatement
38
 
 
Section 4.9.
Account Stated
38
 
     
ARTICLE V
COLLATERAL
38
 
     
 
Section 5.1.
Security Interest
38
 
 
Section 5.2.
Perfection and Protection of Administrative Agent's Security Interest
39
 
 
Section 5.3.
Collateral Proceeds Management
39
 
 
Section 5.4.
Examinations; Inspections; Verifications
41
 
 
Section 5.5.
Appraisal
41
 
 
Section 5.6.
Right to Cure
42
 
 
Section 5.7.
Power of Attorney
42
 
 
Section 5.8.
Preservation of Administrative Agent's Rights
43
 
 
Section 5.9.
Deficiency
43
 
 

     
ARTICLE VI
CONDITIONS
43
 
     
 
Section 6.1.
Conditions Precedent to Initial Loan
43
 
 
Section 6.2
.Conditions Precedent to all Loans
46
 
     
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
47
 
     
 
Section 7.1.
Fundamental Information
47
 
 
Section 7.2.
Prior Transactions
47
 
 
Section 7.3.
Subsidiaries
47
 
 
Section 7.4.
Authorization, Validity and Enforceability
47
 
 
Section 7.5.
Noncontravention
48
 
 
Section 7.6.
Financial Statements
48
 
 
Section 7.7.
Litigation
48
 
 
Section 7.8.
ERISA and Employee Benefit Plans
48
 
 
Section 7.9.
Compliance with Laws
49
 
 
Section 7.10.
Taxes
49
 
 
Section 7.11.
Location of Collateral and Books and Records
49
 
 
Section 7.12.
Accounts
49
 
 
Section 7.13.
Inventory
49
 
 
Section 7.14.
Documents, Instruments, and Chattel Paper
49
 
 
Section 7.15.
Proprietary Rights
50
 
 
Section 7.16.
Investment Property
50
 
 
Section 7.17.
Real Property and Leases
50
 
 
Section 7.18.
Material Agreements
50
 
 
Section 7.19.
Bank Accounts
51
 
   
Section 7.20.Title to Property
51
 
 
Section 7.21.
Debt
51
 
 
Section 7.22.
Liens
51
 
 
Section 7.23.
Solvency
51
 
 
Section 7.24.
Non-Regulated Entities
51
 
 
Section 7.25.
Governmental Authorization
51
 
 
Section 7.26.
Investment Banking or Finder's Fees
52
 
 
Section 7.27.
Full Disclosure
52
 
 
Section 7.28.
Other Obligations and Restrictions
52
 
 
Section 7.29.
Acts of God and Labor Matters
52
 
 
Section 7.30.
Environmental and Other Laws
52
 
 
Section 7.31.
Security Interests
53
 
 
Section 7.32.
Commercial Tort Claims
53
 
 
Section 7.33.
Common Enterprise
53
 
 
Section 7.34.
Anti-Terrorism Laws
54
 
 
Section 7.35.
Trading with the Enemy
54
 
 
Section 7.36.
Anti-Corruption Laws and Sanctions
54
 
 
Section 7.37.
Continuing Representations
55
 
     
ARTICLE VIII
AFFIRMATIVE COVENANTS
55
 
     
 
Section 8.1.
Existence and Good Standing
55
 
 
Section 8.2.
Compliance with Agreements and Laws
55
 
 
Section 8.3.
Books and Records
55
 
 
 
ii

 
Section 8.4.
Financial Reporting
55
 
 
Section 8.5.
Collateral Reporting
57
 
 
Section 8.6.
Compliance Certificate
58
 
 
Section 8.7.
Notification to Administrative Agent
58
 
 
Section 8.8.
Accounts
59
 
 
Section 8.9.
Inventory
59
 
 
Section 8.10.
Equipment and Machinery
59
 
 
Section 8.11.
Insurance
60
 
 
Section 8.12.
Payment of Trade Liabilities, Taxes, Etc
60
 
 
Section 8.13.
Protective Advances
60
 
 
Section 8.14.
Evidence of Compliance
61
 
 
Section 8.15.
Environmental Matters; Environmental Reviews
61
 
 
Section 8.16.
Subsidiaries; Fundamental Information
61
 
 
Section 8.17.
Further Assurances
62
 
 
Section 8.18.
Maintenance of Properties
62
 
         
ARTICLE IX
NEGATIVE COVENANTS
62
 
       
 
Section 9.1.
Fundamental Changes
62
 
 
Section 9.2.
Collateral Locations
62
 
 
Section 9.3.
Use of Proceeds; Convertible Debt Proceeds
62
 
Section 9.4.
Business
63
 
 
Section 9.5.
Debt
63
 
 
Section 9.6.
Subordinated Debt
64
 
 
Section 9.7.
Liens
64
 
 
Section 9.8.
Disposition of Property
64
 
 
Section 9.9.
Sale and Leaseback
65
 
 
Section 9.10.
Distributions; Capital Contribution; Redemption
65
 
 
Section 9.11.
Investments
66
 
 
Section 9.12.
Transactions with Affiliates
66
 
 
Section 9.13.
New Subsidiaries
66
 
 
Section 9.14.
Financial Covenants
66
 
 
Section 9.15.
Fiscal Year; Accounting Method
66
 
 
Section 9.16.
Impairment of Security Interest
66
 
 
Section 9.17.
Prohibited Contracts
67
 
 
Section 9.18.
Deposit Accounts and Securities Accounts
67
 
 
Section 9.19.
Compliance with ERISA
67
 
       
ARTICLE X
EVENT OF DEFAULT
67
 
       
 
Section 10.1.
Event of Default
67
 
       
ARTICLE XI
REMEDIES
69
 
       
 
Section 11.1.
Obligations
69
 
 
Section 11.2.
Collateral
70
 
 
Section 11.3.
Injunctive Relief
71
 
 
Section 11.4.
Setoff
71
 
     
ARTICLE XII
TERM AND TERMINATION
71
 
       
 
Section 12.1.
Term and Termination
71
 
 
 
iii

       
ARTICLE XIII
ADMINISTRATIVE AGENT
71
 
         
 
Section 13.1.
Appointment and Authority
71
 
 
Section 13.2.
Exculpatory Provisions
72
 
 
Section 13.3.
Reliance by Administrative Agent
73
 
 
Section 13.4.
Non-Reliance on Administrative Agent and other Lenders
73
 
 
Section 13.5.
Rights as a Lender
73
 
 
Section 13.6.
Sharing of Set-Offs and Other Payments
73
 
 
Section 13.7.
Investments
74
 
 
Section 13.8.
Resignation of Administrative Agent
74
 
 
Section 13.9.
Delegation of Duties
75
 
 
Section 13.10.
Collateral Matters
75
 
 
Section 13.11.
Agency for Perfection
76
 
 
Section 13.12.
Concerning the Collateral and Related Loan Documents
76
 
       
ARTICLE XIV
MISCELLANEOUS
76
 
         
 
Section 14.1.
Waivers & Amendments
76
 
 
Section 14.2.
Severability
76
 
 
Section 14.3.
Governing Law; Venue
77
 
 
Section 14.4.
WAIVER OF JURY TRIAL
77
 
 
Section 14.5.
Fees and Expenses
77
 
 
Section 14.6.
Notices
78
 
 
Section 14.7.
Waiver of Notices
79
 
 
Section 14.8.
Non-applicability of Chapter 346 of Texas Finance Code
79
 
 
Section 14.9.
Binding Effect
79
 
 
Section 14.10.
INDEMNITY BY CREDIT PARTIES
79
 
 
Section 14.11.
Limitation of Liability
80
 
 
Section 14.12.
Continuing Rights of Lenders in Respect of Obligations
80
 
 
Section 14.13.
Assignments
80
 
 
Section 14.14.
Confidentiality
81
 
 
Section 14.15.
USA Patriot Act Notice
82
 
 
Section 14.16.
Schedules
83
 
 
Section 14.17.
Counterparts
83
 
 
Section 14.18.
Captions
83
 
 
 
 
iv

Schedule 1.1
-
Lenders' Commitments
Schedule 7.1
-
Fundamental Information; Equity Ownership Interests
Schedule 7.2
-
Prior Transactions
Schedule 7.7
-
Litigation
Schedule 7.8
-
ERISA Benefit Plans
Schedule 7.11
-
Location of Collateral
Schedule 7.15
-
Proprietary Rights
Schedule 7.16
-
Investment Property
Schedule 7.17
-
Real Property and Leases
Schedule 7.18
-
Material Agreements
Schedule 7.19
-
Bank Accounts
Schedule 7.21
-
Debt
Schedule 7.22
-
Liens
Schedule 7.30
-
Release of Hazardous Materials
Schedule 7.32
-
Commercial Tort Claims
     
     
Exhibit A-1
-
U.S. Tax Compliance Certificate 1
Exhibit A-2
-
U.S. Tax Compliance Certificate 2
Exhibit A-3
-
U.S. Tax Compliance Certificate 3
Exhibit A-4
-
U.S. Tax Compliance Certificate 4
 
v


LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement is executed and entered into as of December 28, 2016, by and among:  (a) BLONDER TONGUE LABORATORIES, INC., a Delaware corporation (together with its successors and permitted assigns, " Parent "), and R. L. DRAKE HOLDINGS, LLC, a Delaware limited liability company (together with its permitted successors and assigns, " Drake "), as Borrowers (as such term is hereinafter defined), (b) BLONDER TONGUE FAR EAST, LLC, a Delaware limited liability company (together with its permitted successors and assigns, " Far East "), as a Guarantor and a Credit Party (as such terms are hereinafter defined), (c) the lenders from time to time party hereto (such lenders, together with their respective successors and permitted assigns, are referred to hereinafter collectively as the " Lenders " and each is a " Lender ") and (d) STERLING NATIONAL BANK, a national banking association, as administrative and collateral agent (in such capacity, and including its successors and permitted assigns, the " Administrative Agent ") for the Lender Parties (as hereinafter defined) and as Swing Lender (as such term is hereinafter defined).
RECITALS
Administrative Agent, each other Lender Party, each Borrower and each other Credit Party desire to enter into certain financing arrangements according to the terms and provisions as set forth hereinbelow.  Therefore, for value received, the receipt and sufficiency of which is hereby acknowledged, together with the mutual benefits provided herein, Administrative Agent, each other Lender Party, each Borrower and each other Credit Party hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1.   Definitions .  The following definitions shall apply throughout this Agreement:
" Account " has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and includes, without limitation, a right to payment of a monetary obligation, whether or not earned by performance, for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, or for services rendered or to be rendered and further includes, without limitation, any "payment intangible" (as defined in Article 9 of the UCC), together with all income, payments and proceeds thereof, owed by an issuer of a credit or debit card or any servicing or processing agent thereof, resulting from charges by a customer in connection with the sale of goods or for services rendered.
" Account Debtor " means a Person obligated on an Account, Chattel Paper, or General Intangible.
" Adjusted LIBOR Rate " means, for any Loan, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by Administrative Agent to be equal to the sum of the LIBOR Rate plus the Applicable Margin for such Loan.
" Administrative Agent " has the meaning given to such term in the preamble hereto.
 
LOAN AND SECURITY AGREEMENT - Page 1
DAL 79531933v13

" Administrative Agent Account " means Sterling National Bank account number 6700044124, ABA number 221970443, or such other account as Administrative Agent may from time to time specify to Borrower Representative in writing.
" Administrative Agent's Liens " means Liens granted (or purported to be granted) by the Credit Parties in favor of Administrative Agent, for the benefit of Lender Parties, pursuant to this Agreement or any of the other Loan Documents.
" Affiliate " means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person.  For purposes of this definition, "control" of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Equity Interests, by contract, or otherwise; provided , that for purposes of the definition of Eligible Account and Section 9.12 :  (a) any Person which owns (directly or indirectly) 10% or more of the outstanding Equity Interests of another Person, (b) each director (or comparable manager) of a Person and (c) each partnership in which a Person is a general partner shall, in each case, be deemed an Affiliate of such Person.
" Agreement " means this Loan and Security Agreement and all schedules, exhibits and addenda hereto, as may be renewed, extended, amended, supplemented, restated or otherwise modified from time to time.
" Agreement Date " means the date as of which this Agreement is dated as specified in the preamble to this Agreement.
" Anti-Corruption Laws " means all laws, rules, and regulations of any jurisdiction applicable to Credit Parties and their Subsidiaries from time to time concerning or relating to bribery or corruption, all as amended, supplemented or replaced from time to time.
" Anti-Terrorism Laws " shall mean any laws, rules and regulations of any jurisdiction applicable to Credit Parties and their Subsidiaries relating to terrorism, trade sanctions programs and embargoes, import/export licensing, bribery, or money laundering, all as amended, supplemented or replaced from time to time.
" Applicable Law " means, as to a Person, any law (statutory or common), treaty, ordinance, decree, rule, regulation, executive order or code of a Governmental Authority or judgment, decree, injunction, order or determination of a court or binding arbitrator, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject, including, without limitation, all Environmental Laws, all Anti-Terrorism Laws, all Anti-Corruption Laws, the Patriot Act and the Trading with the Enemy Act.
" Applicable Margin " means (a) with respect to Revolving Loans, 4.0% per annum and (b) with respect to the Term RE Loan, 4.5% per annum.
" Availability " means, with respect to Revolving Loans at any time of determination, an amount equal to (a) the Borrowing Base less (b) the unpaid principal balance of Revolving Loans, in each case determined at such time.
" Bank Products " means any one or more of the following financial products or accommodations extended to a Credit Party by a Lender or an Affiliate of a Lender:  (a) credit cards (including commercial credit cards and including so-called "procurement cards" or "P-Cards"), (b) credit card processing services, (c) debit cards, (d) stored value cards or (e) Cash Management Services.
" Bankruptcy Code " means the United States Bankruptcy Code (11 U.S.C. § 101 et   seq. ).
 
 
LOAN AND SECURITY AGREEMENT - Page 2
DAL 79531933v13

" Borrowers " means, collectively, Parent, Drake and each other Person who becomes a Borrower hereunder in accordance with the terms of Section 8.16 , whether now or hereafter existing (but in any event not including Far East, any other Guarantor or any Immaterial Subsidiary), and their successors and assigns.
" Borrower Representative " means Parent, as agent for each other Borrower pursuant to Section 2.2(d) .
" Borrowing Base " means, as of any day of determination, an amount equal to the difference between:
(a)   the sum of (i) eighty-five percent (85%) of the Net Amount of Eligible Accounts (exclusive of Eligible Accounts owing by VBrick), plus (ii) twenty-five percent (25%) of the Net Amount of Eligible Accounts owing by VBrick, plus (iii) the lesser of (1) eighty-five percent (85%) of the Net Amount of Eligible Inventory, (2) fifty percent (50%) of the lower of cost or market value of Eligible Inventory and (3) the Inventory Sublimit, minus
(b)   the aggregate amount of reserves implemented by Administrative Agent pursuant to Section 2.1 , in each case determined as of such day;
provided , however , that Administrative Agent shall have the continuing right to reduce the percentage specified in clause (a)(i) of this definition by one percentage point or fraction of a percentage point for every percentage point or fraction of a percentage point of dilution of Accounts over five percent.
" Borrowing Base Certificate " means a certificate of Borrower Representative, signed by a Responsible Officer of Borrower Representative, setting forth the calculation of the Borrowing Base, including a calculation of each component thereof, all in form, presentation and detail satisfactory to Administrative Agent in its Permitted Discretion.
" Borrowing Notice " means a request for a Revolving Loan made by the Borrower Representative in compliance with Section 2.2 .
" Business Day " means (a) any day that is not a Saturday, Sunday or a day on which commercial banks in Dallas, Texas or New York, New York are required or permitted to be closed and (b) with respect to any borrowing, payment or other dealings with respect to any Loan, any day which is a Business Day described in clause (a) preceding and which is also a day on which dealings in Dollar deposits are carried out in the London interbank market.
" Capital Expenditures " has the meaning prescribed for such term by GAAP.
" Capital Lease " means, with respect to any Person, any lease of property by such Person which, in accordance with GAAP, should be reflected as a capital lease on the balance sheet of such Person.
" Change of Control " means that (a) any "person" or "group" (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) shall have acquired beneficial ownership, directly or indirectly, of Equity Interests of Parent (or other securities convertible into such Equity Interests) representing fifty percent (50%) or more of the combined voting power of all Equity Interests of Parent entitled (without regard to the occurrence of any contingency) to vote for the election of members of the Board of Directors of Parent; provided , however , that the conversion of all or any portion of the Convertible Debt into shares of common stock of Parent in accordance with the terms of the Convertible Debt Documents shall not constitute a "Change of Control", (b) Robert J. Pallé shall cease to own and control, of record and beneficially, at least twenty-five percent (25%) of the Equity Interests of Parent, (c) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Parent by Persons who were neither (i) nominated by the board of directors of Parent nor (ii) appointed by directors so nominated, and (d) Parent shall no longer own, of record and beneficially, one-hundred percent (100%) of the Equity Interests and voting interest of each other Credit Party.
 
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" Chattel Paper " has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and includes, without limitation, a record or records that evidence both a monetary obligation and a security interest in specific goods, a security interest in specific goods and software used in the goods, a security interest in specific goods and license of software used in the goods, a lease of specific goods, or a lease of specific goods and license of software used in the goods.  " Chattel Paper " includes, without limitation, electronic chattel paper.
" Collateral " means all personal and real property of the Credit Parties in which a Lien is granted (or purported to be granted) to Administrative Agent (for the benefit of Lender Parties) or any other Lender Party, whether pursuant to this Agreement or any other Loan Document.
" Collateral Access Agreement " means a landlord waiver or subordination, bailee letter, acknowledgment agreement, use agreement or other agreement of any lessor, warehouseman, processor, consignee, or other Person in possession of, having a Lien upon, or having rights or interests in any of Credit Parties' books and records, Equipment, Inventory or other Collateral, in each case, in form and substance satisfactory to Administrative Agent in its Permitted Discretion.
" Collection Account " has the meaning given to such term in Section 5.3 .
" Commercial Tort Claim " has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and includes, without limitation, in the case of a Credit Party, any tort cause of action claimed by such Credit Party, including those listed on Schedule 7.32 .
" Commitment " means, for each Lender, the obligation of such Lender to make Loans to Borrowers pursuant to the terms hereof in an aggregate amount not exceeding the amount set forth for such Lender in Schedule 1.1 , as such amount may be modified from time to time pursuant to the terms hereof; provided , that no Lender's Commitment to make Revolving Loans shall exceed such Lender's Percentage Share of the Revolving Credit Limit.
" Compliance Certificate " means a certificate meeting the requirements of Section 8.6 and otherwise in form satisfactory to Administrative Agent in its Permitted Discretion.
" Connection Income Taxes " means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
" Control Agreement " means, with respect to any Deposit Account or Securities Account, a control agreement, in form and substance acceptable to Administrative Agent in its Permitted Discretion, executed by Administrative Agent, the Credit Party owner of such Deposit Account or Securities Account and the applicable bank (with respect to a Deposit Account) or Securities Intermediary (with respect to a Securities Account), and pursuant to which Administrative Agent obtains "control" pursuant to the UCC over such Deposit Account or Securities Account (as applicable).
" Convertible Debt " means and refers to the obligations of the Parent and Drake due from time to time under and pursuant to the Convertible Debt Agreement.
 
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" Convertible Debt Agreement " means that certain Amended and Restated Senior Subordinated Convertible Loan and Security Agreement, dated as of March 28, 2016, among (a) Parent and Drake, as borrowers, (b) Robert J. Pallé (as agent for the lenders), and (c) Robert J. Pallé, Carol M. Pallé,  Steven L. Shea and James H. Williams, as lenders.
" Convertible Debt Documents " means, collectively, the Convertible Debt Agreement, the Convertible Debt Mortgage and all other documents, instruments and agreements evidencing, securing  or otherwise relating to the Convertible Debt and the conversion of the Convertible Debt into Equity Interests of Parent, each as existing on the Agreement Date and as amended, supplemented, restated or otherwise modified from time to time with the consent of the Administrative Agent in its Permitted Discretion.
" Convertible Debt Mortgage " means that certain Amended and Restated Mortgage and Security Agreement, dated as of March 28, 2016, between Parent and Robert J. Pallé, as agent for the lenders in respect of the Convertible Debt.
" Credit Parties " means, collectively, each Borrower and each Guarantor.
" Debt " means, with respect to a Person, (a) all obligations for borrowed money of such Person, (b) all obligations of such Person evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations in respect of letters of credit, bankers acceptances, or other similar financial products, (c) all obligations or liabilities of others secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) a Lien on any asset of such Person, irrespective of whether such obligation or liability is assumed, (d) all obligations of such Person in respect of the deferred purchase price of assets or services (other than trade payables incurred in the ordinary course of business and repayable in accordance with customary trade practices), (e) any obligation of such Person guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation of the type otherwise described in this definition of any other Person, (f) asset securitizations and synthetic leases, (g) all obligations of such Person as a lessee under Capital Leases, (h) all net indebtedness, liabilities and other monetary obligations under interest rate, credit, commodity and foreign exchange swaps or similar transactions entered into for the purpose of hedging such Person's exposure to fluctuations in interest or exchange rates, currency valuations or commodity prices and all cancellations, buybacks, reversals, terminations, or assignments of any such transaction, and (i) all liabilities which would under GAAP be shown on such Person's balance sheet as a liability.
" Deed of Trust " means, individually and collectively, one or more mortgages, deeds of trust, or deeds to secure debt, executed and delivered by any Credit Party, each in favor of Administrative Agent and in form and substance satisfactory to Administrative Agent in its Permitted Discretion, encumbering the Real Property Collateral of such Credit Party.
" Default " means an event, condition or occurrence that, with the giving of notice, the passage of time, or both, would constitute an Event of Default.
" Default Rate " means a rate per annum equal to the lesser of (a) the sum of (i) the Adjusted LIBOR Rate for such Loan (which shall be adjusted, from time to time, simultaneously with any change in the LIBOR Rate) plus (ii) two percent (2.0%) and (b) the Maximum Rate.
" Defaulting Lender " means any Lender that fails to make any advance (or other extension of credit) that it is required to make hereunder on the date that it is required to do so hereunder.
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" Defaulting Lender Rate " means the interest rate then applicable to Revolving Loans.
" Deposit Account " has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and includes, without limitation, a nonnegotiable certificate of deposit or a demand, time, savings, passbook, or similar account maintained with a bank.
" Designated Account " means account No. 6700074809 maintained at Sterling by Parent.
" Distribution " means, for any Person:  (a) any dividend, payment or distribution (whether in cash, securities or other property, but excluding dividends or distributions in the form of Equity Interests of such Person to (i) employees, officers and/or directors pursuant to equity incentive plans of such Person and (ii) customers and vendors of such Person in the ordinary course of such Person's business, as determined by such Person's board of directors or managers (or similar governing body) consistent with Applicable Law) made on account of any class of such Person's Equity Interests, or (b) any payment (whether in cash, securities or other property, but excluding dividends or distributions in the form of Equity Interests of such Person to (i) employees, officers and/or directors pursuant to equity incentive plans of such Person and (ii) customers and vendors of such Person in the ordinary course of such Person's business, as determined by such Person's board of directors or managers (or similar governing body) consistent with Applicable Law) on account of, or setting apart of assets for a sinking or analogous fund for,  the purchase, redemption, retirement, cancellation, termination, defeasance or acquisition of any (i) shares of its Equity Interests or (ii) options, warrants or other rights to purchase Equity Interests in such Person.
" Document " has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and includes, without limitation, any bill of lading, dock warrant, dock receipt, warehouse receipt or order for the delivery of goods, or any other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold and dispose of the document and the goods it covers, and which purports to be issued by or addressed to a bailee and purporting to cover goods in the bailee's possession which are either identified or are fungible portions of an identified mass.  " Document " includes, without limitation, electronic documents.
" Dollars " or " $ " refers to lawful money of the United States of America.
" EBITDA " means, with respect to Parent and its consolidated Subsidiaries for any period, an amount equal to (a) consolidated net earnings (or loss), for such period minus (b) extraordinary gains for such period plus (c) Interest Expense (whether paid or accrued), income taxes, depreciation and amortization for such period plus (d) the Permitted EBITDA Add-Back Amount, in each case determined for Parent and its Subsidiaries on a consolidated basis in accordance with GAAP on a rolling twelve month basis ending on the last day of the measurement period.
" Eligible Account " means, with respect to any Borrower, an Account of such Borrower which is acceptable to Administrative Agent for purposes of determining the Borrowing Base and meets all criteria for inclusion in the Borrowing Base as determined and established by Administrative Agent from time to time in its Permitted Discretion.  Without limiting the discretion of Administrative Agent to establish other criteria of ineligibility, unless otherwise agreed by Administrative Agent, Eligible Accounts of any Borrower shall not include any Account: (a) which is not owned exclusively by such Borrower, (b) which is not subject to a first priority and perfected security interest in favor of Administrative Agent or which is subject to any other Lien (other than Permitted Liens securing the Convertible Debt), (c) with respect to which more than 90 days have elapsed since the date of the original invoice or which is unpaid, in whole or in part, more than 60 days after its original due date, (d) if thirty-five percent (35%) or more of the aggregate Dollar
 
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amount of outstanding Accounts owed at such time by the Account Debtor thereon to such Borrower or any of its Affiliates is classified as ineligible under clause (c) above, (e) which are owed by an Account Debtor whose total obligations (including the obligations of such Account Debtor's Affiliates) owing to such Borrower and/or its Affiliates would exceed (i) with respect to Toner Cable Equipment, Inc., thirty-five percent (35%), (ii) with respect to Best Buy, World Cinema, Inc., Charter Communications and North American Cable, thirty percent (30%), and (iii) with respect to all other Account Debtors, twenty percent (20%), of the aggregate amount of all Eligible Accounts of the Borrowers, to the extent of such excess, (f) which represents a sale on a bill-and-hold, guaranteed sale, sale and return, sale on approval, consignment, or other repurchase or return basis or a progress billing under an agreement which requires further performance by such Borrower, is otherwise contingent on Borrower's completion of any future performance or is subject to any other terms by reason of which the payment by the Account Debtor may be conditioned (it being agreed that Accounts owing by VBrick pursuant to the arrangement in effect on the Agreement Date shall not be considered ineligible under this clause (f)), (g) with respect to which any of the following events has occurred as to the Account Debtor on such Account: death or judicial declaration of incompetency, if the Account Debtor is an individual, the filing of any petition for relief under the Bankruptcy Code or other insolvency laws, a general assignment for the benefit of creditors, the appointment of a receiver or trustee, application or petition for dissolution, its dissolution, the sale or transfer of all or any material part of the assets or the cessation of the business as a going concern, (h) owed by an Account Debtor which does not maintain its chief executive office in the United States or Canada (not including Quebec) or is not organized under the laws of the United States or Canada (not including Quebec) or any state or province thereof, (i) which is not payable in United States Dollars, (j) owed by an Account Debtor which is an Affiliate or employee of any Borrower or any of Borrowers' Affiliates, (k) with respect to which either the perfection, enforceability, or validity of Administrative Agent's Lien in such Account, or Administrative Agent's right or ability to obtain direct payment to Administrative Agent of the proceeds of such Account, is governed by any federal, state, provincial or local statutory requirements other than those of the UCC, or comparable law of Canada (not including Quebec), (l) owed by an Account Debtor to which such Borrower or any of its Affiliates are indebted in any way, or which is subject to any right of setoff or recoupment, or if the Account Debtor thereon has disputed liability or made any claim with respect to any other Account due from such Account Debtor, but in each such case only to the extent of such indebtedness, setoff, recoupment, dispute, or claim, (m) which is evidenced by a promissory note or other instrument or by chattel paper, (n) which arises out of a sale not made in the ordinary course of such Borrower's business, (o) with respect to which the goods giving rise to such Account have not been shipped and delivered to and accepted by the Account Debtor or the services giving rise to such Account have not been fully performed by such Borrower, and, if applicable, accepted by the Account Debtor, or with respect to which the Account Debtor has revoked its acceptance of any such goods or services, (p) which arises out of an enforceable contract or order which, by its terms, forbids, restricts or makes void or unenforceable the granting of a Lien by such Borrower to Administrative Agent with respect to such Account or otherwise requires the consent of the respective Account Debtor in order for the Administrative Agent to obtain direct payment of the proceeds of such Account, (q) with respect to which the Account Debtor is either (i) the United States or any department, agency, or instrumentality of the United States or (ii) any state of the United States or province or territory of Canada or any department, agency or instrumentality of such state, province or territory, (r) with respect to which the Account Debtor is a Sanctioned Person or Sanctioned Country, (s) with respect to which the books and records evidencing or otherwise relating to such Account are located in a public warehouse, are in possession of a bailee or are in a facility leased by such Borrower, unless the warehouseman, bailee or lessor, as the case may be, has executed an enforceable Collateral Access Agreement, (t) with respect to which Administrative Agent believes that the prospect of collection of such Account is impaired or that the Account may not be paid by reason of the Account Debtor's financial inability to pay, or (u) owed by an Account Debtor, to the extent the amount owing thereon exceeds the credit limit extended to such Account Debtor by the relevant Borrower.  The identification of specific exclusions from eligibility herein is not exclusive or exhaustive.  Administrative Agent reserves the right in its Permitted Discretion to establish additional or different criteria for determining Eligible Accounts, at any time, without prior notice.
 
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" Eligible Inventory " means, with respect to any Borrower, Inventory of such Borrower which is acceptable to Administrative Agent for purposes of determining the Borrowing Base and meets all criteria for inclusion in the Borrowing Base as determined and established by Administrative Agent from time to time in its Permitted Discretion.  Without limiting the discretion of Administrative Agent to establish other criteria of ineligibility, unless otherwise agreed by Administrative Agent, Eligible Inventory shall not include any Inventory (a) which is not owned exclusively by such Borrower or as to which Borrower does not have good, valid and marketable title thereto, (b) which is not subject to a first priority and perfected security interest in favor of Administrative Agent or which is subject to any other Lien (other than Permitted Liens securing the Convertible Debt), (c) other than finished goods and raw materials Inventory, (d) which is not in good condition, or is unmerchantable or does not meet all standards imposed by any Governmental Authority having regulatory authority over such goods or their use or sale, (e) which is not currently either usable or salable, at prices approximating at least cost, in the normal course of such Borrower's business, or is slow moving or stale, (f) which is obsolete or returned (it being agreed, however, that returned Inventory which is in its unopened, original box and returned to general stock shall not be ineligible under this clause (f) as returned Inventory) or repossessed or used goods taken in trade or goods that constitute spare parts, packaging and shipping materials or supplies used or consumed in such Borrower's business, (g) which is located outside the United States or is in-transit from vendors or suppliers, (h) as to which such Borrower does not have actual and exclusive possession thereof (either directly or through a bailee or agent of such Borrower who has executed a Collateral Access Agreement) or which is located in a public warehouse or is in possession of a bailee or in a facility leased by such Borrower or an Affiliate thereof unless the warehouseman, bailee, or lessor, as the case may be, has delivered to Administrative Agent a Collateral Access Agreement and unless it is segregated or otherwise separately identifiable from goods of others, if any, stored on the premises, (i) which is on consignment from any consignor, or on consignment to any consignee, (j) is subject to a bill of lading or other document of title or (k) that contains or bears any Proprietary Rights licensed to such Borrower by another Person (not including any Inventory subject to an "off the shelf" license as to which Administrative Agent has consented to) unless such Borrower has delivered to Administrative Agent a consent or sublicense agreement from such licensor in form and substance acceptable to Administrative Agent in its Permitted Discretion or Administrative Agent is otherwise satisfied that it may sell or otherwise dispose of such Inventory in accordance with Section 11.2 without infringing the rights of the licensor of such Proprietary Rights or violating any contract of such Borrower with such licensor (and without payment of any royalties other than any royalties due with respect to the sale or disposition of such Inventory pursuant to the existing license agreement).  The identification of specific exclusions from eligibility herein is not exclusive or exhaustive.  Administrative Agent reserves the right in its Permitted Discretion to establish additional or different criteria for determining Eligible Inventory, at any time, without prior notice.
" Eligible Transferee " means (a) at any time that an Event of Default has occurred and is continuing, any Person approved by Administrative Agent and (b) so long as no Event of Default is continuing, (i) any Lender (other than a Defaulting Lender) and any Affiliate of any Lender, (ii) a commercial bank, savings and loan association or savings bank organized under the laws of the United States or any state thereof, and having total assets in excess of $1,000,000,000, (iii) a commercial bank organized under the laws of any other country or political subdivision thereof so long as (1) such bank is acting through a branch or agency located in the United States or is organized under the laws of a country that is a member of the Organization for Economic Cooperation and Development or a political subdivision of such country and (2) such bank has total assets in excess of $1,000,000,000, and (iv) any other Person (other than a natural person) that is an "accredited investor" as defined in Regulation D under the Securities Act that extends credit or buys loans in the ordinary course of its business.
 
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 " Environmental Laws " means any and all applicable federal, state, provincial, foreign or local statutes, laws, rules, regulations, ordinances, codes, binding and enforceable guidelines, binding and enforceable written policies or rules of common law now or hereafter in effect and in each case as amended, or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, in each case relating to the environment, the effect on the environment or employee health or relating to emissions, discharges, releases or threatened releases of Hazardous Materials or any other pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment including ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.
" Equipment " has the meaning prescribed for such term as defined by the UCC (which definition is incorporated herein by reference), wherever located, and whether now or hereafter existing, and all parts thereof, all accessions thereto and all replacements therefor.  The Equipment includes, without limitation, with respect to a Person, all personal property used or useable by such Person in its business.
" Equity Interests " means, with respect to a Person, shares of capital stock, partnership interests, membership or limited liability company interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such interest.
" ERISA " means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto.
" ERISA Affiliate " means (a) any Person, trade or business (whether or not incorporated) subject to ERISA whose employees are treated as being employed by the same employer as the employees of any Credit Party under Section 414(b) of the IRC, (b) any Person, trade or business (whether or not incorporated) subject to ERISA whose employees are treated as being employed by the same employer as the employees of any Credit Party under Section 414(c) of the IRC, (c) solely for purposes of  Section 302 of ERISA and Section 412 of the IRC, any organization subject to ERISA that is a member of an affiliated service group of which any Credit Party is a member under Section 414(m) of the IRC, or (d) solely for purposes of  Section 302 of ERISA and Section 412 of the IRC, any Person subject to ERISA that is a party to an arrangement with any Credit Party and whose employees are aggregated with the employees of any Credit Party under Section 414(o) of the IRC.
" ERISA Benefit Plan " means any "employee benefit plan" (as defined in  Section 3(3) of ERISA) as to which any Credit Party or any ERISA Affiliate (a) is (currently or hereafter), or at any time during the immediately preceding six (6) years has, sponsored, maintained or contributed to on behalf of any of its employees or (b) has (currently or hereafter), or has had at any time within the preceding six (6) years, any liability (contingent or otherwise).
" Event of Default " has the meaning prescribed by Section 10.1 .
" Exchange Act " means the Securities Exchange Act of 1934, as in effect from time to time.
" Excluded Account " means (a) any Deposit Account of a Credit Party specially and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Credit Party's employees, (b) the TD Holding Account, so long as the amount held therein does not exceed $250,000 (unless any amount in excess thereof is transferred to the Parent Sterling Collection Account within one (1) Business Day, as set forth in Section 5.3 ) and (c) the TD Operating Account, so long as the amount held therein is $0 until such account is closed in accordance with Section 5.3 .
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" Excluded Property " means, with respect to any Credit Party, collectively, (i) property of such Credit Party subject to Liens permitted by clauses (d) or (m) of the definition of Permitted Liens solely in the event and to the extent that a grant or perfection of a Lien in favor of Administrative Agent on any such property is prohibited by or results in a breach or termination of, or constitutes a default under, the documentation governing such Liens or the obligations secured by such Liens (other than to the extent that such terms would be rendered ineffective pursuant to Section 9.406, 9.407, 9.408 or 9.409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction and other than to the extent all necessary consents to creation, attachment and perfection of the Administrative Agent's Liens thereon have been obtained) and, in any event, immediately upon the ineffectiveness, lapse or termination of such terms or the obtainment of such consents, such property shall cease to constitute Excluded Property and shall be Collateral, (ii) any personal property lease, contract, permit, license, franchise or letter of credit right of such Credit Party, solely in the event and to the extent that a grant or perfection of a Lien on such personal property lease, contract, permit, license, franchise or letter of credit right is prohibited by applicable law or results in a breach or termination of, or constitutes a default under, any such personal property lease, contract, permit, license, franchise or letter of credit right (other than to the extent that such law or terms would be rendered ineffective pursuant to Section 9.406, 9.407, 9.408 or 9.409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction and other than to the extent all necessary consents to creation, attachment and perfection of the Administrative Agent's Liens thereon have been obtained) and, in any event, immediately upon the ineffectiveness, lapse or termination of such law or terms or the obtainment of such consents, such personal property lease, contract, permit, license, franchise or letter of credit right shall cease to constitute Excluded Property and shall be Collateral, (iii) the voting equity interests of controlled foreign corporations (as defined in the IRC) of such Credit Party in excess of 65% of the voting rights of such corporations and (iv) 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 United States Patent and Trademark Office 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 cease to constitute Excluded Property and shall be Collateral.
" 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 any Lender, its applicable 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 any Recipient that is a Foreign Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to Applicable Law in effect on the date on which (i) such Recipient acquires such interest in the Loan or Commitment or (ii) such Recipient changes its lending office, except in each case to the extent that, pursuant to Section 3.5 , amounts with respect to such Taxes were payable either to such Recipient's assignor immediately before such Recipient became a party hereto or to such Recipient immediately before it changed its lending office, (c) Taxes resulting from such Recipient's failure to comply with Section 3.5(f) and (d) any U.S. federal withholding Taxes imposed under FATCA.
 
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" FATCA " means Sections 1471 through 1474 of the IRC, 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), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the IRC, any intergovernmental agreement entered into in connection with the implementation of such Sections of the IRC and any fiscal or regulatory legislation, rules or practices adopted pursuant to such intergovernmental agreement.
" Fiscal Month " means a calendar month.
" Fiscal Quarter " means one of four fiscal quarters of a Fiscal Year, each consisting of a period of three (3) consecutive Fiscal Months, with the first of such quarters beginning on the first day of a such Fiscal Year and the last of such quarters ending on the last day of such Fiscal Year.
" Fiscal Year " means Parent's fiscal year for financial accounting purposes, beginning on January 1 and ending on December 31 of such year.
" Fixed Charge Coverage Ratio " means, for Parent and its consolidated Subsidiaries on any date of determination, the ratio of (a) (i) EBITDA less (ii) the sum of (A) unfinanced Capital Expenditures plus (B) taxes paid in cash, plus (C) to the extent Distributions have not been reflected in net income, cash Distributions that are made and permitted pursuant to Section 9.10(ii) , to, (b) the sum of (i) Interest Expense paid in cash, plus (ii) principal payments made or required to be made on any and all long term Debt (other than in respect of the Revolving Loans), in each case determined for Parent and its Subsidiaries on a consolidated basis in accordance with GAAP on a rolling twelve month basis on such date of determination.
" Foreign Lender " means a Lender that is not a U.S. Person.
" GAAP " means generally accepted accounting principles in the United States, as in effect from time to time, consistently applied.  Notwithstanding anything herein to the contrary, all financial statements delivered hereunder shall be prepared and all financial covenants contained herein shall be calculated, without giving effect to any election under Statement of Financial Accounting Standards 159 (or any similar account principal) permitting a Person to value its financial liabilities at the fair value thereof.
" General Intangibles " has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and in any event includes, without limitation, all intangible personal property of every kind and nature (other than Accounts, Chattel Paper, Commercial Tort Claims, Deposit Accounts, Securities Accounts, Documents, Instruments, Investment Property, Letter of Credit Rights, Letters of Credit and money), including, without limitation, contract rights, business records, rights and claims against carriers and shippers, customer lists, registrations, licenses, franchises, tax refund claims, rights to indemnification, warranty or guaranty contract, claims for any damages arising out of or for breach or default under or in connection with any contract, rights to exercise or enforce remedies, powers and privileges under any contract and rights and claims to any amounts payable under any contract of insurance, including without limitation, business interruption, property, casualty, key employee life or any other insurance.
" Governmental Authority " means any federal, state or local government, any subdivision thereof, and any agency, entity, instrumentality or authority owned or controlled thereby.
" Guarantor " means, collectively, each Person executing a Guaranty Agreement in favor of Administrative Agent (including, without limitation, Far East and any other direct or indirect Subsidiary of Parent, whether now or hereafter existing, other than a Borrower hereunder or an Immaterial Subsidiary).
 
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" Guaranty " means, with respect to a Person, any direct or indirect guaranty by such Person of any Debt or other obligation of another Person or any obligation by such Person to purchase or acquire or otherwise protect or insure a creditor against loss in respect of Debt or other obligations of another Person, but excluding customary contractual indemnities in contracts made in the ordinary course of business or under organizational documents.
" Guaranty Agreement " means each Guaranty Agreement now or hereafter executed by a Guarantor in favor of Administrative Agent, for the benefit of Lender Parties, pursuant to which such Guarantor guarantees the payment and/or performance of all or any portion of the Obligations of the Borrowers, in form and substance acceptable to Administrative Agent in its Permitted Discretion, as amended, restated, supplemented or otherwise modified from time to time.
" Hazardous Materials " means any substances regulated under any Environmental Law, whether as pollutants, contaminants, or chemicals, or as industrial, toxic or hazardous substances or wastes, or otherwise.
" Hedge Agreement " means a "swap agreement" as that term is defined is defined in Section 101 (53B) (A) of the Bankruptcy Code.
" Immaterial Subsidiary " means each Subsidiary of Parent identified as such on Schedule 7.1 , but only for so long as (a) the aggregate fair market value of the total assets of any individual Immaterial Subsidiary does not exceed $10,000 and (b) the aggregate fair market value of the total assets of all Subsidiaries designated as Immaterial Subsidiaries does not exceed $25,000 (it being understood that a Subsidiary identified as an Immaterial Subsidiary shall no longer be classified as such if it fails to abide by clauses (a) or (b) above, and in such event, Parent shall cause such Subsidiary to comply with Section 8.16 of this Agreement).
" Indemnified Claims " means any and all claims, demands, actions, causes of action, judgments, obligations, liabilities, losses, damages and consequential damages, penalties, fines, costs, fees, expenses, Lender Expenses and disbursements (including without limitation, fees and expenses of attorneys and other professional consultants and experts in connection with investigation or defense) of every kind, known or unknown, existing or hereafter arising, foreseeable or unforeseeable, which may be imposed upon, threatened or asserted against, or incurred or paid by, an Indemnified Person at any time and from time to time, because of, resulting from, in connection with, or arising out of any transaction, act, omission, event or circumstance in any way connected with the Collateral, the Loan Documents (including enforcement of Administrative Agent's or Lenders' rights thereunder or defense of Administrative Agent's or Lenders' actions thereunder), any Default or Event of Default or any acts or omissions taken by such Indemnified Person in connection with this Agreement or administration of the Loan Documents.
" Indemnified Persons " means, collectively, Administrative Agent, Swing Lender, each Lender and their Affiliates, Equity Interest owners, officers, directors, members, managers, employees, agents and representatives.
" Indemnified Taxes " means (a) any Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Credit Party under any Loan Document and (b) to the extent not otherwise described in the foregoing clause (a) of this definition, Other Taxes.
 
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" Installment Payment Date " means, with respect to the Term RE Loan, the first day of each calendar month, commencing on February 1, 2017 and continuing thereafter until the earlier of the Termination Date or the date on which the Term RE Loan has been paid in full.
" Instrument " has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and includes, without limitation, a negotiable instrument or any other writing that evidences a right to the payment of a monetary obligation, is not itself a security agreement or lease, and is of a type that in the ordinary course of business is transferred by delivery with any necessary endorsement or assignment.
" Intangible Assets " means, for any Person, assets that are treated as intangible pursuant to GAAP, including, without limitation: (a) obligations owing to such Person by its stockholders, officers, directors, members, managers, partners, employees, subsidiaries, Affiliates or any Person in which any such stockholder, officer, director, member, manager, partner, employee, subsidiary, or Affiliate owns any interest and (b) any asset which is intangible or lacks intrinsic or marketable value or collectability, including, without limitation, goodwill, noncompetition agreements, patents, copyrights, trademarks, franchises, organization or research and development costs.
" Interest Expense " means, for a Person for a period, total interest expense for such Person for such period, as determined in accordance with GAAP.
" Inventory " has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and includes, without limitation, with respect to a Person, goods (including goods in-transit) that (a) are held or to be held by such Person for sale or lease or to be furnished under a contract of service, (b) are leased or to be leased by such Person as lessor or (c) consist of raw materials, work in process, finished goods or materials used or consumed in such Person's business.
" Inventory Sublimit " means an amount equal to the product of (a) three (3) times (b) the amount determined pursuant to clause (a)(i) of the definition of Borrowing Base.
" Investment " means, with respect to any Person, any investment made, directly or indirectly by such Person in, to or with respect to any other Person, and any other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP, whether by (a) acquisition of shares of capital stock or other Equity Interests, indebtedness, securities or other obligations, (b) a loan, guarantee, advance, capital contribution or other like investment, or (c) any purchase or other acquisition (or any commitment to make any such purchase or other acquisition) of all or a material portion of the assets of (or any division or business line of) any other Person, in each case, whether made in cash, by the transfer of property or otherwise (including, without limitation, any joint venture relationship).
" Investment Property " has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and includes, without limitation, a security (whether certificated or uncertificated) security entitlement, securities account, commodity contract, or commodity account.
" IP License Agreement " any license agreement granting to a Borrower a license of Proprietary Rights that is used in Borrowers' Inventory.
 
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" IRC " means the Internal Revenue Code of 1986, as amended and in effect from time to time.
" IRS " means the United States Internal Revenue Service.
" Joinder Agreement " has the meaning given to such term in Section 8.16 .
" Lender " and " Lenders " have the respective meanings set forth in the preamble hereto and shall include the Swing Lender and any other Person made a party to this Agreement in accordance with the provisions of Section 14.13 .
" Lender Expenses " has the meaning prescribed by Section 14.5 .
" Lender Parties " means, collectively, Administrative Agent, Swing Lender and each Lender.
" Letter of Credit Rights " has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and includes, without limitation, a right to payment or performance under a letter of credit, whether or not the beneficiary has demanded or is at the time entitled to demand payment or performance and whether or not evidenced by a writing.
" Leverage Ratio " means, with respect to Parent and its consolidated Subsidiaries as of any date of determination, the ratio of (a) the difference of (i) the total liabilities of Parent and its consolidated Subsidiaries as reflected on a consolidated balance sheet of Parent  and its consolidated Subsidiaries prepared as of such date in accordance with GAAP, minus (ii) the Subordinated Debt of Parent and its consolidated Subsidiaries as of such date to (b) the Tangible Net Worth of Parent and its consolidated Subsidiaries as of such date.
" LIBOR Rate " means the rate per annum published on each Business Day in the "Money Rates" table of The Wall Street Journal (or such other presentation within The Wall Street Journal as may be adopted hereafter for such information) as the one-month LIBOR rate, adjusted daily; provided , that , if any change in market conditions or any change in Applicable Law shall at any time after the date hereof, in the reasonable opinion of the Administrative Agent, make it unlawful or impractical for any Lender (other than as a result of such Lender's creditworthiness) to fund or maintain Loans at the LIBOR Rate or to continue such funding or maintaining, or to determine or change interest rates based on the LIBOR Rate, then the LIBOR Rate shall be adjusted to a rate per annum determined by the Administrative Agent in its Permitted Discretion in order to adequately and fairly reflect Administrative Agent's costs (provided that, upon Borrower Representative's request, the Administrative Agent shall furnish to Borrower Representative a statement setting forth the basis for adjusting such LIBOR Rate and the method for determining the amount of such adjustment).
" Lien " means any interest in property securing an obligation owed to, or a claim by, a Person other than the owner of the property, whether such interest is based on the common law, statute, or contract, and including a security interest, collateral assignment, charge, claim, or lien arising from a security agreement, mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, conditional sale, trust receipt, lease, consignment or bailment for security purposes or similar agreement, or any contingent or other agreement to provide any of the foregoing.
" Loan " means any loan or advance made by Lenders to Borrowers under this Agreement and includes Revolving Loans, the Term RE Loan and Swing Loans made by Swing Lender, and " Loans " means, collectively, all such loans and advances.
 
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" Loan Documents " means this Agreement, each Deed of Trust, each Guaranty Agreement (if any), each Subordination Agreement, the Term RE Note, each Pledge Agreement, each Control Agreement, each Collateral Access Agreement, and any other documents, instruments or agreements heretofore, now or hereafter evidencing, securing, guaranteeing or otherwise relating to, or executed by any Credit Party in connection with, the Obligations, the Collateral or any other aspect of the transactions contemplated by this Agreement, and in each case including any and all renewals, extensions, modifications, amendments, or restatements of any of the foregoing.
" Machinery " refers to Collateral that would be classified within the definition of "Equipment" but for the fact that such items have become so affixed to the related Real Property that an interest has arisen therein under real property law.
" Margin Stock " means " margin stock " as such term is defined in Regulation T, U or X of the Federal Reserve Board.
" Material Adverse Effect " means the occurrence of any of the following:  (i) a material adverse change in, or effect on, the business, assets, operations, prospects or financial condition of the Credit Parties, taken as a whole, (ii) a material impairment of the ability of any Credit Party to perform any obligations under the Loan Documents to which it is a party, (iii) a material adverse effect upon the Collateral or the validity, perfection or priority of Administrative Agent's Liens on the Collateral, or (iv) a material adverse effect upon the legality, validity, binding effect or enforceability of any Loan Document.
" Maturity Date " means December 28, 2019.
" Maximum Rate " means the maximum rate of interest permitted to be charged under Applicable Law from time to time in effect; provided , that in the event that Texas law is applicable hereto and Applicable Law provides for an interest ceiling on any day under Chapter 303 of the Texas Finance Code, as amended (the " Texas Finance Code "), for that day the ceiling shall be the " monthly   ceiling " as referred to and in effect from time to time under the provisions of Section 303.004 of the Texas Finance Code.
" Multiemployer Plan " means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which any Credit Party or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding six plan years, has made or been obligated to make contributions.
" Net Amount " means, (a) with respect to an Eligible Account of any Borrower at any time, an amount equal to:  (i) the gross amount of such Account less (ii) sales, excise or similar taxes, and all returns, discounts, claims, credits, rebates and allowances of any nature at any time issued, owing, granted, outstanding, available or claimed, (b) with respect to any Eligible Inventory at any time, the net orderly liquidation value of such Inventory, as determined pursuant to the most recent appraisal acceptable to Administrative Agent in its discretion, and (c) with respect to Real Property Collateral at any time, the fair market value thereof, as determined pursuant to the most recent appraisal acceptable to Administrative Agent in its discretion.
" Obligations " means all obligations, liabilities and indebtedness now or hereafter owing by any Credit Party to any Lender Party pursuant to or otherwise arising in connection with this Agreement or any other Loan Documents, including, without limitation, all loan repayment obligations, accrued interest obligations (including interest that accrues after the commencement of an insolvency proceeding, regardless of whether allowed or allowable in whole or in part as a claim in such insolvency proceeding), Indemnified Claims, Lender Expenses (including any fees or expenses that accrue after the commencement of an insolvency proceeding, regardless of whether allowed or allowable in whole or in part as a claim in such insolvency proceeding), all obligations or liabilities arising from Bank Products, premiums, fees or guarantees arising out of, under, pursuant to, in connection with or evidenced by this Agreement or any other Loan Document, in each case, whether direct or indirect, primary or secondary, joint, several, or joint and several, fixed or contingent, including indebtedness and obligations, if any, which may be assigned to or acquired by any Lender Party, and any and all renewals and extensions of the foregoing or of any part thereof.
 
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" OFAC " means the Office of Foreign Assets Control of the United States Department of the Treasury.
" Other Connection Taxes " means, with respect to any Recipient, Taxes that are imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising 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 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 that are Other Connection Taxes imposed with respect to an assignment.
" Participant Register " has the meaning given to such term in Section 14.13(e) .
" Patriot Act " means the USA Patriot Act (Title III of Pub. L. 107–56), as amended, supplemented or replaced from time to time.
" Payment Intangibles " means all "payment intangibles" as defined in the UCC, which definition is incorporated herein by reference.
" PBGC " shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.
" Percentage Share " means, with respect to any Lender, (a) unless otherwise specifically set forth therein, when used in Sections 2.1 , 2.2 or 3.2 , in any request for Loans pursuant to Section 2.2 , or when no Loans are outstanding hereunder, the percentage set forth opposite such Lender's name on Schedule 1.1 and (b) when used otherwise, the percentage obtained by dividing (i) the sum of the unpaid principal balance of such Lender's Loans at the time in question by (ii) the sum of the aggregate unpaid principal balance of all Loans at such time.
" Perfection Certificate " means any perfection certificate executed by the Credit Parties on and as of the Agreement Date which provides information with respect to the assets and/or property of such Credit Parties as of the Agreement Date and is in form acceptable to Administrative Agent in its Permitted Discretion and any additional similar perfection certificate delivered by one or more Credit Parties to the Administrative Agent after the Agreement Date pursuant to Section 8.16 .
" Permitted Debt " shall have the meaning given to such term in Section 9.5 .
 
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" Permitted Discretion " means, a determination made by the Administrative Agent or a Lender Party (as applicable) in the exercise of its commercially reasonable business judgment (from the perspective of a secured asset-based lender).
" Permitted EBITDA Add-Back Amount " means, for any period, an amount equal to the sum of:  (a) the aggregate amount of any non-cash intangible asset impairment expenses incurred by Parent and its consolidated Subsidiaries during such period to the extent recognized in accordance with GAAP and in an aggregate amount not exceeding $2,800,000 during the term of this Agreement plus (b) the aggregate amount of any non-cash expenses incurred by the Parent and its consolidated Subsidiaries in connection with the termination of any pension plan in accordance with resolutions adopted by such Person's board of directors, to the extent that such expense reduces Parent's consolidated net income (loss), plus (c) the amount of any non-cash inventory reserve established by Parent or its consolidated Subsidiaries, as set forth in Parent's financial statements from time to time during such period, in an amount not exceeding $1,000,000 for any twelve-month period and only to the extent such reserve(s) reduce the Parent's consolidated net income (loss), plus (d) the amount of any non-cash equity-based compensation expenses of the Parent and its consolidated Subsidiaries during such period contemplated by FASB Accounting Standards Codification Topic 718 in an amount not exceeding $200,000 at any time, plus (e) fees, costs and expenses (including, without limitation attorneys' fees) incurred by Parent and its consolidated Subsidiaries during such period in connection with the preparation, negotiation and closing of the transactions contemplated by this Agreement and the other Loan Documents.
" Permitted Investment " means, with respect to any Credit Party, (a) advances made in connection with purchases of goods and services in the ordinary course of business, (b) acquisitions (not otherwise prohibited by this Agreement) of Equipment by such Credit Party for use in the ordinary course of business, (c) Investments in negotiable instruments deposited or to be deposited for collection in the ordinary course of business, (d) guarantees constituting Permitted Debt, (e) direct obligations of the United States of America or any agency thereof, or obligations guaranteed by the United States of America, that mature within one year from the date of acquisition thereof, (f) certificates of deposit maturing within one year from the date of acquisition, issued by a commercial bank organized under the laws of the United States of America or any state thereof having capital and surplus aggregating at least $100,000,000, (g) commercial paper of an issuer rated at least A-1 by Standard & Poor's Corporate or P-1 from Moody's Investor Services Inc., (h) money market mutual funds so long as substantially all of the assets of such fund are comprised of securities of the type described in clauses (e), (f) and (g) above, (i) travel and similar advances to employees made in the ordinary course of business, and (j) loans made by Parent to certain of its employees from time to time who receive grants of restricted Equity Interests issued by Parent, in an amount equal to income tax liability arising from receipt of such restricted Equity Interests in the year in which granted, which loans are due and payable in full no later than one year after the date of such grant; provided that the aggregate outstanding amount of such loans shall not exceed $100,000, at any time.
" Permitted Liens " means, with respect to any Credit Party, (a) Administrative Agent's Liens, (b) Liens for unpaid taxes, assessments or other governmental charges or levies that either (i) are not delinquent or (ii) do not have priority over the Administrative Agent's Liens and are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and for which adequate reserves are maintained on the books of such Credit Party in accordance with GAAP, (c) Liens, if any, described in Schedule 7.22 , but only to the extent such Liens secure Permitted Debt existing on the Agreement Date and any Refinancing Debt, (d) Liens which constitute purchase money Liens and secure Debt permitted under clause (d) of Section 9.5 , but only to the extent such Liens attach only to the property acquired by the incurrence of such purchase money secured Debt and such Liens only secure the Debt incurred to acquire such property or any related Refinancing Debt, (e) the interests of lessors or sublessors under operating leases entered into in the ordinary course of business and not prohibited by any other provision hereof, (f) statutory Liens in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers or suppliers, incurred in the ordinary course of business of such Credit Party and not in connection with the borrowing of money, and which Liens are for sums not delinquent or sums being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and for which adequate reserves are maintained on the books of such Credit Party in accordance with GAAP, (g) Liens arising from deposits made in connection with obtaining worker's compensation or other unemployment insurance, (h) purported Liens evidenced by the filing of precautionary UCC financing statements relating solely to operating leases of personal property entered into in the ordinary course of business, (i) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business, (j) judgment liens in respect of judgments that do not constitute an Event of Default, (k) non-exclusive licenses of intellectual property rights granted by such Credit Party in the ordinary course of business, (l) with respect to real property, zoning restrictions, easements, rights of way, restrictions, reservations, declarations, licenses, covenants, encroachments, and other minor defects or irregularities in title, in each case which do not and will not interfere in any material respect with the ordinary conduct of the business of such Credit Party, or, in the case of the Real Property Collateral, encumbrances that have been insured over by the mortgagee title insurance policy insuring Administrative Agent's interest in such Real Property Collateral, (m) Liens on cash deposits to secure the performance of tenders, statutory obligations, surety, stay, customs and appeals bonds, bids, insurance, leases, government contracts, trade contracts, performance and return of money bonds, letters of credit and other similar obligations (exclusive of obligations for the payment of borrowed money) entered into in the ordinary course of business, (n) security deposits to public utilities or to any municipalities or Governmental Authority or other public authorities when required by such utility, municipality, Governmental Authority or other public authority in connection with the supply of services or utilities and (o) statutory or common law rights of setoff of depository banks with respect to funds of Credit Parties at such banks to secure fees and charges in connection with returned items or the standard fees and charges of such banks in connection with Deposit Accounts maintained by Credit Parties at such banks (but not any other Debt or other obligations).
 
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" Person " means any individual, corporation, joint venture, general or limited partnership, trust, unincorporated organization or Governmental Authority.
" Pledge Agreement " means, collectively, each Pledge Agreement now or hereafter executed by any Credit Party in favor of the Administrative Agent, for the benefit of the Lender Parties, pursuant to which such Credit Party pledges and grants to Administrative Agent as security for the Obligations, a security interest in all or any portion of the Equity Interests owned by it, in form and substance acceptable to Administrative Agent in its Permitted Discretion as amended, restated, supplemented or otherwise modified from time to time.
" Proprietary Rights " means collectively, all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational, foreign laws or otherwise, including, without limitation, inventions, invention disclosures, designs, blueprints, plans, specifications, licenses, permits, patents, patent rights, copyrights, works which are the subject matter of copyrights, trademarks, service marks, trade names, trade styles, patent, trademark and service mark applications, trade secrets, domain names, good will and all licenses and rights related to any of the foregoing, including, without limitation, all royalties, license fees or other payments due under or in respect of any of the foregoing, all extensions, renewals, reissues, divisions and continuations of any of the foregoing, and all rights to sue at law or in equity for past, present and future infringement, misappropriation, violation or other impairment of any of the foregoing, including the right to receive all proceeds and damages therefrom.
 
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" Protective Advances " has the meaning set forth in Section 2.4 .
" Real Property " means any estates or interests in real property now owned or hereafter acquired by any Credit Party and the improvements thereto.
" Real Property Collateral " means the Real Property identified on Schedule 7.17 and any Real Property hereafter acquired by any Credit Party.
" Recipient " means any of (a) the Administrative Agent, (b) the Swing Lender and (c) any Lender, as applicable and " Recipients " means all of the foregoing collectively.
" Refinancing Debt " means, with respect to any Debt of any Person, refinancings, renewals, or extensions thereof so long as (a) the terms and conditions of such refinancings, renewals, or extensions do not materially impair the prospects of repayment of the Obligations or materially impair such Person's creditworthiness, (b) the terms of such refinancings, renewals and extensions are not less favorable to the obligor thereon or to the Lender Parties than the Debt so refinanced, renewed or extended (individually or in the aggregate), (c) such refinancings, renewals, or extensions do not result in an increase in the principal amount of the Debt so refinanced, renewed, or extended, (d) such refinancings, renewals, or extensions do not result in an increase in the interest rate with respect to the Debt so refinanced, renewed, or extended, (e) such refinancings, renewals, or extensions do not result in a shortening of the average weighted maturity of the Debt so refinanced, renewed, or extended, nor are they on terms or conditions that, taken as a whole, are materially more burdensome or restrictive to such Person, (f) if the Debt that is refinanced, renewed, or extended (or any Lien securing such Debt) was subordinated in right of payment or priority to the Obligations (or any Lien securing any Obligations), then the terms and conditions of the refinancing, renewal, or extension must include subordination terms and conditions that are at least as favorable to the Lender Parties as those that were applicable to the refinanced, renewed, or extended Debt and any Liens securing such Debt, and (g) the Debt that is refinanced, renewed, or extended is not recourse to any Person that is liable on account of the Obligations other than that Person or those Persons which were obligated with respect to the Debt that was refinanced, renewed, or extended.
" Register " has the meaning given to such term in Section 14.13(b) .
" Reportable Event " shall mean an event described in Section 4043(c) of ERISA with respect to an ERISA Benefit Plan that is subject to Title IV of ERISA other than those events as to which the 30 day notice period is waived under 29 C.F.R. Sections 4043.22, .23, .25, .27 or .28.
" Reporting Date " means, with respect to any Schedule hereto, (i) initially, the Agreement Date and (ii) thereafter, the most recent date as to which such Schedule was updated or required to be updated, as applicable, in accordance with the terms hereof.
" Required Lenders " means (a) Administrative Agent and (b) Lenders whose aggregate Percentage Shares equal or exceed fifty-one percent (51%); provided , however , at any time there are two (2) or more Lenders, Required Lenders must include at least (2) Lenders.
" Responsible Officer " means, for any Person, the chief executive officer, chief financial officer, chief operating officer, controller or president of such Person and, in addition, with respect to a Borrowing Base Certificate or a Compliance Certificate, the treasurer of such Person or any other Person authorized by board resolution and approved by Administrative Agent in its Permitted Discretion.
" Revolving Credit Limit " means $5,000,000.
 
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" Revolving Loans " has the meaning set forth in Section 2.1(a) .
" Revolving Note " has the meaning set forth in Section 2.1(a) .
" Sanctioned Countr y" means, at any time, a country or territory which is the subject or target of any Sanctions.
" Sanctioned Person " means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department of State, any other U.S. government entity, the United Nations Security Council or any similar list maintained by Canada, the European Union or any EU member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person controlled by any Person described in clauses (a) or (b) of this definition.
" Sanctions " means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State, the U.S. Department of Commerce or the U.S. Department of the Treasury or (b) the United Nations Security Council, the European Union of Her Majesty's Treasury of the United Kingdom or the relevant sanctions authority of Canada, and in each case, the regulations promulgated thereunder.
" Securities Account " has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference.
" Securities Act " means the Securities Act of 1933, as amended from time to time, and any successor statutes
" Securities Intermediary " has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference.
" Settlement " has the meaning set forth in Section 2.5(b)
" Settlement Date " has the meaning set forth in Section 2.5(b) .
" Shareholder's Equity " means, as of any date, stockholder's or member's equity as determined in accordance with GAAP or, in the case of a partnership, a partner's partnership interest.
" Solvent " means, when used with respect to any Person at any time of determination, that:
(a)   the assets of such Person, at a fair valuation, are in excess of the total amount of its liabilities (including contingent, subordinated, unmatured and unliquidated liabilities); and
(b)   the present fair saleable value of such Person's assets is greater than the total amount of its existing debts (including contingent, subordinated, unmatured and unliquidated liabilities) as such debts become absolute and matured; and
(c)   such Person is then able and expects to be able to pay its debts (including contingent, subordinated, unmatured and unliquidated liabilities) as they mature; and
(d)   such Person has capital sufficient to carry on its business as conducted and as proposed to be conducted.
 
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For purposes of determining whether a Person is Solvent, the amount of any contingent liability shall be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
" Sterling " means Sterling National Bank, a national banking association.
" Subordinated Debt " means (a) Debt (whether secured or unsecured) that is subordinated to the Obligations pursuant to a Subordination Agreement (including, without limitation, the Convertible Debt) or (b) unsecured Debt that is subordinated in right of payment to the Obligations, on terms acceptable to Administrative Agent in its Permitted Discretion, in each case that does not have a final maturity on or before the date that is six months after the Maturity Date.
" Subordination Agreement " means any subordination agreement among Administrative Agent, the applicable Credit Party and the applicable third party creditor (including, without limitation, any Affiliate of such Credit Party), pursuant to which all obligations and indebtedness now or hereafter owing by such Credit Party to such creditor are subordinated to the Obligations in right of payment and claim, and all Liens securing such obligations and indebtedness are subordinated to Administrative Agent's Liens in the Collateral, in form and substance satisfactory to Administrative Agent in its Permitted Discretion.
" Subsidiary " means, with respect to a Person, any other Person of which more than ten percent (10%) of the voting Equity Interests is owned or controlled directly or indirectly by such Person or one or more of its Subsidiaries, or a combination thereof; provided , that for the purposes of this definition, any Person that is required to be consolidated with a Credit Party in accordance with GAAP will be considered to be a Subsidiary of such Credit Party.
" Supporting Obligations " has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference and includes letters of credit and guaranties issued in support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments or Investment Property.
" Swing Lender " means Sterling or any successor Lender in such capacity.
" Swing Loan " has the meaning specified therefor in Section 2.2(b) hereof.
" Swing Loan Sublimit " means the lesser of (a) the Availability and (ii) $4,500,000.
" Tangible Net Worth " means, for Parent and its consolidated Subsidiaries on any date of determination, (a) Shareholder's Equity plus (b) Subordinated Debt minus (c) Intangible Assets, in each case determined for Parent and its consolidated Subsidiaries as of such date on a consolidated basis in accordance with GAAP.
" Taxes " means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority or taxing authority thereof or therein, including any interest, additions to tax or penalties applicable thereto.
" TD Holding Account " means deposit account #7862471765 held by Far East with TD Bank.
" TD Operating Account " means deposit account #4325119926 held by Parent with TD Bank.
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" Termination Date " means the earlier of (a) the Maturity Date, (b) the day on which the obligations of Lenders to make Loans hereunder have been terminated pursuant to Section 12.1 or (c) the day on which the Obligations first become due and payable in full (or, with the exception of contingent indemnity obligations for which no claim has been asserted are paid in full) and the obligation of Lenders to make Loans hereunder are terminated.
" Term RE Loan " has the meaning given to such term in Section 2.1(b) .
" Term RE Loan Amount " means $3,500,000.00.
" Term RE Note " has the meaning given to such term in Section 2.1(b) .
" Termination Event " shall mean (i) a Reportable Event with respect to any ERISA Benefit Plan; (ii) the existence with respect to any ERISA Benefit Plan of a non-exempt "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the IRC) for which any Credit Party could have liability that would result in a Material Adverse Effect; (iii) the withdrawal of any Credit Party or any ERISA Affiliate from an ERISA Benefit Plan or Multiemployer Plan during a plan year in which such entity was a "substantial employer" as defined in Section 4001(a)(2) of ERISA; (iv) the providing of notice of intent to terminate an ERISA Benefit Plan in a distress termination described in Section 4041(c) of ERISA; (v) the institution by the PBGC of proceedings to terminate an ERISA Benefit Plan or Multiemployer Plan; (vi) any event or condition (a) which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any ERISA Benefit Plan or Multiemployer Plan, or (b) that may result in termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vii) the partial or complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of any Credit Party or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization.
" Total Facility " means on any date of determination an amount equal to the sum of (a) the Revolving Credit Limit plus (b) the Term RE Loan Amount.
" Trading with the Enemy Act " shall mean the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any enabling legislation or executive order relating thereto.
" UCC " means the Uniform Commercial Code in effect in the State of New York, as amended from time to time.
" U.S. Person " means any Person that is a "United States Person" as defined in Section 7701(a)(30) of the IRC.
" U.S. Tax Compliance Certificate " has the meaning given to such term in Section 3.5 .
" VBrick " means VBrick Systems, Inc.
Section 1.2.   Interpretive Provisions .  Unless expressly provided otherwise, any term which is defined by the UCC, wherever used in this Agreement, shall have the same meaning as is prescribed by the UCC.  The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.  The words "hereof," "herein," "hereunder" and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement.  Unless the context indicates otherwise, references to "Section," "Subsection," "clause" "Schedule" and "Exhibit" are references to this Agreement.  The term "documents" (if not capitalized as a defined term) includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced.  The term "including" is not limiting and means "including without limitation."  Unless the context requires otherwise, in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including," the words "to" and "until" each mean "to but excluding" and the word "through" means "to and including."  The term, "discretion", when used in reference to a Person, means, unless qualified by the word(s) "reasonable" or Permitted Discretion, the sole and absolute discretion of such Person, honestly determined by such Person under the circumstances.  Unless otherwise expressly provided herein, references to agreements (including this Agreement) and other contractual documents shall be deemed to include all subsequent amendments, restatements and other modifications thereto, and references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation.  The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.  This Agreement and the other Loan Documents are the result of negotiations among the parties, have been reviewed by counsel to each party and are the products of all parties, and in consideration thereof, it is agreed that they shall not be construed against either party solely because of such party's involvement in their preparation.  Unless otherwise specified, any reference to time shall be deemed to mean Central Standard Time or Central Daylight Time, as applicable, as in effect in Dallas County, Texas.
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ARTICLE II
LOANS
Section 2.1.   Loans .
(a)   Revolving Loans .  Subject to the terms and provisions of this Agreement, Lenders agree to make advances to Borrowers from time to time during the period from the date of this Agreement to the Termination Date in an amount not exceeding such Lender's Percentage Share of the Availability as of such time of determination (such advances made by Lenders pursuant to this Section 2.1(a) collectively, the " Revolving Loans "); provided , that in no event shall the aggregate outstanding principal balance of the Revolving Loans exceed the Revolving Credit Limit.  Borrowers may borrow, repay and re-borrow Revolving Loans from time to time, subject to the terms of this Agreement.  Administrative Agent shall have the continuing right to establish and maintain any reserves for purposes of calculating the Borrowing Base in such amounts and at such times and with respect to such matters and for such purposes as Administrative Agent deems appropriate upon prompt written notice to Borrower Representative (which notice may be given via email notification and shall, to the fullest extent permitted by Applicable Law, be effective upon Administrative Agent's sending of such email), including reserves with respect to collection performance, slow moving or obsolete Inventory, dilution of Accounts, contingencies, amounts a Borrower is or may be required to pay (such as taxes, freight and shipping charges, duties, insurance premiums, amounts owing to licensors, landlords, warehousemen, carriers, mechanics, materialmen, laborers or suppliers, or ad valorem, excise, sales, or other taxes) or any other matter in Administrative Agent's discretion.  Any such reserves are solely for purposes of calculating the Borrowing Base and do not constitute or represent cash funds and shall be without duplication to any other determinations of ineligibility already reflected in the determination of the Borrowing Base.  No Revolving Loans shall be evidenced by a note unless requested otherwise by a Lender, in which case such Lender's Revolving Loans shall be evidenced by a note executed by Borrowers in favor of such Lender (each, as amended, supplemented, restated or otherwise modified, a " Revolving Note ") in form and substance reasonably satisfactory to Administrative Agent and such Lender
(b)   Term RE Loan .  Subject to the terms and provisions of this Agreement, each Lender agrees to make a term loan secured primarily by the Real Property Collateral to Parent once all conditions precedent set forth in Sections 6.1 and 6.5 have been met (such date, the " Term RE Loan Funding Date ") in an amount equal to such Lender's Percentage Share of the Term RE Loan Amount (such term loan of Lenders collectively, the " Term RE Loan ").  Amounts paid on the Term RE Loan may not be re-borrowed.  The Term RE Loan of each Lender shall be evidenced by a Note executed by Parent in favor of such Lender (each, as amended, supplemented, restated or otherwise modified, a " Term RE Note ") in form and substance satisfactory to Administrative Agent.
 
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(c)   Accounting for Loans .  Administrative Agent shall maintain, in accordance with its usual practice, electronic or written records evidencing the outstanding Obligations of each Borrower to each Lender, including without limitation the Obligations resulting from each Loan made by such Lender to each Borrower from time to time, and the amounts of principal and interest payable and paid to such Lender from time to time in respect of each Loan.  The entries made in the electronic or written records maintained pursuant to this Section 2.1(c) shall be prima facie evidence of the existence and amounts of the Obligations therein recorded; provided , however , that the failure of Administrative Agent to maintain such records or any error therein shall not in any manner affect the obligations of the Borrowers to repay their respective Obligations in accordance with the terms of this Agreement and the other Loan Documents.
Section 2.2.   Request for and Making of Revolving Loans; Swing Loans .
(a)   Request for Revolving Loans .  Borrower Representative shall request each Revolving Loan, on behalf of all Borrowers, by delivering to Administrative Agent a written Borrowing Notice, signed by a Responsible Officer of Borrower Representative, accompanied by a Borrowing Base Certificate complying with Section 8.5 and reflecting sufficient Availability.  Unless otherwise agreed by Administrative Agent, each request for a Loan shall be irrevocable and, in order to be effective, must be received by Administrative Agent prior to 10:00 a.m., Dallas time, two (2)   Business Days prior to the requested funding date, specifying (i) the amount of the requested Loan, and (ii) the requested funding date, which shall be a Business Day.
(b)   Making of Swing Loans .  In the case of a request for a Revolving Loan (other than the initial Revolving Loan, which may not be funded by a Swing Loan) and so long as the aggregate outstanding amount of Revolving Loans at such time does not exceed the Swing Loan Sublimit, after giving effect to the amount of collections or payments applied to Swing Loans since the last Settlement Date, plus the amount of the current requested Revolving Loans, Swing Lender shall make Revolving Loans in the amount of such borrowing (any such advance made solely by Swing Lender pursuant to this Section 2.2(b) being referred to as a " Swing Loan " and such advances being referred to collectively as " Swing Loans ") on the requested funding date applicable thereto (in lieu of any Revolving Loan that otherwise may be made by Lenders pursuant to such request) by transferring immediately available funds to the Designated Account; provided , however , upon the request from Borrower Representative, the Swing Lender may advance a Swing Loan to the Borrowers on the same day as the request therefor is made so long as such request is received by Swing Lender prior to 10:00 a.m., Dallas time.  Each Swing Loan shall be deemed to be a Revolving Loan hereunder and shall be subject to all the terms and conditions applicable to other advances of Revolving Loans, except that all payments on any Swing Loan shall be payable to Swing Lender solely for its own account.  Subject to the provisions of Section 2.2(c)(ii) , Swing Lender shall not make and shall not be obligated to make any Swing Loan if Swing Lender reasonably believes that (i) one or more of the applicable conditions precedent set forth in Article VI will not be satisfied or waived on the requested funding date, or (ii) the requested borrowing would exceed the Availability on such funding date.  Swing Lender shall not otherwise be required to determine whether the applicable conditions precedent set forth in Article VI have been satisfied or waived on the funding date applicable thereto prior to making any Swing Loan.  The Swing Loans shall be secured by the Administrative Agent's Liens, constitute Obligations hereunder, and bear interest at the rate applicable from time to time to Revolving Loans.
 
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(c)   Making of Loans .
(i)   Promptly after receipt of a Borrowing Notice pursuant to Section 2.2(a) , and in any event not later than 1:00 p.m., Dallas time, on the Business Day such Borrowing Notice was received by Administrative Agent, and in the event that Swing Lender is not obligated to make a Swing Loan (with respect to a request for a borrowing of a Revolving Loan), Administrative Agent shall notify Lenders, by telecopy, telephone, or other similar form of transmission, of the requested borrowing.  Each Lender shall make the amount of such Lender's Percentage Share of the requested borrowing available to Administrative Agent in immediately available funds, to an account designated by Administrative Agent, not later than 10:00 a.m., Dallas time, on the funding date applicable thereto.  After Administrative Agent's receipt of the proceeds thereof, Administrative Agent shall make the proceeds thereof available to Borrowers on the applicable funding date by transferring immediately available funds equal to such proceeds received by Administrative Agent to the Designated Account; provided , however , that, subject to the provisions of Section 2.2(c)(ii) , Administrative Agent shall not be required to request any Lender to make, and no Lender shall have the obligation to make, any advance if (1) one or more of the applicable conditions precedent set forth in Article VI will not be satisfied on the requested funding date for the applicable borrowing unless such condition has been waived, or (2) the requested borrowing would exceed the Availability on such funding date or, after giving effect thereto, cause the aggregate outstanding principal amount of the Revolving Loans to exceed the Revolving Credit Limit.  Each Lender shall make the amount of such Lender's Percentage Share of the Term RE Loan available to Administrative Agent on the Agreement Date in immediately available funds to an account designated by Administrative Agent not later than 10:00 a.m., Dallas time on such date, and Administrative Agent shall make the Term RE Loan available to Borrowers by transferring immediately available funds equal to the Term RE Loan Amount to the Designated Account on such date; provided , however , that no Lender shall have the obligation to make its Percentage Share of the Term RE Loan and Administrative Agent shall not make the Term RE Loan available to Borrowers unless all conditions precedent set forth in Article VI have been satisfied in full (or waived by Administrative Agent and the appropriate Lenders).
(ii)   Unless Administrative Agent receives notice from a Lender prior to 9:00 a.m., Dallas time, on the date of a borrowing of any Loan that such Lender will not make available as and when required hereunder to Administrative Agent for the account of Borrowers the amount of that Lender's Percentage Share of such borrowing, Administrative Agent may assume that each Lender has made or will make such amount available to Administrative Agent in immediately available funds on the respective funding date and Administrative Agent may (but shall not be so required), in reliance upon such assumption, make available to Borrowers on such date a corresponding amount.  If any Lender shall not have made its full amount available to Administrative Agent in immediately available funds and if Administrative Agent in such circumstances has made available to Borrowers such amount, that Lender shall on the Business Day following such funding date make such amount available to Administrative Agent, together with interest at the Defaulting Lender Rate for each day during such period.  A notice submitted by Administrative Agent to any Lender with respect to amounts owing under this subsection shall be conclusive, absent manifest error.  If such amount is so made available, such payment to Administrative Agent shall constitute such Lender's advance on the date of Borrowing for all purposes of this Agreement.  If such amount is not made available to Administrative Agent on the Business Day following the funding date, Administrative Agent will notify Borrowers of such failure to fund and, upon demand by Administrative Agent, Borrowers shall pay such amount to Administrative Agent for Administrative Agent's account, together with interest thereon for each day elapsed since the date of such borrowing, at a rate per annum equal to the interest rate applicable at the time to the Loans composing such borrowing.  The failure of any Lender to make any advance on any funding date shall not relieve any other Lender of any obligation hereunder to make an advance on such funding date, but no Lender shall be responsible for the failure of any other Lender to make the advance to be made by such other Lender on any funding date.
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(iii)   Administrative Agent shall not be obligated to transfer to a Defaulting Lender any payments made by Borrowers to Administrative Agent for such Defaulting Lender's benefit, and, in the absence of such transfer to a Defaulting Lender, Administrative Agent shall transfer any such payments to each other non-defaulting Lender Party ratably in accordance with their Commitments (but only to the extent that such Defaulting Lender's advance was funded by the other Lender Parties) or, if so directed by Borrower Representative and if no Default or Event of Default has occurred and is continuing (and to the extent such Defaulting Lender's advance was not funded by the Lender Parties), retain same to be re-advanced to Borrowers as if such Defaulting Lender had made advances to Borrowers.  Subject to the foregoing, Administrative Agent may hold and, in its Permitted Discretion, re-lend to Borrowers for the account of a Defaulting Lender the amount of all such payments received and retained by Administrative Agent for the account of such Defaulting Lender.  Solely for the purposes of voting or consenting to matters with respect to the Loan Documents, a Defaulting Lender shall be deemed not to be a "Lender" and such Defaulting Lender's Percentage Share shall be deemed to be zero.  This Section shall remain effective with respect to a Defaulting Lender until (x) the Obligations under this Agreement shall have been declared or shall have become immediately due and payable, (y) the non-Defaulting Lenders, Agent, and Borrowers shall have waived such Defaulting Lender's default in writing, or (z) such Defaulting Lender makes its Percentage Share of the applicable advance and pays to Administrative Agent all amounts owing by such Defaulting Lender in respect thereof.  The operation of this Section shall not be construed to increase or otherwise affect the Commitment of any Lender, to relieve or excuse the performance by any Defaulting Lender or any other Lender of its duties and obligations hereunder, or to relieve or excuse the performance by any Borrower of its duties and obligations hereunder to Administrative Agent or to the Lenders other than a Defaulting Lender.  Any such failure to fund by a Defaulting Lender shall constitute a material breach by such Defaulting Lender of this Agreement and shall entitle Borrowers at their option, upon written notice to Administrative Agent by Borrower Representative, and without prejudice to any rights Borrowers may have against such Defaulting Lender as a result of such Defaulting Lender's breach of this Agreement, to arrange for a substitute Lender to assume the Commitment of such Defaulting Lender, such substitute Lender to be reasonably acceptable to Administrative Agent.  In connection with the arrangement of such a substitute Lender, the Defaulting Lender shall have no right to refuse to be replaced hereunder.
              (iv)                 Notwithstanding anything herein relating to the Lenders making funds available to the Administrative Agent and provisions relating to Defaulting Lenders, so long as the Administrative Agent is the sole Lender hereunder, subject to the terms and conditions set forth herein (including, without limitation, any condition precedent to the making of any Loan), Administrative Agent shall fund the proceeds of such requested Loan into the Designated Account on the applicable funding date.
 
(d)   Disbursement of Proceeds; Borrower Representative .  Unless otherwise requested by Borrower Representative and agreed by Administrative Agent, the proceeds of each Loan, when funded, shall be disbursed by Administrative Agent to the Designated Account.  Each Borrower shall have the full benefit of and access to each Loan made hereunder.  Each Borrower (other than Parent) hereby designates and appoints Parent to act as Borrower Representative for and on behalf of it for purposes of requesting Loans and for all other purposes hereunder and under the other Loan Documents for which Borrower Representative acts from time to time.  The agency relationship established pursuant to this Section 2.2(d) is for administrative convenience only and such agency relationship shall not extend to any matter outside the scope of the Loan Documents.
 
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(e)   Joint and Several Obligations .  Each Borrower hereby agrees that the Obligations under this Agreement and the other Loan Documents are joint and several obligations of each Borrower.
(f)   No Fraudulent Conveyances .  Notwithstanding any provisions of this Agreement to the contrary, it is intended that the joint and several nature of the Obligations and the Liens granted by Borrowers to secure the Obligations not constitute a "Fraudulent Conveyance" (as defined below).  Consequently, the Lender Parties and Borrowers agree that if the Obligations of a Borrower, or any Liens granted by such Borrower securing the Obligations would, but for the application of this sentence, constitute a Fraudulent Conveyance, the Obligations of such Borrower and the Liens securing such Obligations shall, to the fullest extent permitted by Applicable Law, be valid and enforceable only to the maximum extent that would not cause such Obligations or such Liens to constitute a Fraudulent Conveyance, and the Obligations of such Borrower and this Agreement shall automatically be deemed to have been amended accordingly.  For purposes hereof, " Fraudulent Conveyance " means a fraudulent conveyance under Section 548 of the Bankruptcy Code or a fraudulent conveyance or fraudulent transfer under the applicable provisions of any fraudulent conveyance or fraudulent transfer law or similar law of any state, nation or other governmental unit, as in effect from time to time.
Section 2.3.   Deemed Request for Revolving Loans .  Each Borrower irrevocably authorizes the Administrative Agent, on behalf of each Lender, at its election and without necessity for request by any Borrower, to make a Revolving Loan to Borrowers in an amount equal to any amount due and owing by Borrowers pursuant to the terms of this Agreement and the other Loan Documents, including, without limitation, payments of principal, interest, fees and Lender Expenses, and apply the proceeds thereof in payment of such Obligations.  Any such Revolving Loans shall be secured by the Collateral and shall be included in the Obligations.
Section 2.4.   Protective Advances .  Upon the occurrence and during the continuance of a Default or an Event of Default, Administrative Agent is authorized to request, from time to time in its discretion (but without any obligation to do so), that Lenders make, and upon each such request Lenders shall make, Revolving Loans to Borrowers which Administrative Agent deems necessary or appropriate to preserve or protect the Collateral, or any portion thereof or to enhance the likelihood of collection of any of the Obligations (" Protective Advances ").  All such Revolving Loans shall be secured by the Collateral and shall be included in the Obligations.
 
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Section 2.5.   Settlement of Swing Loans .  It is agreed that each Lender's funded portion of the Loans is intended by the Lenders to equal, at all times, such Lender's Percentage Share of the outstanding Loans.  Such agreement notwithstanding, Administrative Agent, Swing Lender, and the other Lenders agree (which agreement shall not be for the benefit of Borrowers) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among the Lenders as to the Revolving Loans and the Swing Loans shall take place on a periodic basis in accordance with the following provisions:
(a)   Administrative Agent shall request settlement (" Settlement ") with the Lenders on a weekly basis, or on a more frequent basis if so determined by Administrative Agent on behalf of Swing Lender, with respect to the outstanding Swing Loans, as to each by notifying the Lenders by telecopy, telephone, or other similar form of transmission, of such requested Settlement, no later than 2:00 p.m., Dallas time, on the Business Day immediately prior to the date of such requested Settlement (the date of such requested Settlement being the " Settlement Date ").  Such notice of a Settlement Date shall include a summary statement of the amount of outstanding Revolving Loans (including, without limitation, Swing Loans) for the period since the prior Settlement Date.  Subject to the terms and conditions contained herein:  (y) if a Lender's balance of the Revolving Loans (including Swing Loans) exceeds such Lender's Percentage Share of the Revolving Loans (including Swing Loans) as of a Settlement Date, then Administrative Agent shall, by no later than 12:00 p.m., Dallas time, on the Settlement Date, transfer in immediately available funds to a deposit account of such Lender (as such Lender may designate), an amount such that each such Lender shall, upon receipt of such amount, have as of the Settlement Date, its Percentage Share of the Revolving Loans (including Swing Loans), and (z) if a Lender's balance of the Revolving Loans (including Swing Loans) is less than such Lender's Percentage Share of the Revolving Loans (including Swing Loans) as of a Settlement Date, such Lender shall no later than 12:00 p.m., Dallas time, on the Settlement Date transfer in immediately available funds to the account designated by the Administrative Agent, an amount such that each such Lender shall, upon transfer of such amount, have as of the Settlement Date, its Percentage Share of the Revolving Loans (including Swing Loans).  Such amounts made available to Administrative Agent under clause (z) of the immediately preceding sentence shall be applied against the amounts of the applicable Swing Loans and, together with the portion of such Swing Loans representing Swing Lender's Percentage Share thereof, shall constitute advances of such Lenders.  If any such amount is not made available to Administrative Agent by any Lender on the Settlement Date applicable thereto to the extent required by the terms hereof, Administrative Agent shall be entitled to recover for its account such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate.
(b)   In determining whether a Lender's balance of the Revolving Loans (including Swing Loans) is less than, equal to, or greater than such Lender's Percentage Share as of a Settlement Date, Administrative Agent shall, as part of the relevant Settlement, apply to such balance the portion of payments actually received in good funds by Administrative Agent with respect to principal, interest, fees payable by Borrowers and allocable to the Lenders hereunder, and proceeds of Collateral.
(c)   Between Settlement Dates, Administrative Agent, to the extent Swing Loans are outstanding, may pay over to Administrative Agent or Swing Lender, as applicable, any collections or payments received by Administrative Agent that in accordance with the terms of this Agreement would be applied to the reduction of the Swing Loans.
Section 2.6.   Cross Guaranty .
(a)   Guaranty .  Each Borrower (each referred to in this Section 2.6 individually as a " Co-Borrower " and collectively, as the " Co-Borrowers ") hereby agrees that it is jointly and severally liable for, and hereby irrevocably, absolutely and unconditionally guarantees to Administrative Agent (for the benefit of the Lender Parties) and to the Lender Parties the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all Obligations and other amounts owed or hereafter owing to the Lender Parties under this Agreement and the other Loan Documents by the other Co-Borrowers.  Each Co-Borrower agrees that its guaranty obligation hereunder is a continuing guaranty of payment and performance and not of collection, that its obligations under this Section shall not be discharged until payment and performance, in full, of the Obligations and other amounts owed or hereafter owing under this Agreement has occurred, and that its obligations under this Section shall be absolute and unconditional, irrespective of, and unaffected by:
 
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(i)
the genuineness, validity, regularity, enforceability or any future amendment of, or change in, this Agreement or any other Loan Document;
(ii)
the absence of any action to enforce this Agreement (including this Section) or any other Loan Document or the waiver or consent by Administrative Agent or the other Lender Parties with respect to any of the provisions hereof or thereof;
(iii)
the existence, value or condition of, or failure to perfect its security interest in or lien against, any security for the Obligations or any action, or the absence of any action, by Administrative Agent in respect thereof (including the release of any such security);
(iv)
the insolvency of any Co-Borrower; or
(v)
any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor.
Each Co-Borrower shall be regarded, and shall be in the same position, as principal debtor with respect to the Obligations and other amounts guaranteed hereunder.
(b)   Waivers .  Each Co-Borrower expressly waives, to the fullest extent permitted by Applicable Law, 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 subrogation, to compel Administrative Agent or any other Lender Party to marshal assets or to proceed in respect of the Obligations and other amounts guaranteed hereunder against any other Co-Borrower, any other party or against any security for the payment and performance of the Obligations and other amounts before proceeding against, or as a condition to proceeding against, such Co-Borrower.
(c)   Benefit of Guaranty .  Each Co-Borrower agrees that the provisions of this Section are for the benefit of each Lender Party and its successors, transferees, endorsees and assigns.
(d)   Election of Remedies .  If Administrative Agent (on behalf of the Lender Parties), under Applicable Law, proceeds to realize its benefits under any of the Loan Documents giving Administrative Agent a security interest in or lien upon any Collateral, whether owned by any Co-Borrower or by any Guarantor, either by judicial foreclosure or by non judicial sale or enforcement, Administrative Agent may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of the rights and remedies under this Section.  If, in the exercise of any of its rights and remedies, Administrative Agent shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Co-Borrower or any other Guarantor, whether because of any applicable laws pertaining to "election of remedies" or the like, each Co-Borrower hereby consents to such action by Administrative Agent and waives any defense to the Administrative Agent's enforcement of remedies based upon such action, to the fullest extent permitted by Applicable Law.  Any election of remedies that results in the denial or impairment of the right of Administrative Agent to seek a deficiency judgment against any Co-Borrower shall not impair any other Co-Borrower's obligation to pay the full amount of the Obligations and other amounts owed or hereafter owing under this Agreement.  In the event Administrative Agent or any other Lender Party shall bid at any foreclosure or trustee's sale or at any private sale permitted by Applicable Law or the Loan Documents, Administrative Agent may, to the fullest extent permitted by Applicable Law,  bid all or less than the amount of the Obligations and other amounts owed or hereafter owing under this Agreement and the amount of such bid need not be paid by Administrative Agent but shall be credited against such Obligations and other amounts.
 
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(e)   Liability Cumulative .  The liability of Co-Borrowers under this Section 2.6 is in addition to and shall be cumulative with all liabilities of each Co-Borrower to Administrative Agent and the other Lender Party under this Agreement and other Loan Documents to which such Co-Borrower is a party or in respect of any Obligations or obligation of the other Co-Borrowers, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically  provides to the contrary.
(f)   Limitation of Liability .  Notwithstanding anything in this Section 2.6 to the contrary, the liability of each Co-Borrower as a Guarantor hereunder shall, to the fullest extent permitted by Applicable Law, be limited to the maximum amount of liability that can be incurred without rendering such Person's guaranty hereunder voidable under Applicable Law relating to fraudulent transfer or fraudulent conveyance, and not for any greater amount.
ARTICLE III
INTEREST, FEES, REIMBURSEMENTS
Section 3.1.   Interest .
(a)   Except as otherwise provided herein, all outstanding Loans shall bear interest at a per annum rate equal to the lesser of (1) the Adjusted LIBOR Rate for such Loan and (2) the Maximum Rate.
(b)   At any time when any Event of Default has occurred and is continuing, effective as of the date on which such Event of Default occurred and continuing for so long as any such Event of Default is continuing, all Obligations shall bear interest at a rate per annum equal to the Default Rate applicable thereto.
(c)   Subject to Section 3.6 , interest shall be computed on the basis of a year of 360 days and actual days elapsed (which results in more interest being paid than if computed on the basis of a 365 day year).
Section 3.2.   Fees .  Subject to the terms of this Agreement:
(a)   Commitment Fee .  In consideration of each Lender's commitment hereunder to make the Loans to Borrowers, the Borrowers hereby agree to pay to the Administrative Agent (for the account of each Lender on a pro rata basis in accordance with its Percentage Share) a commitment fee equal to 0.875% multiplied   by the Total Facility as of the Agreement Date, which amount shall be fully earned as of, and payable in full on, the Agreement Date.
(b)   Unused Line Fee .  Borrowers agree to pay to Administrative Agent for the account of each Lender on a pro rata basis in accordance with its Percentage Share, an unused line fee determined on a daily basis, payable on the first day of each month, in an amount equal to one-half of one percent (.50%) per annum multiplied   by such Lender's Percentage Share of the amount by which the Revolving Credit Limit exceeded the sum of the average daily outstanding amount of Revolving Loans during the immediately preceding calendar month, or shorter period if calculated on the Termination Date (prorated for a partial calendar month).  Such fee shall be computed on the basis of a 360-day year for the actual number of days elapsed.  All payments on the Revolving Loans received by Administrative Agent shall be deemed to be credited to the Revolving Loans immediately upon receipt for purposes of calculating the amount payable pursuant to this Section 3.2(b) .
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(c)   Collateral Monitoring Fee .  Borrowers shall pay to Administrative Agent, for the account of Administrative Agent, a monthly collateral monitoring fee in the amount of $1,000 for each calendar month, or portion thereof, during the term of this Agreement.  The collateral monitoring fee for each calendar month shall be due and payable in arrears on the first day of each calendar month and on the Termination Date, and shall be prorated for any partial calendar month.
Section 3.3.   Increased Costs and Reduced Return .
(a)   Increased Costs .  If any Change in Law shall (i) subject any Recipient to any Taxes (other than (i) Indemnified Taxes, (ii) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (iii) Connection Income Taxes) on any Loan, Loan principal, the Commitments or other obligations or its deposits, reserves, other liabilities or capital attributable thereto, (ii) impose or modify any reserve, special deposit, compulsory loan, insurance charge, assessment or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Recipient (except any reserve requirement reflected in the Adjusted LIBOR Rate) or (iii) impose on any Recipient any condition, cost or expense (other than Taxes) affecting this Agreement or any extensions of credit or commitments hereunder, and the result of any of the foregoing is to increase the cost to such Recipient of making, converting to, continuing or maintaining any Loans (or of maintaining its obligation to make any Loan) or to reduce any amount received or receivable by such Recipient under this Agreement (whether of principal, interest or any other amount), then upon written demand by such Recipient (with a copy to Administrative Agent and which demand shall be delivered to Borrower Representative and accompanied by a statement setting forth the basis for such demand and calculation of the amount thereof in reasonable detail), Borrowers shall promptly pay to such Recipient such amount or amounts as will compensate such Recipient for such additional costs incurred or reduction suffered.
(b)   Capital Requirements .  If any Recipient determines that any Change in Law affecting such Recipient, any lending office of such Recipient or such Recipient's holding company regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Recipient's capital or on the capital of such Recipient's holding company as a consequence of this Agreement, the Commitment of, the Loans made by such Recipient, to a level below that which such Recipient or such Recipient's holding company could have achieved but for such Change in Law (taking into consideration such Recipient's policies and the policies of such Recipient's holding company with respect to capital adequacy), then from time to time the Borrowers will pay to such Recipient such additional amount or amounts as will compensate such Recipient or such Recipient's holding company for any such reduction suffered.
(c)   Certificates for Reimbursement .  Demand of any Recipient setting forth the amount or amounts necessary to compensate such Recipient or its holding company, as the case may be, as specified in clauses (a) or (b) of this Section and delivered to the Borrower Representative shall be conclusive absent manifest error.  The Borrowers shall pay the applicable Recipient the amount shown as due on any such certificate within 10 days after receipt thereof.
 
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(d)   Delay in Requests .  Failure or delay on the part of any Recipient to demand compensation pursuant to this Section shall not constitute a waiver of such Recipient's right to demand such compensation; provided   that , the Borrowers shall not be required to compensate any Recipient pursuant to this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Recipient notifies the Borrower Representative of the Change in Law giving rise to such increased costs or reductions, and of such Recipient's intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs and/or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).
Section 3.4.   Illegality .  Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for Lenders, Swing Lender or their applicable lending office to make, maintain or fund Loans hereunder, then Administrative Agent shall promptly notify Borrower Representative thereof and Lenders' and Swing Lender's obligation to make Loans, shall be suspended until such time as Lenders and Swing Lender may again make, maintain and fund Loans.
Section 3.5.   Taxes .
(a)   Indemnified Taxes .  Any and all payments by or on account of any obligation of any Credit Party under any Loan Document shall be made free and clear of, and without deduction or withholding for, any present or future Indemnified Taxes, except as required by Applicable Law (which, for purposes of this Section 3.5 , includes FATCA).  If any Applicable Law requires the deduction or withholding of any Indemnified Tax from any payment by any Credit Party, then Credit Parties agree:  (i) to timely pay the full amount of such Indemnified Taxes to the relevant Governmental Authority in accordance with Applicable Law and (ii) that the sum payable by Credit Parties shall be increased as necessary so that after such deduction or withholding has been made (including deductions and withholdings applicable to additional sums payable under this Section 3.5(a) ), the applicable Recipient receives an amount equal to the sum it would have received had no such deductions or withholdings been made.  Without duplication of any other obligation set forth in this Section 3.5 or in Section 3.3 , the Credit Parties shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.  As soon as practicable after any payment of Taxes by the Credit Parties to a Governmental Authority pursuant to this Section 3.5 , the Credit Parties shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(b)   Indemnification by Credit Parties .  Each Credit Party hereby agrees to indemnify, to the fullest extent permitted by Applicable Law, each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 3.5 ) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto (including, without limitation, reasonable attorneys' fees incurred in connection therewith), whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Borrower Representative by a Recipient (with a copy to the Administrative Agent if such Recipient is not Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of another Recipient, shall be conclusive absent manifest error.
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(c)   Recipient Indemnity .  Each Recipient (other than Administrative Agent) shall severally indemnify, to the fullest extent permitted by Applicable Law, the Administrative Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes attributable to such Recipient (but only to the extent that the Credit Parties have not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Credit Parties to do so) and (ii) any Excluded Taxes attributable to such Recipient, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto (including, without limitation, reasonable attorneys' fees incurred in connection therewith), whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to any such Recipient by the Administrative Agent shall be conclusive absent manifest error.  Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this Section 3.5(c) .
(d)   Exemptions .  If a Recipient is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document, such Recipient agrees with and in favor of Credit Parties and Administrative Agent to deliver to the Borrower Representative and the Administrative Agent one of the following before receiving its first payment under this Agreement:
(i)
if such Recipient is a U.S. Person, executed copies of IRS Form W-9 certifying that such Recipient is exempt from U.S. federal backup withholding tax;
(ii)
if such Recipient is a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the "interest" article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the "business profits" or "other income" article of such tax treaty;
(iii)
if such Recipient is a Foreign Lender claiming that its extension of credit will generate U.S. effectively connected income, executed copies of IRS Form W-8ECI;
(iv)
if such Recipient is a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the IRC, (x) a certificate substantially in the form of Exhibit A-1 to the effect that such Foreign Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of the IRC, a "10 percent shareholder" of any Borrower within the meaning of Section 881(c)(3)(B) of the IRC, or a "controlled foreign corporation" described in Section 881(c)(3)(C) of the IRC (a " U.S. Tax Compliance Certificate ") and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable; or
(v)
if such Recipient is a Foreign Lender that is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, a U.S. Tax Compliance Certificate substantially in the form of Exhibit A-2 or Exhibit A-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided , that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit A-4 on behalf of each such direct and indirect partner.
 
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(e)   Foreign Lenders .  Any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower Representative and the Administrative Agent (in such number of copies as shall be requested by the relevant recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower Representative or the Administrative Agent), executed copies of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit the Borrowers or the Administrative Agent to determine the withholding or deduction required to be made.
(f)   FATCA Withholding .  If a payment made to a Recipient under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Recipient were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the IRC, as applicable), such Recipient shall deliver to the Borrower Representative and the Administrative Agent at the time or times prescribed by Applicable Law and at such time or times reasonably requested by the Borrower Representative or the Administrative Agent such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the IRC) and such additional documentation reasonably requested by the Borrower Representative or the Administrative Agent as may be necessary for the Borrowers and the Administrative Agent to comply with their obligations under FATCA and to determine that such Recipient has complied with such Recipient's obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this Section 3.5(f) , "FATCA" shall include any amendments made to FATCA after the date of this Agreement.
(g)   Update of Forms and Certifications .  Each Recipient agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower Representative and the Administrative Agent in writing of its legal inability to do so.
(h)   Refunds .  If any Recipient determines, in its sole discretion exercised in good faith, that it has received a refund of any Indemnified Taxes that were paid by Credit Parties pursuant to this Section 3.5 , so long as no Event of Default has occurred and is continuing, it shall pay an amount equal to such refund (but only to the extent of indemnity payments made under this Section 3.5 with respect to the Indemnified Taxes giving rise to such refund) to Credit Parties, net of all out-of-pocket expenses (including Taxes) of such Recipient and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided , that Credit Parties, upon request of such Recipient, agrees to repay the amount paid to Credit Parties ( plus any penalties, interest or other charges imposed by the applicable Governmental Authority, other than such penalties, interest or other charges imposed as a result of the willful misconduct or gross negligence of Recipients hereunder) to such Recipient in the event such Recipient is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this Section 3.5(h) , in no event will any Recipient be required to pay any amount to Credit Parties pursuant to this Section 3.5(h) if such payment would place such Recipient in a less favorable net after-Tax position than such Recipient would have been in if the Indemnified Tax giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid.  This paragraph shall not be construed to require any Recipient to make available its tax returns (or any other information relating to its Taxes that it deems confidential) to the Credit Parties or any other Person.
 
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(i)   Survival of Obligations .  Each party's obligations under this Section 3.5 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Recipient, the termination of the Commitments and the repayment, satisfaction or discharge of all Obligations under any Loan Document.
Section 3.6.   Maximum Interest; Controlling Limitation .
(a)   Maximum Interest .  If the rate of interest on the Obligations, absent the limitations set forth in this Section 3.6 , would at any time exceed the Maximum Rate, then the actual rate of interest shall be the Maximum Rate, and, if in the future, the interest rate would otherwise be less than the Maximum Rate, then the interest rate shall remain at the Maximum Rate until such time as the amount of interest paid hereunder equals the amount of interest which would have been paid if the same had not been limited by the Maximum Rate.  In the event that, upon payment in full of the Obligations (other than contingent Obligations which survive the termination of this Agreement in accordance with the terms hereof), the total amount of interest paid or accrued under the terms of this Agreement is less than the total amount of interest which would, but for this Section 3.6 , have been paid or accrued if the interest rate otherwise provided by this Agreement had at all times been in effect, then Borrowers shall, to the fullest extent permitted by Applicable Law, pay to Administrative Agent, on the date of payment in full of such Obligations, an amount equal to (a) the lesser of (i) the amount of interest which would have been paid or accrued if the Maximum Rate had, at all times, been in effect and (ii) the amount of interest which would have been paid or accrued had the interest rate otherwise set forth in this Agreement, at all times, been in effect, less (b) the amount of interest actually paid or accrued under this Agreement.
(b)   Controlling Limitation .  Each Lender Party, each Borrower and each other Credit Party hereby acknowledge, agree, and declare that it is its intention to expressly comply with all Applicable Laws in respect of limitations on the amount or rate of interest that can legally be contracted for, charged or received under or in connection with the Loan Documents.  Notwithstanding anything to the contrary contained in any Loan Document (even if any such provision expressly declares that it controls all other provisions of the Loan Documents), in no contingency or event whatsoever shall the amount of interest (including the aggregate of all charges, fees, benefits, or other compensation which constitutes interest under any Applicable Law) under the Loan Documents paid by Borrowers or any other Credit Party, received by any Lender Party, agreed to be paid by Borrowers or any other Credit Party, or requested or demanded to be paid by any Lender Party exceed the Maximum Rate, and all provisions of the Loan Documents in respect of the contracting for, charging, or receiving compensation for the use, forbearance, or detention of money shall be limited as provided by this Section 3.6 .  In the event any such interest is paid to any Lender Party by Borrowers or any other Credit Party in an amount or at a rate which would exceed the Maximum Rate, such Lender Party then, notwithstanding any entry on Administrative Agent's or any other Lender Party's books otherwise, such excess shall conclusively be deemed to be automatically applied to any unpaid amount of the Obligations other than interest, in inverse order of maturity, or if the amount of such excess exceeds said unpaid amount, such excess shall be refunded to Borrowers or such other applicable Credit Party.  All interest paid, or agreed to be paid, by Borrowers or any other Credit Party, or taken, reserved, or received by any Lender Party shall be amortized, prorated, spread, and allocated in respect of the Obligations throughout the full term of this Agreement.  Notwithstanding any provision contained in any of the Loan Documents, or in any other related documents executed pursuant hereto, no Lender Party shall ever be entitled to charge, receive, take, reserve, collect, or apply as interest any amount which, together with all other interest under the Loan Documents, would result in a rate of interest under the Loan Documents in excess of the Maximum Rate and, in the event any Lender Party ever charges, receives, takes, reserves, collects, or applies any amount in respect of Borrowers or any other Credit Party that otherwise would, together with all other interest under the Loan Documents, be in excess of the Maximum Rate, such amount shall automatically be deemed to be applied in reduction of the unpaid principal balance of the Obligations other than interest and, if the principal balance thereof is paid in full, any remaining excess shall forthwith be refunded to the Borrowers or such other applicable Credit Party.  Each Credit Party and each Lender Party shall, to the maximum extent permitted under any Applicable Law, (i) characterize any non-principal payment as a standby fee, commitment fee, prepayment charge, delinquency charge, expense, or reimbursement for a third-party expense rather than as interest and (ii) exclude prepayments, acceleration, and the effect thereof.  Nothing in any Loan Document shall be construed or so operate as to require or obligate Borrowers or any other Credit Party to pay any interest, fees, costs, or charges greater than is permitted by any Applicable Law.  Subject to the foregoing, each Credit Party hereby agrees that the actual effective rate of interest from time to time existing under the Loan Documents, including all amounts agreed to by the Credit Parties pursuant to and in accordance with the Loan Documents which may be deemed to be interest under any Applicable Law, shall be deemed to be a rate which is agreed to and stipulated by the Credit Parties and the Lender Parties in accordance with Applicable Law.
 
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ARTICLE IV
PAYMENT
Section 4.1.   Interest .  Accrued interest on the Loans shall be due and payable in arrears on the first calendar day of each month and on the Termination Date.
Section 4.2.   Prepayment; Mandatory Payment of Deficiencies .  Borrowers may prepay Loans at any time.  In the event that the Revolving Loans are paid in full and the Lenders' Commitments to make Revolving Loans hereunder are terminated, then all Obligations shall immediately be due and owing and Borrowers shall pay the full amount of all outstanding Obligations.  Borrowers promise to pay to Administrative Agent, for the account of Lenders, on demand, the amount (if any) at any time by which (a) the unpaid principal balance of the Revolving Loans exceeds the Availability at such time, and (b) the unpaid principal balance of the Term RE Loan at such time exceeds an amount equal to seventy percent (70%) times the Net Amount of the Real Property Collateral at such time (it being understood that the Net Amount shall be determined pursuant to an appraisal conducted or updated by Administrative Agent in accordance with Section 5.5 ).
Section 4.3.   Mandatory Payments; Payment on the Termination Date .
(a)   The principal of the Term RE Loan shall be payable to Administrative Agent, for the account of each Lender, in equal monthly installments on each Installment Payment Date in an amount equal to $19,444.44 (plus interest payable pursuant to Section 4.1 ).
(b)   On the Termination Date:
(i)
Borrowers shall pay to Administrative Agent, for the account of Swing Lender, in full the outstanding principal balance of the Swing Loans plus all unpaid accrued interest thereon;
(ii)
Borrowers shall pay to Administrative Agent, for the account of each Lender, in full (1) the outstanding principal balance, if any, of the Revolving Loans plus all unpaid accrued interest thereon, and (2) the outstanding principal balance, if any, of the Term RE Loan plus all unpaid accrued interest thereon;
(iii)
If the Termination Date is prior to the third anniversary of the Agreement Date, Borrowers shall pay to Administrative Agent, for the account of Lenders, the amount required by Section 4.5 ; and
(iv)
Borrowers shall pay to Administrative Agent, for the account of Lender Parties, all unpaid Lender Expenses and all other Obligations payable under the Loan Documents.
 
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Section 4.4.   Mandatory Prepayment in Respect of Certain Events .  All proceeds or other cash payments received by any Borrower in respect of a Distribution to such Borrower (other than Distributions to such Borrower made by another Credit Party and Distributions received by Parent in connection with the sale of Parent's Equity Interests) or in respect of the sale, lease or other disposition by any Borrower of any asset (other than the sale of Inventory in the ordinary course of business or the sale of Equipment permitted under Section 9.8(c)(ii) ), shall be promptly paid to Administrative Agent (including by deposit into the Collection Account), for the account of Lender Parties, which shall be applied to the Obligations by the Administrative Agent in accordance with Section 4.7 (unless, with respect to any sale of any Equipment, such proceeds are reinvested in accordance with Section 9.8(c) ).
Section 4.5.   Early Termination; Prepayment Penalty .  Each Borrower may at any time prepay in full the Obligations and terminate the Commitment of Lenders to make Loans hereunder.  Each Borrower acknowledges that occurrence of the Termination Date and prepayment of all outstanding Obligations prior to the third anniversary of the Agreement Date, would result in the loss by Lenders of benefits under this Agreement and that the damages incurred by Lenders as a result thereof would be difficult and impractical to ascertain.  Subject to the terms of this Agreement, if for any reason the Termination Date occurs on any date prior to the third anniversary of the Agreement Date, Borrowers shall pay to Administrative Agent, for the account of Lenders on a pro rata basis in accordance with their Percentage Shares, in addition to all other amounts payable under the Loan Documents, a prepayment penalty, calculated as of the Termination Date, equal to the product of (a) the Revolving Credit Limit times (b) the following percentage, as applicable: (i) if the Termination Date is on any day during the period from the Agreement Date through the day preceding the date that is the first anniversary of the Agreement Date, 3.0%, (ii) if the Termination Date is on any day during the period from and including the date that is the first anniversary of the Agreement Date through the day preceding the date that is the second anniversary of the Agreement Date, 2.0% or (iii) if the Termination Date is on any day during the period from and including the date that is the second anniversary of the Agreement Date through the day that is 61 days immediately preceding the date that is the third anniversary of the Agreement Date, 1.0%, which amount Borrower and Lenders each acknowledges to be the best estimate of the amount necessary to fairly and reasonably compensate Lenders for their loss resulting from occurrence of the Termination Date and prepayment of all outstanding Loans prior to the third anniversary of the Agreement Date.
Section 4.6.   General Payment Provisions .  All payments to be made by Borrowers under the Loan Documents shall be made without set‑off, recoupment, or counterclaim.  Except as otherwise expressly provided herein, all payments by Borrowers shall be made in Dollars and in immediately available funds to Administrative Agent, for the account of Lenders, at its address set forth in Section 14.6 or to the Administrative Agent Account, no later than 2:00 p.m. on the date specified herein.  Any payment received by Administrative Agent later than 2:00 p.m. shall be deemed to have been received on the following Business Day and any applicable interest or fee shall continue to accrue.  Whenever any payment is due on a day other than a Business Day, such payment shall be due on the following Business Day, and such extension of time shall in such case be included in the computation of interest or fees, as the case may be.
Section 4.7.   Application .  All payments not relating to amounts due on Loans (including interest) or specific fees, and all proceeds of Accounts or other Collateral received and applied by Administrative Agent during any time when no Event of Default has occurred and is continuing shall be applied, first , to pay to Administrative Agent and/or Lenders any Lender Expenses then due; second , to interest due and payable on any outstanding Swing Loans; third , to interest due and payable on the Revolving Loans; fourth , to interest due and payable on the Term RE Loan; fifth , to principal of the Swing Loans and the Revolving Loans; sixth , to principal due and payable on the Term RE Loan, if any; seventh , to the payment of any other outstanding Obligations then due and payable, in such manner and order as Administrative Agent determines in its discretion; eighth , to the Borrowers by deposit in the Designated Account.  At any time that an Event of Default has occurred and is continuing, all payments and collections received by Administrative Agent and all proceeds of Collateral, shall be applied, first , to pay to Administrative Agent and/or Lenders any Lender Expenses then due; second , to interest due and payable on any outstanding Swing Loans; third , to interest due and payable in respect of the remaining Obligations; fourth , to pay or prepay principal of the Loans (including the Swing Loans), in such manner and order as Administrative Agent determines in its discretion; and fifth , to the payment of any other Obligations, in such manner and order as Administrative Agent determines in its discretion.  Administrative Agent shall have the continuing right, to the fullest extent permitted by Applicable Law, to apply and reverse and reapply any application, subject to the terms of this Agreement.
 
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Section 4.8.   Reinstatement .  If after receipt and application of any payment or proceeds any such application is invalidated, set aside, determined to be void or voidable for any reason, then the Obligations or part thereof intended to be satisfied by such application shall be revived and continued and this Agreement shall continue in full force as if such payment or proceeds had not been received by Administrative Agent and the Borrowers shall be liable to pay to Administrative Agent, for the account of Lenders, and each Borrower hereby does indemnify Lenders and Administrative Agent and defend and hold Lenders and Administrative Agent harmless in, an amount equal to the amount of such application.  The provisions of this Section 4.8 shall survive the termination of this Agreement.
Section 4.9.   Account Stated .  Administrative Agent will provide to Borrower Representative a monthly statement of all Loans, payments thereon, and other transactions pursuant to this Agreement.  Such statement shall be deemed correct, accurate, and binding on Borrowers and an account stated, subject to reversals and reapplications made as provided in Section 4.8 and corrections of errors discovered by Administrative Agent, unless Borrower Representative notifies Administrative Agent in writing to the contrary within thirty (30) days after such statement is rendered.  In the event a timely written notice of objections is given by Borrower Representative, only the items to which exception is expressly made will be considered to be disputed.
ARTICLE V
COLLATERAL
Section 5.1.   Security Interest .  Each Credit Party hereby pledges and grants to Administrative Agent for the benefit of Lender Parties, as security for the payment and performance of  such Credit Party's Obligations, a continuing security interest, lien and collateral assignment in all of such Credit Party's right, title and interest in and to all of the following, in each case both now owned and hereafter acquired by such Credit Party:  all Accounts, Inventory, Equipment, other goods, Machinery, fixtures General Intangibles, Payment Intangibles, Chattel Paper, Letter of Credit Rights, Supporting Obligations, Proprietary Rights, Instruments, promissory notes, Documents and documents of title, Investment Property, Deposit Accounts, Securities Accounts, Commercial Tort Claims, money, cash, cash equivalents, securities and other personal property of any kind (whether held directly or indirectly by such Credit Party), all books and records, whether in tangible or intangible form, all  other assets, if any, and all accessions to, substitutions for and replacements, products and proceeds (including all "proceeds" as defined in Section 9.102 of the UCC and, including all dividends, distributions and other income from such Credit Party's Collateral, collections thereon or distributions with respect thereto) of any of the foregoing.  Administrative Agent's Liens shall continue in full force and effect in all Collateral until all Obligations (other than contingent indemnification obligations which survive the termination of this Agreement in accordance with the terms hereof) have been fully paid and all commitments of the Lender Parties under this Agreement have been terminated.  Notwithstanding anything to the contrary, in no event shall the Collateral include, or the security interest in this Section 5.1 attach to, any property or assets that constitute Excluded Property, but only for so long as such property or assets constitute Excluded Property.
 
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Section 5.2.   Perfection and Protection of Administrative Agent's Security Interest .  Administrative Agent's Liens at all times shall be and remain first, prior and senior to any other interests in the Collateral, except those Permitted Liens which are expressly permitted to be prior to Administrative Agent's Liens in accordance with the definition thereof and except as may be expressly agreed otherwise by Administrative Agent in writing.  Credit Parties shall take all action reasonably requested by Administrative Agent at any time to perfect, maintain, protect and enforce Administrative Agent's Liens and to ensure that Administrative Agent's Liens at all times are first, prior and senior to any other interests in the Collateral, except those Permitted Liens which are expressly permitted to be prior to Administrative Agent's Liens in accordance with the definition thereof.  Without limiting the foregoing, unless Administrative Agent agrees otherwise in writing, Credit Parties will deliver to Administrative Agent the originals of all Instruments, Documents and Chattel Paper that evidence indebtedness owing to any Credit Party in excess of $25,000 in any one case or in the aggregate, duly endorsed or assigned to Administrative Agent without restriction, and all certificates of title covering any portion of the Collateral for which certificates of title have been issued (other than motor vehicles), together with executed applications for corrected certificates of title and other such documentation as may be requested by Administrative Agent, in each case to be held by Administrative Agent as Collateral securing the Obligations.  If at any time any Collateral or any books and records evidencing or relating to any Credit Party's Accounts or Inventory is located on any leased premises not owned by a Credit Party, then such Credit Party shall use commercially reasonable efforts to obtain a Collateral Access Agreement from the record owner thereof (it being understood that, without a Collateral Access Agreement, Accounts and Inventory of the Borrowers will not be eligible for inclusion in the Borrowing Base, in accordance with the definitions of Eligible Account and Eligible Inventory).  If any Collateral is at any time in the possession or control of any warehouseman, bailee, processor or any other Person other than a Credit Party where the value of such Collateral so held by any such warehouseman, bailee, processor or other Person exceeds $75,000, then Borrower Representative shall notify Administrative Agent thereof and shall use commercially reasonable efforts to obtain a Collateral Access Agreement from such Person (it being understood that, without a Collateral Access Agreement, such Collateral will not be eligible for inclusion in the Borrowing Base, in accordance with the definitions of Eligible Account and Eligible Inventory, as applicable). If at any time any Borrower's Equipment that is necessary or otherwise material (in Administrative Agent's Permitted Discretion) to Borrowers' manufacturing business is subject to a Lien of a third party, then such Borrower shall obtain a Collateral Access Agreement and/or a Subordination Agreement from such Person.
Section 5.3.   Collateral Proceeds Management .  All collections and proceeds of Collateral shall be subject to an express trust for the benefit of Administrative Agent, for the benefit of the Lender Parties, and shall be delivered to Administrative Agent for application to the Obligations as follows:
(a)   Parent has established (i) a lock box service for collection of Accounts (the " Parent Santander Lockbox "), along with account #1200233468 (the " Parent Santander Collection Account ") with Santander Bank and (ii) Parent has established a lock box service for collection of Accounts (together with any other lockbox replacing it with Administrative Agent's consent, the " Parent Sterling Lockbox "), along with account #6700074796 (such account and any other account replacing it with Administrative Agent's consent, the " Parent Sterling Collection Account ") with Sterling.  Drake (i) has established a lock box service for collection of Accounts (the " Drake Santander Lockbox "; the Parent Santander Lockbox and the Drake Santander Lockbox are herein collectively called the " Santander Lockboxes "), along with account #7683711810 (the " Drake Santander Collection Account "; the Parent Santander Collection Account and the Drake Santander  Collection Account are collectively called the " Santander Collection Accounts ") with Santander and (ii) within thirty (30) days after the Agreement Date, (A) shall establish a lockbox service for collection of Accounts, (together with any other lockbox replacing it with Administrative Agent's consent the " Drake Sterling Lockbox "; the Parent Sterling Lockbox and the Drake Sterling Lockbox are herein collectively called the " Sterling Lockboxes " and the Santander Lockboxes and the Sterling Lockboxes are herein collectively called the " Lockboxes "), along with a related account (such account and any other account replacing it with Administrative Agent's consent, the " Drake Sterling Collection Account "; the Parent Sterling Collection Account and the Drake Sterling Collection Account are collectively called the " Sterling Collection Accounts " and the Santander Collection Accounts and the Sterling Collection Accounts are collectively called the " Collection Accounts ") with Administrative Agent, and (B) shall execute and deliver a control agreement in form and substance acceptable to Administrative Agent with respect to the Drake Sterling Collection Account.  Each Collection Account and Lockbox shall at all times be subject to a Control Agreement providing, among other things, for Administrative Agent's control over such Collection Account and Lockbox and further that (i) all items of payment received in such account are received by such bank for the Lender Parties, (ii) such bank has no rights of setoff or recoupment or any other claim against such items (other than for payment of its service fees and other charges directly related to the administration of such account, returned or charged back items, reversals, cancellation of payment orders and other electronic fund transfers or other corrections, adjustments or overdrafts), (iii) no Credit Party shall have access to any funds therein and (iv) such bank will deposit all collections and amounts therein to the Administrative Agent Account on a daily basis.
 
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(b)   Schedule 7.19 lists all of Credit Parties' Deposit Accounts and Securities Accounts as of the date hereof (with the Collection Accounts and Lockboxes being listed in Part A thereof, Excluded Accounts being listed in Part C thereof and all other Deposit Accounts and Securities Accounts listed in Part B thereof).  All Deposit Accounts and Securities Accounts listed or required to be listed in Part B of Schedule 7.19 (as updated pursuant to the terms of Section 7.19 ) are and shall at all times be subject to a Control Agreement or, if such Deposit Accounts and/or Securities Accounts are held with Administrative Agent, shall otherwise be subject to Administrative Agent's "control" under the UCC (such accounts so subject to a Control Agreement or otherwise under the Administrative Agent's control, collectively the " Controlled Accounts " and all Controlled Accounts held by a Credit Party with Santander Bank are herein collectively called the " Santander Controlled Accounts ").  Each Control Agreement shall provide, among other things, for Administrative Agent's control under the UCC over such accounts (allowing the applicable Credit Party access to funds therein until such time as an activation notice is sent to the applicable bank by Administrative Agent), for the benefit of Lender Parties.  Administrative Agent hereby agrees that (i) it will not send an activation notice with respect to any Controlled Account unless an Event of Default has occurred and is continuing and (ii) it will not block Credit Parties' access to any Controlled Account held by Administrative Agent unless an Event of Default has occurred and is continuing (but, for the avoidance of doubt, it is expressly agreed that Administrative Agent can block Credit Parties' access to any Controlled Account after the occurrence and during the continuance of any Event of Default).
(c)   No Credit Party will use, dispose, withhold or otherwise exercise dominion over any proceeds of Collateral.  Borrowers shall instruct all Account Debtors to send all payments in respect of Accounts to the Collection Account or the related lock-box.  At all times on and after Borrowers borrow the initial Loan hereunder, if a Borrower or any other Credit Party at any time receives any proceeds of Collateral, it shall receive such proceeds as Administrative Agent's trustee and shall promptly (and in any event within one (1) Business Day of such receipt) deliver such proceeds to Administrative Agent, for the benefit of the Lender Parties, in their original form duly endorsed in blank or to the order of Administrative Agent.
 
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(d)   All payments received by Administrative Agent pursuant to Section 5.3(a) or Section 5.3(c) shall be credited to the Obligations in accordance with Section 4.7 , immediately upon receipt (conditional upon final collection) after allowing one (1) Business Day for collection, provided , that such payments shall be deemed to be credited to such Obligations immediately upon receipt for purposes of determining Availability and calculating the unused line fee pursuant to Section 3.2(b) .  Any payments received by Administrative Agent pursuant to Section 5.3(a) or Section 5.3(c) that are to be distributed to Borrowers pursuant to Section 4.7 shall be deposited in the Designated Account within one Business Day of receipt of good funds by Administrative Agent.
(e)   No later than the 60 th day immediately succeeding the Agreement Date (the " Santander Termination Date "), all Santander Lockboxes, Santander Collection Accounts and Santander Controlled Accounts shall be closed.  On the Santander Termination Date, Credit Parties shall deliver an updated Schedule 7.19 to Administrative Agent.  No later than the 30 th Day immediately succeeding the Agreement Date, the TD Operating Account shall be closed.  At no time shall any funds be deposited into or held within the TD Operating Account.  If at any time the amount held within the TD Holding Account shall exceed $250,000, such excess amount shall be transferred to the Parent Sterling Collection Account within one (1) Business Day thereof.
Section 5.4.   Examinations; Inspections; Verifications .  Administrative Agent shall have the right at any time without hindrance or delay to conduct field examinations (including through third party field examiners) to inspect the Collateral and to inspect, audit and copy Credit Parties books and records relating to the Collateral or Credit Parties' business.  Credit Parties agree to pay all reasonable fees and expenses of such third party field examiners and Administrative Agent's customary fees and disbursements relating to such field examinations and the preparation of reports thereof; provided , that so long as no Event of Default has occurred and is continuing, there shall be no more than (4) field examinations in any calendar year at the expense of Borrowers.  Administrative Agent is authorized to discuss Credit Parties' affairs with Credit Parties' independent auditors and any other Person that provides professional services to Credit Parties, as well as employees of any Credit Party, as Administrative Agent may deem necessary in relation to the Collateral, Credit Parties' business or financial condition or Administrative Agent's or Lender Parties' rights under the Loan Documents.  Administrative Agent shall have full access to all records available to Credit Parties from any credit reporting service, bureau or similar service and shall have the right to examine and make copies of any such records.  Administrative Agent may exhibit a copy of this Agreement to such service and such service shall be entitled to rely on the provisions hereof in providing access to Administrative Agent as provided herein.  If requested by Administrative Agent, Credit Parties will deliver to Administrative Agent any authorization or consent necessary for Administrative Agent to obtain records from any such service.
Section 5.5.   Appraisal .  At any time when a Default or Event of Default exists, and also at such other times not more frequently than two (2) times per Fiscal Year Administrative Agent shall, at Borrowers' expense, conduct appraisals, or updates of appraisals, of any Collateral (with the exception of Real Property Collateral, as to which not more than one (1) appraisal per Fiscal Year shall be performed at Borrowers' expense so long as no Default or Event of Default has occurred and is continuing), prepared by an appraiser acceptable to Administrative Agent in its Permitted Discretion and on a basis satisfactory to the Administrative Agent.
 
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Section 5.6.   Right to Cure .  Administrative Agent may pay any amount or do any act required of Credit Parties hereunder or under any other Loan Document in order to preserve, protect, maintain or enforce the Collateral or Administrative Agent's Liens, and which Credit Parties fail to pay or do, including payment of any license, fee, maintenance costs, judgment lien, insurance premium, charge, landlord's claim or bailee's claim relating to the Collateral or Administrative Agent's Liens.  All payments that Administrative Agent makes under this Section 5.6 and all costs, fees and expenses that Administrative Agent pays or incurs in connection therewith shall be paid or reimbursed to Administrative Agent on demand.  Any action taken by Administrative Agent under this Section 5.6 shall not waive any Default or Event of Default or any rights of Administrative Agent or Lenders with respect thereto.
Section 5.7.   Power of Attorney .  Each Credit Party hereby irrevocably appoints Administrative Agent as its agent and attorney-in-fact (such appointment to terminate on the occurrence of the Termination Date and the payment in full of all Obligations (other than contingent indemnity obligations that survive the termination of this Agreement in accordance with the terms hereof) to take any action necessary to preserve and protect the Collateral and Administrative Agent's interests under the Loan Documents or to sign and file any document necessary to perfect Administrative Agent's Liens, in each case, to the fullest extent permitted by Applicable Law.  Such appointment and agency shall terminate upon payment in full of the Obligations (other than contingent indemnity obligations that survive termination of this Agreement in accordance with the terms hereof) after occurrence of the Termination Date.  Without limiting the foregoing:
(a)   Administrative Agent shall have the right at any time to take any of the following actions, in its own name or in the name of any Credit Party, whether or not an Event of Default is in existence:  (i) make written or verbal requests for verification of the validity, amount or any other matter relating to any Collateral from any Person, and (ii) sign and file, in a Credit Party's name or in Administrative Agent's name as secured party, any proof of claim or other document in any bankruptcy proceedings of any Account Debtor or obligor on Collateral, solely to the extent that such Credit Party has failed to file such proof of claim or other document within one (1) week prior to the bar date or deadline for such filing in such bankruptcy proceeding.
(b)   Administrative Agent shall have the right at any time to take any of the following actions, in its own name or in the name of a Credit Party, at any time when any Event of Default is in existence, in connection with Administrative Agent's exercise of its rights and remedies in respect of such Event of Default in accordance with Article XI hereof: (i) notify any or all Persons which Administrative Agent believes may be Account Debtors or obligors on Collateral to make payment directly to Administrative Agent, for the benefit of the Lenders, for the account of such Credit Party, (ii) redirect the deposit and disposition of collections and proceeds of Collateral; provided , that such proceeds shall be applied to the Obligations as provided by this Agreement, (iii) settle, adjust, compromise or discharge Accounts or extend time of payment upon such terms as Administrative Agent may determine, (iv) notify post office authorities, in the name of such Credit Party or in the name of Administrative Agent, as secured party, to change the address for delivery of such Credit Party's mail to an address designated by Administrative Agent, (v) sign and file, in a Credit Party's name or in Administrative Agent's name as secured party, any proof of claim or other document in any bankruptcy proceedings of any Account Debtor or obligor on Collateral, (vi) sign such Credit Party's name on any invoice, bill of lading, warehouse receipt or other document of title relating to any Collateral, (vii) clear Inventory through customs in such Credit Party's name, in Administrative Agent's name as secured party or in the name of Administrative Agent's designee, and to sign and deliver to customs officials powers of attorney in Credit Party's name for such purpose (viii) endorse a Credit Party's name on checks, instruments or other evidences of payment on Collateral, (ix) access, copy or utilize any information related to the Collateral, recorded or contained in any computer or data processing equipment or system maintained by a Credit Party in respect of the Collateral and (x) open mail addressed to a Credit Party and take possession of checks or other proceeds of Collateral for application in accordance with this Agreement.
 
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(c)   Each Credit Party authorizes Administrative Agent at any time and from time to time to file, transmit, or communicate, as applicable, financing statements and amendments naming such Credit Party as debtor thereon (i) describing such Credit Party's Collateral as "all personal property of debtor" or "all assets of debtor" or words of similar effect, (ii) describing such Credit Party's Collateral as being of equal or lesser scope or with greater detail, or (iii) that contain any information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance.
(d)   The powers of attorney granted under this Section 5.7 are coupled with an interest and are irrevocable until all Obligations (other than contingent indemnification Obligations which survive termination of this Agreement in accordance with the terms hereof) have been paid in full and all commitments of Lenders under this Agreement have been terminated.  The powers of attorney granted under this Section 5.7 are durable and should not be affected by the subsequent disability or incapacity of any Credit Party.  Costs, fees and expenses incurred by Administrative Agent in connection with any of such actions by Administrative Agent, including attorneys' fees and out-of-pocket expenses, shall be reimbursed to Administrative Agent on demand.
Section 5.8.   Preservation of Administrative Agent's Rights .  To the extent allowed by Applicable Law, none of Administrative Agent, any other Lender Party, their Affiliates nor any of their officers, directors, stockholders, members, managers, employees or agents shall be liable or responsible in any way for the safekeeping of any Collateral or for any act or failure to act with respect to the Collateral, or for any loss or damage thereto or any diminution in the value thereof, or for any act by any other Person, except to the extent of gross negligence or willful misconduct on the part of Administrative Agent or Lenders.  In the case of any Instruments and Chattel Paper included within the Collateral, Administrative Agent shall have no duty or obligation to preserve rights against prior parties.  The Obligations shall not be affected by any failure of Administrative Agent or any other Lender Party to take any steps to perfect its security interests or to collect or realize upon the Collateral, nor shall loss of or damage to the Collateral release any Credit Party from any of the Obligations.
Section 5.9.   Deficiency .  In the event that the proceeds of any sale, collection or realization of or upon the Collateral by Administrative Agent are insufficient to pay all Obligations in full, each Credit Party shall be liable for the deficiency, together with interest thereon as provided in this Agreement, together with the costs of collection and the reasonable fees of any attorneys employed by the Administrative Agent to collect such deficiency.
ARTICLE VI
CONDITIONS
Section 6.1.   Conditions Precedent to Initial Loan .  The obligation of Lenders to make the initial extension of credit under this Agreement is subject to the fulfillment, to Administrative Agent's satisfaction, of each of the following conditions precedent:
(a)   Administrative Agent shall have received each of the following, in each case in form and substance satisfactory to Administrative Agent:
(i)   A copy of the organizational documents of each Credit Party and all amendments thereto, accompanied by the certificate of the appropriate Governmental Authority of such Person's jurisdiction of organization bearing a recent date acceptable to Administrative Agent in its Permitted Discretion, to the effect that such copy is correct and complete and that such Person is duly organized and validly existing in such jurisdiction;
 
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(ii)   Certification by the appropriate Governmental Authority, bearing a recent date acceptable to Administrative Agent in its Permitted Discretion, to the effect that each Credit Party is in good standing and qualified to transact business in its jurisdiction of organization and in each other jurisdiction where it transacts business, except in the case of any such foreign jurisdiction where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect;
(iii)   (A) a copy of the bylaws, operating agreement or other similar governing document of each Credit Party and all amendments thereto, (B) certification of the name, signature and incumbency of all officers of such Person who are authorized to execute any Loan Document (or request Loans with respect to Borrower Representative) and (C) a copy of authorizing resolutions approving the transactions contemplated by the Loan Documents, and authorizing and directing an officer or officers of such Person to sign and deliver all Loan Documents to be executed by it, duly adopted by such Person's board of directors or similar governing body, all accompanied by a certificate from a Responsible Officer of such Person dated as of the Agreement Date to the effect that each such item is true and complete and in full force and effect as of the Agreement Date;
(iv)   This Agreement, duly executed by each Credit Party;
(v)   Evidence of insurance in compliance with the requirements of this Agreement;
(vi)   All Collateral Access Agreements and other third-party waivers, subordinations and consents as are required hereunder;
(vii)   A Subordination Agreement with respect to any Debt proposed by Credit Parties as Subordinated Debt (including, without limitation, the Convertible Debt) and a copy of the instrument and other documents evidencing, securing or otherwise relating to any such Debt;
(viii)   An executed Guaranty Agreement from each Guarantor;
(ix)   A security agreement in respect of Proprietary Rights from each Credit Party owning any Proprietary Rights;
(x)   An executed Pledge Agreement from Parent;
(xi)   Each Control Agreement required under Section 5.3(a) ;
(xii)   A Deed of Trust relating to the Real Property Collateral, executed by Parent;
(xiii)   a payoff letter executed by Santander Bank, in form and substance acceptable to Administrative Agent;
(xiv)   An executed Perfection Certificate from each Credit Party;
 
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(xv)   A disbursement letter executed by Borrower Representative to Administrative Agent setting forth therein the flow of funds information for the initial Loans and extensions of credit made by the Lenders, which such letter shall include the name of, the amount to be sent to, and the wiring instructions for each such party receiving Loan proceeds, and shall be in form acceptable to Administrative Agent;
(xvi)   UCC-3 termination statements, partial releases or such other releases as may be required by Administrative Agent with respect to the Collateral, other than with respect to Permitted Liens;
(xvii)   Copies of Parent's and its consolidated Subsidiaries' financial statements for the Fiscal Year ending December 31, 2015, audited by Parent's independent certified public accountants;
(xviii)   Copies of the interim unaudited consolidated and consolidating financial statements of the Parent and its Subsidiaries for the period ending October 31, 2016;
(xix)   Copies of the Credit Parties' forecasts and projections for the period specified by Administrative Agent, in form and substance reasonably satisfactory to Administrative Agent;;
(xx)   An opinion of counsel for Credit Parties, in form and substance satisfactory to Administrative Agent;
(xxi)   With respect to the initial Revolving Loan, an executed Borrowing Notice as required by Section 2.2(a) and Borrowing Base Certificate as required by Section 8.5(a) , in each case, duly executed by a Responsible Officer of Borrower Representative;
(xxii)   An appraisal of the Inventory prepared by either Tiger, Hilco or Gordon Brothers in form and substance acceptable to Administrative Agent in its Permitted Discretion;
(xxiii)   Flood hazard determinations for all Real Property Collateral and evidence of flood insurance, acceptable to Administrative Agent in Permitted Discretion;
(xxiv)   An appraisal for the Real Property Collateral prepared by ARD Appraisal Co. or such other real property appraiser acceptable to Administrative Agent in its Permitted Discretion, with a minimum fair market value of such Real Property Collateral set forth therein and otherwise acceptable to Administrative Agent in its Permitted Discretion;
(xxv)   A survey in respect of the Real Property Collateral, in form and substance and prepared by a Person acceptable to Administrative Agent in its Permitted Discretion;
(xxvi)   A Phase I environmental report in respect of the Real Property Collateral, in form and substance and prepared by a Person acceptable to Administrative Agent in its Permitted Discretion;
(xxvii)   Mortgagee title commitments or pro forma policies, in form and substance and issued by a title insurance company acceptable to Administrative Agent in its Permitted Discretion;
 
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(b)   Administrative Agent shall have received satisfactory evidence that Availability, after giving effect to (i) the initial Revolving Loans, (ii) payment of all fees and Lender Expenses required to be paid hereunder, (iii) payment of all taxes due and owing and (iv) payment of all trade indebtedness such that no trade indebtedness is sixty (60) days or more past due, will be in an amount equal to or greater than $1,250,000;
(c)   A field examination of the Credit Parties and the Collateral satisfactory to Administrative Agent shall have been completed and delivered to Administrative Agent;
(d)   Credit Parties shall have established cash proceeds management pursuant to Section 5.3 and confirmed that Credit Parties' reporting systems are acceptable to Administrative Agent;
(e)   Administrative Agent shall have filed all financing statements as required to perfect Administrative Agent's Liens in all Collateral with respect to which perfection can be achieved by filing a financing statement, and shall have received evidence or other confirmation of such filing, satisfactory to Administrative Agent;
(f)   Administrative Agent shall have received satisfactory reference checks with respect to the senior management of each Credit Party;
(g)   Administrative Agent shall have completed confirmation of Borrowers' Accounts, via telephone or otherwise, and the results of such confirmation shall be satisfactory to Administrative Agent;
(h)   Credit Parties shall have paid all Lender Expenses owed by them as of the Agreement Date;
(i)   All legal and business matters in connection with the transaction contemplated by this Agreement shall be satisfactory to Administrative Agent.
Section 6.2.   Conditions Precedent to all Loans .  In addition to the conditions precedent specified by Section 6.1 , the obligation of Lender to make any Loan shall be subject to the following conditions precedent:
(a)   All representations and warranties in this Agreement and the other Loan Documents shall be true and correct in all material respects on and as of the date of such Loan, as though such representations and warranties are made on and as of such date (except to the extent any such representations and warranties relate solely to an earlier date);
(b)   No Default or Event of Default shall have occurred and be continuing on the date of such Loan, and no Default or Event of Default will occur after giving effect to such Loan;
(c)   The funding of such Loan shall not be prohibited by any Applicable Law;
(d)   Borrowers shall have satisfied all applicable requirements for requesting such Loan;
(e)   No Material Adverse Effect shall have occurred or will result from the making of such Loan;
(f)   No involuntary petition shall have been filed against any Credit Party or Guarantor that has not been
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dismissed and there shall not exist any other action or proceeding seeking relief under the Bankruptcy Code or seeking any reorganization, arrangement, consolidation or readjustment of the debts of any Credit Party under any other bankruptcy or insolvency law; and
(g)   Credit Parties shall have paid all Lender Expenses incurred through the date of the funding of such Loan.
Any request for a Loan pending at a time when any condition precedent specified by Section 6.1 or Section 6.2 is not satisfied may be declined by Administrative Agent without prior notice.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender Parties to enter into this Agreement and make Loans, each Credit Party, jointly and severally, makes each of the following representations and warranties to the Lender Parties as being true, complete and correct in all respects as of the Agreement Date and as of the date of the making of each Loan thereafter, as though made on and as of the date of such Loan (except to the extent such representations or warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all respects as of such earlier date):
Section 7.1.   Fundamental Information Schedule 7.1 sets forth, as of the most recent Reporting Date, for each Credit Party: (a) its legal name, (b) its federal tax identification number, (c) its jurisdiction of organization, (d) its address of its chief executive office, (e) jurisdictions in which qualification is necessary in order for it to own or lease its property and conduct its business, except for such jurisdictions in which the failure to so qualify could not reasonably be expected to have a Material Adverse Effect, (f)  other than for Parent, the number and the percentage of the outstanding shares of each class of such Person's and its direct and indirect Subsidiaries' Equity Interests, all of which are validly issued, outstanding, fully paid and non-assessable, and owned beneficially and of record by the Person identified therein and (g) each Immaterial Subsidiary.  Each Credit Party (i) is a registered organization, as defined by the UCC, duly organized and validly existing and in good standing under the laws of its jurisdiction of organization, and (ii) is qualified to do business and is in good standing as a foreign organization in each jurisdiction in which qualification is necessary in order for it to own or lease its property and conduct its business, except for such jurisdictions in which the failure to so qualify or maintain such good standing could not reasonably be expected to have a Material Adverse Effect, and has all requisite power and authority to conduct its business and to own its property.
Section 7.2.   Prior Transactions .  No Credit Party has, during the past five (5) years, (a) except as set forth on Schedule 7.2 , changed its name or used any fictitious name, or been a party to any merger or organizational change or (b) acquired any of its property outside of the ordinary course of business.
Section 7.3.   Subsidiaries .  No Credit Party has any Subsidiaries except as shown in Schedule 7.1 .
Section 7.4.   Authorization, Validity and Enforceability .  Each Credit Party has the corporate or company power and authority to execute, deliver and perform this Agreement and the other Loan Documents to which it is a party, to incur the Obligations, and to grant the Administrative Agent's Liens on the Collateral.  Each Credit Party has taken all necessary action to properly authorize its execution, delivery and performance of the Loan Documents to which it is a party.  This Agreement and the other Loan Documents to which each Credit Party is a party have been duly executed and delivered by such Credit Party, and constitute the legal, valid and binding obligations of such Credit Party, enforceable against it in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to enforcement of creditors' rights.
 
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Section 7.5.   Noncontravention .  Each Credit Party's execution, delivery, and performance of this Agreement and the other Loan Documents to which it is a party do not and will not conflict with, violate or constitute a violation of or breach or default under, as applicable, (a) its organizational documents, (b) any agreement or instrument to which it or any of its Subsidiaries is a party or which is otherwise binding upon it or any of its Subsidiaries, other than a violation, breach or default which could not reasonably be expected to have a Material Adverse Effect, or (c) any Applicable Law applicable to it or any of their Subsidiaries.
Section 7.6.   Financial Statements .  Credit Parties have delivered to Administrative Agent the audited consolidated and consolidating balance sheet and related statements of income, retained earnings, cash flows and changes in stockholders' equity for Parent and its consolidated Subsidiaries as of December 31, 2015, and for the Fiscal Year then ended, accompanied by the report thereon of the Credit Parties' independent certified public accountants.  Credit Parties have also delivered to Administrative Agent the unaudited consolidated and consolidating balance sheet and related statements of income and cash flows for Parent and its consolidated Subsidiaries as of October 31, 2016.  All such financial statements have been prepared in accordance with GAAP and present accurately and fairly the financial position of Parent and its consolidated Subsidiaries as at the dates thereof and their results of operations for the specified periods, subject, in the case of such unaudited financials to normal year-end adjustments and the absence of footnote disclosure.  No Material Adverse Effect has occurred since the dates of such financial statements, respectively.
Section 7.7.   Litigation .  As of the most recent Reporting Date, except as set forth on Schedule 7.7 (which sets forth a complete and accurate description of each action, suit, claim or proceeding described therein, the parties thereto, the nature of such dispute, and whether any potential liability is covered by insurance), there is no pending or, to the best of Credit Parties' knowledge after due inquiry, threatened, action, suit, proceeding or claim by any Person against or with respect to any Credit Party or its Subsidiaries, or to the best of Credit Parties' knowledge after due inquiry, investigation by any Governmental Authority into or relating in any way to any Credit Party or its Subsidiaries, or any basis for any of the foregoing, which, in each case, could reasonably be expected to have a Material Adverse Effect.  To the extent any Credit Party notifies Administrative Agent of any new pending or threatened action, suit, proceeding or claim pursuant to Section 8.7(b) hereto, such new information shall be deemed added to Schedule 7.7 hereto.
Section 7.8.   ERISA and Employee Benefit Plans .  Except as set forth on Schedule 7.8 , no Credit Party nor any ERISA Affiliate maintains or contributes to an ERISA Benefit Plan.  Except for those events or circumstances that could not reasonably be expected to have a Material Adverse Effect, (x) each ERISA Benefit Plan is in compliance with applicable provisions of ERISA, the IRC and other Applicable Law and (y) there are no existing or pending (or to the knowledge of Credit Parties, threatened) claims (other than routine claims for benefits in the normal course), sanctions, actions, lawsuits or other proceedings or investigations involving any ERISA Benefit Plan to which a Credit Party or any of its Subsidiaries incurs or otherwise has or could have a material obligation or any material liability.  No ERISA Affiliate is required to contribute to, or has any other absolute or contingent liability in respect of, any Multiemployer Plan.  No "accumulated funding deficiency" (as defined in Section 412(a) of the IRC) exists with respect to any ERISA Benefit Plan, whether or not waived by the Secretary of the Treasury or his delegate.  No Termination Event has occurred, and none of the Credit Parties is aware of any fact, event or circumstance that could reasonably be expected to constitute or result in a Termination Event with respect to any ERISA Benefit Plan.  None of the Credit Parties or any ERISA Affiliate has (i) 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 or (ii) engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA.
 
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Section 7.9.   Compliance with Laws .  Each Credit Party and its Subsidiaries are (a) in compliance, in all material respects, with the Patriot Act and (b) in compliance with all other Applicable Laws, except where such failure to comply could not reasonably be expected to have a Material Adverse Effect.
Section 7.10.   Taxes .  Credit Parties have filed all federal and other material tax returns and reports required to be filed by Applicable Law, and have paid all federal and other taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable other than any unpaid taxes, assessments fees or other charges that are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and for which adequate reserves are maintained on the books of the applicable Credit Party in accordance with GAAP, and so long as none of the Collateral would become subject to forfeiture, any Lien (other than a Permitted Lien not prior to Administrative Agent's Lien on the Collateral) or any loss as a result of such contest or delay in payment.
Section 7.11.   Location of Collateral and Books and Records Schedule 7.11 is a complete list of the location of the Collateral and of Credit Parties' books and records as of the most recent Reporting Date, with a notation as to whether such location is leased or owned and which Credit Party so leases or owns such property.  If any such location is not owned by a Credit Party, Schedule 7.11 includes the name and mailing address of the owner thereof.  If any Collateral or any books or records of any Credit Party is transported or transferred to a location not previously disclosed in Schedule 7.11 , such schedule shall be updated within five (5) Business Days of such transfer.
Section 7.12.   Accounts .  Each Account of a Borrower represents a bona fide sale or lease and delivery of goods or rendition of services by such Borrower in the ordinary course of such Borrower's business.  Each Account is for a liquidated amount payable by the Account Debtor thereon on the terms set forth in the invoice therefor and in the schedule of Accounts delivered to Administrative Agent, without any offset, deduction, defense or counterclaim except those known to Borrowers and disclosed to Administrative Agent in writing in accordance with Section 8.8 .  No payment has been received on any Account (except for any payment that is at any time received by Borrowers and remitted to Administrative Agent in accordance with Section 5.3(b) ), and no credit, discount or extension or agreement has been granted, on any Account except permitted by and as reported to Administrative Agent in writing in accordance with Section 8.8 .  Each copy of an invoice delivered to Administrative Agent by Borrowers is a genuine copy of the original invoice sent to the Account Debtor named therein.  All goods described in any invoice representing a sale of goods have been delivered to the Account Debtor named therein and all services of Borrowers described in each invoice representing services have been performed.
Section 7.13.   Inventory .  No Instruments or documents of title have been issued in respect of any Inventory.
Section 7.14.   Documents, Instruments, and Chattel Paper .  All Documents, Instruments and Chattel Paper (if any), and all signatures and endorsements thereon, are complete, valid and genuine.
 
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Section 7.15.   Proprietary Rights Schedule 7.15 sets forth a correct and complete list of all Proprietary Rights owned by or licensed to the Credit Parties that are material to the Credit Parties' business as of the most recent Reporting Date.  None of such Proprietary Rights is subject to any licensing agreement or similar arrangement except as set forth on Schedule 7.15 .  All Proprietary Rights set forth on Schedule 7.15 are valid, subsisting, unexpired and enforceable.  To Credit Parties' knowledge, none of such Proprietary Rights infringes on, misappropriates, dilutes or conflicts with any other Person's property, and no other Person's property infringes on misappropriates, dilutes or conflicts with such Proprietary Rights.  The Proprietary Rights described on Schedule 7.15 and all other Proprietary Rights in which Credit Parties have an interest constitute all of the property of such type necessary to the current and anticipated future conduct of Credit Parties' business.  No holding, decision or judgment has been rendered by any Governmental Authority or court of law which would cancel or question the validity of, or such Credit Parties' rights in, any Proprietary Rights material to the conduct of any Credit Party's business.  No action, suit, claim, demand, order or proceeding is pending, or threatened in writing, (i) seeking to limit, cancel or question the validity of any Proprietary Rights material to the conduct of any Credit Party's business, or such Credit Party's ownership interest therein (other than office actions issued in the ordinary course of prosecution of any pending applications for Patents or applications for registration of other Proprietary Rights), or (ii) which, if adversely determined, could reasonably be expected to have a Material Adverse Effect on any Proprietary Rights material to the conduct of any Credit Party's business.  If any Credit Party becomes the owner of any Proprietary Rights or if any new Proprietary Rights are licensed to any Credit Party, in each case that are material to the conduct of any Credit Party's business, not previously disclosed in Schedule 7.15 , such Schedule shall be updated promptly, and in any event, within ten (10) days of becoming the owner thereof.  If any Credit Party enters into any licensing agreement or similar arrangement, with respect to any of Credit Parties' Proprietary Rights not previously disclosed in Schedule 7.15 but that are required to be so disclosed hereunder, such Schedule shall be updated promptly, and in any event, within five (5) Business Days of entering into such agreement.
Section 7.16.   Investment Property Schedule 7.16 sets forth a correct and complete list of all Investment Property owned by Credit Parties as of the most recent Reporting Date, excluding Equity Interests constituting treasury stock of Parent.  As of the most recent Reporting Date, Credit Parties are the legal and beneficial owner of such Investment Property, as applicable, and have not sold, granted any option with respect to, assigned or transferred, or otherwise disposed of any of their rights or interest therein.  Credit Parties shall update Schedule 7.16 on the last Business Day of any month in which (and to the extent) there are any changes thereto.
Section 7.17.   Real Property and Leases .  The Credit Parties have good, valid, marketable and legal title to all of the Real Property Collateral owned by them, free and clear of all Liens, encumbrances, or adverse claims other than Permitted Liens and free and clear of all impediments to the use of such properties in Credit Parties' business.  Schedule 7.17 sets forth a correct and complete list of all Real Property owned by the Credit Parties, all leases and subleases of Real Property on which a Credit Party is lessee or sublessee, and all leases or subleases of Real Property on which a Credit Party is lessor or sublessor, each as of the most recent Reporting Date.  Each Credit Party enjoys peaceful and undisturbed possession under all leases listed in Schedule 7.7 and, to the best of Credit Parties' knowledge, each of such leases is valid and enforceable in accordance with its terms and is in full force and effect.  No default by any Credit Party to any such lease exists.  Credit Parties shall update Schedule 7.17 on the last Business Day of any month in which (and to the extent) there are any changes thereto.
Section 7.18.   Material Agreements Schedule 7.18 sets forth all material agreements (but not including any IP License Agreement), to which any Credit Party is a party or is otherwise bound as of the most recent Reporting Date.  Credit Parties shall update Schedule 7.18 on a monthly basis on the last Business Day of each month to the extent there are any changes thereto.  To the best of Credit Parties' knowledge, all such material agreements set forth on Schedule 7.18 are in full force and effect.  No defaults by a Credit Party exist under any such material agreement.
 
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Section 7.19.   Bank Accounts Schedule 7.19 contains a complete list of all Deposit Accounts and Securities Accounts maintained by the Credit Parties as of the most recent Reporting Date.  If any Credit Party opens or otherwise comes into possession of a Deposit Account or a Securities Account not previously disclosed on Schedule 7.19 such schedule shall be updated immediately upon such opening, or coming into possession.
Section 7.20.   Title to Property .  Each Credit Party has good, valid, marketable and exclusive title to, or a leasehold interest or license in, all of its property, free of all Liens except Permitted Liens.  Each Credit Party possesses all Proprietary Rights (or otherwise possesses the right to use such Proprietary Rights without violation of the rights of any other Person) which are necessary to carry out its business as presently conducted and as presently proposed to be conducted hereafter, and no Credit Party is in violation in any material respect of the terms under which it possesses such Proprietary Rights or the right to use such Proprietary Rights.  Administrative Agent's Liens are not subject or junior to any other Lien other than those Permitted Liens that are prior to Administrative Agent's Liens.
Section 7.21.   Debt .  After giving effect to the making of the initial Loans, no Credit Party has any Debt except the Obligations and other Debt expressly permitted under Section 9.5 .
Section 7.22.   Liens .  There are no Liens on any property of any Credit Party other than Permitted Liens.
Section 7.23.   Solvency .  Prior to and after giving effect to the making of the initial Loans hereunder and each subsequent Loan thereafter, each Credit Party is, on an individual basis, Solvent.
Section 7.24.   Non-Regulated Entities .  No Credit Party and no Subsidiary of any Credit Party is a "registered investment company" or a company "controlled" by a "registered investment company" or a "principal underwriter" of a "registered investment company" as such terms are defined in the Investment Company Act of 1940.  No Credit Party and no Subsidiary of any Credit Party is subject to regulation under the Federal Power Act or the Investment Company Act of 1940 or under any other federal or state statute or regulation which may limit its ability to incur Debt or may otherwise render all or any portion of the Obligations unenforceable.
Section 7.25.   Governmental Authorization .  No approval, consent, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Credit Party of this Agreement or any other Loan Document, other than:  (i) the filing of UCC Financing Statements to be filed against the Credit Parties evidencing Administrative Agent's Liens; (ii) filings to be made with the United States Patent and Trademark Office or United States Copyright Office evidencing Administrative Agent's Liens on registered Proprietary Rights; (iii) the Deed of Trust to be filed in favor of Administrative Agent with respect to the Real Property Collateral; (iv) as may be required in connection with any exercise of remedies by Administrative Agent in respect of the Equity Interests of any Credit Party by Applicable Laws affecting the offering and sale of securities generally; and (v) those which have been obtained and are still in full force and effect.
 
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Section 7.26.   Investment Banking or Finder's Fees .  No Credit Party has agreed to pay or is otherwise obligated to pay or reimburse any Person with respect to any investment banking or similar or related fee, underwriter's fee, finder's fee or broker's fee in connection with this Agreement.
Section 7.27.   Full Disclosure .  None of the representations or warranties made by any Credit Party in the Loan Documents and none of the statements contained in any Schedule or any report, statement or certificate furnished to Administrative Agent by or on behalf of any Credit Party in connection with the Loan Documents contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered.
Section 7.28.   Other Obligations and Restrictions .  No Credit Party has any outstanding liabilities of any kind (including contingent obligations, tax assessments, or long-term commitments) of a nature and type required to be set forth as a liability on a balance sheet in accordance with GAAP which are, in the aggregate, material to Credit Parties or material with respect to Credit Parties' consolidated financial condition that are not reflected on the financial statements delivered pursuant to Section 6.1(a) , Section 8.4(a) or Section 8.4(b) or in the notes thereto.  No Credit Party is subject to or restricted by any franchise, contract, deed, charter restriction, or other instrument or restriction which could reasonably be expected to have a Material Adverse Effect.
Section 7.29.   Acts of God and Labor Matters .  Neither the business nor the properties of any Credit Party has been affected by any fire, explosion, accident, drought, storm, hail, earthquake, embargo, act of God or other casualty (whether or not covered by insurance), which could reasonably be expected to have a Material Adverse Effect.  There is (a) no unfair labor practice complaint pending or, to the knowledge of any Credit Party, threatened against any Credit Party or its Subsidiaries before any Governmental Authority and no grievance or arbitration proceeding pending or, to the knowledge of any Credit Party, threatened against any Credit Party or its Subsidiaries which arises out of or under any collective bargaining agreement, (b) no strike, labor dispute, lockout, slowdown, stoppage or similar action or grievance, pending or, to Credit Parties knowledge, threatened against any Credit Party or any of their respective Subsidiaries that could reasonably be expected to have a Material liability and (c) no union certification application or representation petition existing with respect to the employees of any Credit Party or any of their respective Subsidiaries, and no union organizing activities are taking place with respect to any of the employees of any Credit Party or their Subsidiaries.  No Credit Party nor their Subsidiaries has incurred any liability or obligation under the Worker Adjustment and Retraining Notification Act or similar state law, which remains unpaid or unsatisfied.  The hours worked and payments made to employees of each Credit Party and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable legal requirements, except to the extent such violations could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  All material payments due from any Credit Party or its Subsidiaries on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of Credit Parties, except where the failure to do so could not, individually or in the aggregate, reasonably be expected have a Material Adverse Effect.
Section 7.30.   Environmental and Other Laws .  (a) Except as individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect, each Credit Party is conducting its business in material compliance with all Applicable Laws, including Environmental Laws, and is in compliance with all licenses and permits required under any such laws; (b) to the knowledge of Credit Parties, none of the operations or properties of any Credit Party is the subject of federal, state or local investigation evaluating whether any material remedial action is needed to respond to a release of any Hazardous Materials into the environment or to the improper storage or disposal (including storage or disposal at offsite locations) of any Hazardous Materials, except as set forth on Schedule 7.30 ; (c) no Credit Party has (and to the knowledge of Credit Parties, no other Person has) filed any notice under any Applicable Law indicating that any Credit Party or their Subsidiaries is responsible for the improper release into the environment, or the improper storage or disposal, of any material amount of any Hazardous Materials or that any Hazardous Materials have been improperly released, or are improperly stored or disposed of, upon any property of any Credit Party or their Subsidiaries; (d) no Credit Party has (nor have any of Credit Parties' Subsidiaries) transported or arranged for the transportation of any Hazardous Material to any location which is (i) listed on the National Priorities List under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, listed for possible inclusion on such National Priorities List by the Environmental Protection Agency in its Comprehensive Environmental Response, Compensation and Liability Information System List, or listed on any similar state list or (ii) the subject of federal, state or local enforcement actions or other investigations which may lead to claims against such Credit Party for clean-up costs, remedial work, damages to natural resources or for personal injury claims (whether under Environmental Laws or otherwise); and (e) no Credit Party has any known material contingent liability under any Environmental Laws or in connection with the release into the environment, or the storage or disposal, of any Hazardous Materials.
 
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Section 7.31.   Security Interests .
(a)   Administrative Agent, for the benefit of the Lender Parties, has a valid and perfected first priority security interest in the Collateral that can be perfected by the filing of a financing statement indicating such Collateral as the collateral and a valid and perfected first priority Deed of Trust covering the Real Property Collateral, in each case subject only to Permitted Liens, and
(b)   no further or subsequent filing, recording, registration, other public notice or other action is necessary or desirable to perfect or otherwise continue, preserve or protect Administrative Agent's security interest in the Collateral that may be perfected by the filing of a financing statement pursuant to the UCC except (i) for continuation statements described in UCC §9.515(d), (ii) for filings required to be filed in the event of a change in the name, jurisdiction of organization, type of organization or organizational structure of a Credit Party, or (iii) in the event any financing statement filed by Administrative Agent, for the benefit of the Lender Parties, relating hereto otherwise becomes inaccurate or incomplete.
Section 7.32.   Commercial Tort Claims Schedule 7.32 sets forth all Commercial Tort Claims brought by any Credit Party against any Person as of the most recent Reporting Date.  If any Credit Party brings a Commercial Tort Claim against any Person on or after such Reporting Date, such Schedule shall be updated promptly, and in any event, within ten (10) days of such Credit Party bringing such Commercial Tort Claim against such Person.
Section 7.33.   Common Enterprise .  The successful operation and condition of each of the Credit Parties is dependent on the continued successful performance of the functions of the group of the Credit Parties as a whole and the successful operation of each of the Credit Parties is dependent on the successful performance and operation of each other Credit Party.  Each Credit Party expects to derive benefit (and its board of directors, manager(s), general partner(s) or other governing body has determined that it may reasonably be expected to derive benefit), directly and indirectly, from (i) successful operations of each of the other Credit Parties and (ii) the credit extended by the Lenders to the Borrowers hereunder, both in their separate capacities and as members of the group of companies.  Each Credit Party has determined that execution, delivery, and performance of this Agreement and any other Loan Documents to be executed by such Credit Party is within its purpose, will be of direct and indirect benefit to such Credit Party, is in its best interest and necessary or convenient to the conduct, promotion or attainment of the business of such Credit Party, its wholly owned direct or indirect Subsidiaries and/or its direct or indirect parent.
 
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Section 7.34.   Anti-Terrorism Laws .
(a)   No Credit Party nor any Subsidiary of any Credit Party is in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.
(b)   No Credit Party nor any Subsidiary of any Credit Party, nor to the knowledge of any Credit Party, their respective agents acting or benefiting in any capacity in connection with the Loans or other transactions hereunder, is any of the following (each a "Blocked Person"):
(i)
a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;
(ii)
a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;
(iii)
a Person or entity with which any Lender Party is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;
(iv)
a Person or entity that commits, threatens or conspires to commit or supports "terrorism" as defined in the Executive Order No. 13224;
(v)
a Person or entity that is named as a "specially designated national" on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list, or
(vi)
a Person or entity who is affiliated or associated with a Person or entity listed above.
No Credit Party nor any Subsidiary of any Credit Party, nor to the knowledge of any Credit Party, their respective agents acting in any capacity in connection with the Loans or other transactions hereunder (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224.
Section 7.35.   Trading with the Enemy .  No Credit Party has engaged, nor does it intend to engage, in any business or activity prohibited by the Trading with the Enemy Act.
Section 7.36.   Anti-Corruption Laws and Sanctions .  Each Credit Party, its Subsidiaries and to the knowledge of such Credit Party, their respective officers, employees, directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects and have instituted and maintain policies and procedures designed to promote and achieve compliance with such laws.  None of the Credit Parties, their Subsidiaries or, to the knowledge of Credit Parties, their respective directors, officers, employees, agents or representatives (a) is a Sanctioned Person, (b) is a Person owned or controlled by a  Sanctioned Person, (c) is located, organized or resident in a Sanctioned Country or (d) has directly or indirectly engaged in, or is now directly or indirectly engaged in, any dealings or transactions (i) with any Sanctioned Person, (ii) in any Sanctioned Country or (iii) otherwise in violation with any Sanctions.  No Loan or use of proceeds of the Loans has or will violate Anti-Corruption Laws or applicable Sanctions.
 
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Section 7.37.   Continuing Representations .  All representations and warranties under this Agreement shall survive the execution and delivery of this Agreement.
ARTICLE VIII  
AFFIRMATIVE COVENANTS
Until termination of this Agreement and the payment and performance in full of the Obligations (other than contingent indemnification obligations), each Credit Party agrees, jointly and severally, as follows:
Section 8.1.   Existence and Good Standing .  Each Credit Party shall maintain (a) its existence and good standing in its jurisdiction of organization and (b) its qualification and good standing in all other jurisdictions in which the failure to maintain such qualification or good standing could reasonably be expected to have a Material Adverse Effect.
Section 8.2.   Compliance with Agreements and Laws .  Each Credit Party will perform all obligations it is required to perform under the terms of each indenture, mortgage, deed of trust, security agreement, lease, franchise, agreement, contract or other instrument or obligation to which it is a party or by which it or any of its properties is bound, except where failure to do so could not reasonably be expected to have a Material Adverse Effect.  Each Credit Party will conduct its business and affairs in compliance with all Applicable Laws applicable thereto, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.  Each Credit Party shall, and shall ensure that each of its Subsidiaries will (a) conduct its business in compliance with all Anti-Corruption Laws and Anti-Terrorism Laws and (b) maintain policies and procedures designed to promote and achieve compliance with Anti-Corruption Laws.  Each Credit Party will cause all licenses and permits necessary for the conduct of its business and the ownership and operation of its property used and property reasonably expected to be used in the conduct of its business to be at all times maintained in good standing and in full force and effect, except where failure to do so could not reasonably be expected to have a Material Adverse Effect.
Section 8.3.   Books and Records .  Each Credit Party shall maintain at all times correct and complete books and records in which complete, correct and timely entries are made of its transactions in accordance with GAAP applied consistently with the audited financial statements required to be delivered pursuant to Section 8.4 .
Section 8.4.   Financial Reporting .  Borrower Representative and, to the extent required hereby, each other Credit Party, shall promptly furnish to Administrative Agent all such financial information with respect to Credit Parties as Administrative Agent may reasonably request.  Without limiting the foregoing, Borrower Representative and, to the extent required hereby, each other Credit Party, will furnish to Administrative Agent the following:
(a)   As soon as available, but in any event not later than one hundred five (105) days after the end of each Fiscal Year, (i) consolidated audited balance sheets, and statements of income and expense, cash flow and of stockholders' equity for Parent and its consolidated Subsidiaries for such Fiscal Year, and the accompanying notes thereto, and (ii) unaudited consolidating balance sheets, and statements of income and expense, cash flow and of stockholders' equity for Parent and its consolidated Subsidiaries, each] prepared in accordance with GAAP, in reasonable detail and fairly presenting the financial position and results of operations of Parent and its consolidated Subsidiaries as of the date thereof and for the Fiscal Year then ended.  Such audited statements shall be examined in accordance with generally accepted accounting standards by independent certified public accountants selected by Parent and reasonably satisfactory to Administrative Agent, whose report thereon shall not be qualified in any respect.  Each Credit Party hereby authorizes Administrative Agent to communicate directly with its certified public accountants and, by this provision, authorizes such accountants to disclose to Administrative Agent any and all financial statements and other supporting financial documents and schedules relating to any Credit Party and to discuss directly with Administrative Agent the finances and affairs of Credit Parties.
 
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(b)   As soon as available, but in any event not later than thirty (30) days after the end of each Fiscal Month, consolidated and consolidating unaudited balance sheets of Parent and its consolidated Subsidiaries as of the end of such Fiscal Month, and consolidated and consolidating unaudited statements of income and expense and cash flow for Parent and its consolidated Subsidiaries for such Fiscal Month and for the period from the beginning of the Fiscal Year to the end of such Fiscal Month, all in reasonable detail, fairly presenting the financial position and results of operations of Parent and its consolidated Subsidiaries as of the date thereof and for such Fiscal Months, and prepared in accordance with GAAP applied consistently with the audited financial statements required by Section 8.4(a) .  Borrower Representative shall certify by a certificate signed by a Responsible Officer of Borrower Representative that all such statements have been prepared in accordance with GAAP and present fairly, subject to normal year-end adjustments and the absence of footnote disclosure, Credit Parties' financial position as of the dates thereof and its results of operations for the Fiscal Months then ended.
(c)   Annually, on or prior to January 30 th of  each Fiscal Year (and not sooner than thirty (30) days prior to the end of the prior Fiscal Year), annual forecasts (to include forecasted consolidated balance sheets, statements of income and expenses and statements of cash flow) for Parent and its consolidated Subsidiaries as of the end of and for each Fiscal Month of the then current Fiscal Year.
(d)   As soon as available, but in any event not later than fifteen (15) days after any Credit Party's receipt thereof, a copy of all management reports and management letters prepared for Credit Parties by any independent certified public accountants of Credit Parties.
(e)   Not later than fifteen (15) days after the filing thereof, a copy of each tax return filed by Parent and its consolidated Subsidiaries with the Internal Revenue Service and the State of New Jersey.
(f)   Promptly after receipt thereof, copies of all bank statements in respect of any Deposit Account or Securities Account of any Credit Party located at a financial institution other than Sterling National Bank (which may be satisfied by providing Administrative Agent electronic read-only access to such accounts).
(g)   Such additional information as Administrative Agent may from time to time reasonably request regarding the financial and business affairs of Credit Parties or any of their Subsidiaries.
 
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Section 8.5.   Collateral Reporting .  Borrower Representative, on behalf of all Borrowers, shall provide the following to Administrative Agent:
(a)   At least once during each calendar week, on the twentieth (20 th ) day of each calendar month (and reporting as of the last day of the prior calendar month), at the time of each request for a Revolving Loan and at any other time reasonably requested by Administrative Agent, a Borrowing Base Certificate including (i) a detailed calculation of the Borrowing Base, (ii) a certification of Eligible Accounts and Eligible Inventory and (iii) all supporting documents and information (including, without limitation, sales journals, credit memos, cash receipts journals and reconciliation of changes from the most recent certificate delivered to Administrative Agent);
(b)   Monthly, not later than the twentieth (20 th ) day of each Fiscal Month:
(i)
a schedule of Accounts and a schedule of payments on Accounts, as of the last day of the preceding Fiscal Month;
(ii)
a reconciliation to the Borrowing Base, as calculated in the most recent Borrowing Base Certificate relating thereto delivered to Administrative Agent, in the form prescribed by Administrative Agent;
(iii)
an aging of Borrowers' Accounts as of the last day of the preceding Fiscal Month, showing (A)(i) Accounts aged 30 days or less from date of invoice, (ii) Accounts aged over 30 days, but less than 61 days, from date of invoice, (iii) Accounts aged over 60 days, but less than 91 days, from date of invoice, (iv) Accounts aged over 90 days, but less than 120 days, from date of invoice, and (v) Accounts aged 120 days or more from date of invoice and (B) a listing of the name and complete address of each Account Debtor and such other information as Administrative Agent may request and (C) a reconciliation to the previous calendar month's aging of Borrowers' Accounts and to Borrowers' general ledgers;
(iv)
an aging of Borrowers' accounts payable (including the due date for each account payable) as of the last day of the preceding Fiscal Month;
(v)
Inventory reports as of the last day of the preceding Fiscal Month, by category and location, with detail showing additions to and deletions from Inventory, together with a reconciliation to the general ledger;
(vi)
at Administrative Agent's reasonable request, copies of invoices and supporting delivery or service records, copies of credit memos or other advices of credit or reductions against amounts previously billed, shipping and delivery documents, purchase orders and such other copies or reports in respect of any Collateral as Administrative Agent may reasonably request from time to time; and
(vii)
semiannually, on or before the last Business Day in June and December of each year, or more often at Administrative Agent's request, a listing of each Account Debtor in respect of Borrowers' Accounts, with full contact information for each such Account Debtor (including, without limitation, the complete address, contact person, phone number and email address) and such other information as Administrative Agent may request in respect of the Borrowers' Accounts.
Each Borrowing Base Certificate, schedule, reconciliation, aging, copy or report delivered to Administrative Agent shall bear a signed statement by a Responsible Officer of Borrower Representative certifying the accuracy and completeness of all information included therein.  The execution and delivery of a Borrowing Base Certificate shall in each instance constitute a representation and warranty by each Borrower to Administrative Agent and Lenders that: (x) no Account included therein as an Eligible Account should be excluded from inclusion in the Borrowing Base pursuant to the terms of the definition of "Eligible Accounts" and (y) no Inventory included therein as Eligible Inventory should be excluded from inclusion in the Borrowing Base pursuant to the terms of the definition of " Eligible Inventory ".  In the event any request for a Revolving Loan, if a Borrowing Base Certificate or other information required by this Section 8.5 is delivered to Administrative Agent by Borrower Representative electronically or otherwise without signature, such request, or such Borrowing Base Certificate or other information shall, upon such delivery, be deemed to be signed and certified on behalf of Borrower Representative by a Responsible Officer thereof and constitute a representation to Administrative Agent and Lenders as to the authenticity thereof.  Administrative Agent shall have the right to review and adjust any such calculation of the Borrowing Base to reflect, without duplication, exclusions from Eligible Accounts or Eligible Inventory, reserves pursuant to Section 2.1 , declines in value of Eligible Inventory as determined pursuant to appraisals thereof conducted pursuant to Section 5.5 , or such other matters as are necessary to determine the Borrowing Base.  Administrative Agent shall have the continuing right to establish and adjust reserves in determining or re-determining the Borrowing Base, pursuant to Section 2.1 .
 
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Section 8.6.   Compliance Certificate .  With each of the financial statements delivered pursuant to Section 8.4(a) and Section 8.4(b) , respectively, Borrower Representative shall deliver to Administrative Agent a certificate signed by a Responsible Officer of Borrower Representative (i) setting forth in reasonable detail the calculations required to establish that Credit Parties were in compliance with the covenants set forth in Section 9.14 during the period covered in such financial statements and as of the end thereof and (ii) stating that, except as explained in reasonable detail in such certificate (A) all of the representations and warranties of Credit Parties contained in this Agreement and the other Loan Documents are correct and complete in all material respects as at the date of such certificate as if made at such time, except for those that are solely effective as of a particular date, which shall be correct and complete in all material respects as of such particular date, (B) on the date of such certificate, Credit Parties are in compliance in all material respects with all of their respective covenants and agreements in this Agreement and the other Loan Documents, and (C) no Default or Event of Default then exists or existed during the period covered by such financial statements.  If such certificate discloses that a representation or warranty is not correct or complete, or that a covenant has not been complied with, or that a Default or Event of Default existed or exists, such certificate shall set forth what action Credit Parties have taken or propose to take with respect thereto.
Section 8.7.   Notification to Administrative Agent .  Credit Parties shall notify Administrative Agent in writing (a) immediately of the occurrence of any Default or Event of Default, (b) within ten (10) days after becoming aware of any event or circumstance, including without limitation any pending or threatened action, suit or claim by any Person, any pending or threatened investigation by a Governmental Authority or any violation of any Applicable Law, that would be treated as a contingent liability of any Credit Party under GAAP and is in an amount in excess of $250,000 or which could reasonably be expected to have a Material Adverse Effect, (c) promptly if any of their boards of directors, other governing boards or committees, members or partners authorizes the filing by any Credit Party of a petition in bankruptcy, (d) promptly of the acceleration of the maturity of any Debt owed by any Credit Party or of any default by any Credit Party under any indenture, mortgage, agreement, contract or other instrument to which such Credit Party is a party or by which any of its properties is bound and is in an amount in excess of $150,000, (e) within ten (10) days after becoming aware of any claim or receipt of any notice of potential liability under any Environmental Laws or in respect of any Hazardous Materials which might exceed $200,000, (f) promptly of any other material adverse claim asserted against any Credit Party or with respect to any Credit Party's properties and (g) any other development that has, or could reasonably be expected to have, a Material Adverse Affect.  Each notice given shall describe the subject matter thereof in reasonable detail and specify the action that Credit Parties have taken or propose to take with respect thereto.
 
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Section 8.8.   Accounts .  If any Borrower becomes aware of any matter adversely affecting the collectability of any Account of any Borrower involving an amount greater than $150,000, including information regarding the Account Debtor's creditworthiness, such Borrower will promptly so advise Administrative Agent.  Each Borrower hereby agrees to promptly notify Administrative Agent of all disputes and claims in excess of $150,000 with respect to any Account Debtor of such Borrower.  No discount, credit or allowance shall be granted to any such Account Debtor without Administrative Agent's prior written consent, except for discounts, credits and allowances provided by Borrowers in the ordinary course of business and which do not exceed $100,000 for any one or more Accounts owed by any single Account Debtor and its Affiliates.  Borrowers shall deliver to Administrative Agent a copy of each credit memorandum upon demand by Administrative Agent.
Section 8.9.   Inventory .
(a)   All finished goods Inventory shall be held for sale in the ordinary course of Credit Parties' business, and is and will be fit for such purpose.  Credit Parties will keep the Inventory in good and marketable condition, at their own expense.  No Borrower will acquire or accept any Inventory on consignment or approval.  Other than with respect to certain arrangements entered into by the Borrowers in the ordinary course of business with VBrick on terms similar to those entered into in the past with VBrick, no Borrower will sell any Inventory on a bill-and-hold, guaranteed sale, sale and return, sale on approval, consignment or other repurchase or return basis.
(b)   Borrowers will maintain a perpetual inventory system at all times.  Borrowers will conduct a cycle count of the Inventory on a regular basis, in accordance with its existing practices and as disclosed to Administrative Agent prior to the date hereof, which cycle count may be audited and verified by Administrative Agent's Collateral auditors in connection with the field examinations conducted by Administrative Agent in accordance with Section 5.4 .
(c)   Borrowers shall promptly report to Administrative Agent in writing any Inventory returned by an Account Debtor involving an amount in excess of $150,000.  All such returned Inventory shall be segregated from all other Inventory, and shall not be reportable as Eligible Inventory unless and until Borrowers demonstrate to Administrative Agent's satisfaction that such returned Inventory is in saleable condition and meets all criteria for Eligible Inventory.  Unless otherwise agreed by Administrative Agent, the amount of Borrowers' Accounts relating to such returned Inventory shall be deemed excluded from Eligible Accounts.  No Borrower shall issue any credits or allowances (each, an "Inventory Credit") with respect to such returned Inventory except for Inventory Credits provided by Borrowers in the ordinary course of their business.  All returned Inventory shall be subject to Administrative Agent's Liens.
Section 8.10.   Equipment and Machinery .  Credit Parties will maintain, preserve, protect and keep all Equipment and Machinery in good condition, repair and working order, ordinary wear and tear excepted, and will cause such Equipment and Machinery to be used and operated in a good and workmanlike manner, in accordance with Applicable Law and in a manner which will not make void or cancelable any insurance with respect to such Equipment and Machinery.  Except with respect to Equipment and Machinery that is obsolete or no longer used or useful in Credit Parties' business (which shall include any such Equipment and Machinery with a zero book value and otherwise not material to any Credit Party's business), Credit Parties will (a) promptly make or cause to be made all repairs, replacements and other improvements to or in connection with Credit Parties' Equipment and Machinery which are necessary or desirable or that Administrative Agent may request to such end and (b) maintain current maintenance records on Credit Parties' Equipment and Machinery, which such maintenance records shall be made available to Administrative Agent upon request.  Borrowers will promptly furnish to Administrative Agent a statement respecting any loss or damage to any of such Equipment or Machinery with an aggregate value in excess of $150,000.  No Credit Party will alter or remove any identifying symbol or number on any Equipment or Machinery or permit any of the Collateral which constitutes Equipment to at any time become so related or attached to, or used in connection with any particular real property so as to become a fixture upon such real property, or to be installed in or affixed to other goods so as to become an accession to such other goods unless such other goods are also included in the Collateral and as to which Administrative Agent has a first priority Lien.
 
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Section 8.11.   Insurance .  Credit Parties shall keep and maintain insurance with respect to their business and all Collateral, wherever located, covering liabilities, losses or damage as are customarily insured against by other Persons in the same or similar business and similarly situated or located.  All such policies of insurance shall be written by financially sound and reputable insurers acceptable to Administrative Agent in its Permitted Discretion.  Such insurance shall be with respect to loss, damages, and liability of amounts reasonably acceptable to Administrative Agent in its Permitted Discretion and shall include, at a minimum, business interruption, workers compensation, general premises liability, fire, theft, casualty and all risk.  Credit Parties will make timely payment of all premiums required to maintain such insurance in force.  Credit Parties shall cause Administrative Agent to be an additional insured and loss payee under all policies of insurance covering any of the Collateral, to the extent of Administrative Agent's interest, in form satisfactory to Administrative Agent, and shall cause a lenders loss payable endorsement to be issued in favor of Administrative Agent in respect of Credit Parties' property insurance.  All insurance proceeds paid to Administrative Agent shall be applied in reduction of the Obligations unless otherwise agreed by Administrative Agent.  Credit Parties shall deliver copies of each insurance policy to Administrative Agent upon request.  Notwithstanding the foregoing, Credit Parties shall keep and maintain insurance with respect to the Real Property Collateral in accordance with the terms and provisions of the Deed of Trust.
Section 8.12.   Payment of Trade Liabilities, Taxes, Etc .  Each Credit Party will (a) timely file all required tax returns including any extensions; (b) timely pay all taxes, assessments, and other governmental charges or levies imposed upon it or upon its income, profits or property before the same become delinquent; (c) timely (and in any event within ninety (90) days past the original invoice billing date), pay all material liabilities owed by it on ordinary trade terms to vendors, suppliers and other Persons providing goods and services used by it in the ordinary course of its business in accordance with its existing business practices and in the exercise of its business judgment; (d) pay and discharge when due all other material liabilities now or hereafter owed by it, other than royalty payments suspended in the ordinary course of business; and (e) maintain appropriate accruals and reserves for all of the foregoing in accordance with GAAP.  A Credit Party may, however, delay paying or discharging any of the foregoing set forth in this Section 8.12 so long as (i) it is in good faith contesting the validity thereof by appropriate proceedings, promptly instituted and diligently conducted and has set aside on its books adequate reserves therefore in accordance with GAAP, and (ii) none of the Collateral would become subject to forfeiture, any Lien (other than a Permitted Lien not prior to Administrative Agent's Lien on the Collateral) or loss as a result of such delay or contest.
Section 8.13.   Protective Advances .  Borrowers hereby agree to immediately pay Administrative Agent for any Protective Advances made by the Lenders on their behalf or in respect of any Collateral and such amounts are due and payable by Borrowers on the date such Protective Advances are so made.
 
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Section 8.14.   Evidence of Compliance .  Credit Parties will furnish to Administrative Agent at Credit Parties' expense all evidence which Administrative Agent may from time to time reasonably request in writing as to the accuracy and validity of or compliance with all representations, warranties and covenants made by Credit Parties in the Loan Documents, the satisfaction of all conditions contained therein, and all other matters pertaining thereto.
Section 8.15.   Environmental Matters; Environmental Reviews .
(a)   Each Credit Party will comply in all material respects with all Environmental Laws now or hereafter applicable to such Person, as well as all contractual obligations and agreements with respect to environmental remediation or other environmental matters, and shall obtain, at or prior to the time required by applicable Environmental Laws, all environmental, health and safety permits, licenses and other authorizations necessary for its operations and will maintain such authorizations in full force and effect, except for those which if not obtained or maintained could not reasonably be expected to have a Material Adverse Effect.  No Credit Party will do anything or permit anything to be done which will subject any of its properties or Subsidiaries to any remedial obligations under, or result in noncompliance with applicable permits and licenses issued under, any applicable Environmental Laws, assuming disclosure to the applicable governmental authorities of all relevant facts, conditions and circumstances.
(b)   Credit Parties will promptly furnish to Administrative Agent all written notices of violation, orders, claims, citations, complaints, penalty assessments, suits or other proceedings received by any Credit Party, or of which Credit Parties otherwise have notice, pending or threatened against any such Person by any Governmental Authority with respect to any alleged violation of or non-compliance with any Environmental Laws or any permits, licenses or authorizations in connection with such Person's ownership or use of its properties or the operation of its business.
(c)   Credit Parties will promptly furnish to Administrative Agent all requests for information, notices of claim, demand letters, and other notifications, received by any Credit Party in connection with Credit Parties' or their Subsidiaries' ownership or use of their properties or the conduct of its business, relating to potential responsibility with respect to any investigation or clean-up of Hazardous Material at any location.
Section 8.16.   Subsidiaries; Fundamental Information .  In the event that a direct or indirect Subsidiary of any Credit Party is created or acquired or otherwise comes into existence (which new Subsidiary must have been created or acquired in compliance with the terms hereof), then (a) such Subsidiary shall (i) become a party to this Agreement as a Borrower (or, with Administrative Agent's consent, as a Credit Party and a Guarantor hereunder) through a joinder agreement to this Agreement, in form and substance acceptable to Administrative Agent in its Permitted Discretion (a " Joinder Agreement "), (ii) execute and deliver to Administrative Agent a Perfection Certificate, (iii) if not joining as a Borrower hereunder, execute and deliver to Administrative Agent a Guaranty Agreement, guarantying all of the Obligations of Borrowers, and (iv) execute and deliver to Administrative Agent such other documents, instruments and agreements as reasonably required by Administrative Agent in order to pledge such Person's real and personal property (other than Excluded Property) to Administrative Agent and Lender Parties as security for the Obligations, free and clear of any Liens (other than Permitted Liens) and (b) the Credit Party parent of such Subsidiary shall execute and deliver to Administrative Agent such other documents, instruments and agreements as reasonably required by Administrative Agent in order to pledge the Equity Interest (other than Equity Interests constituting Excluded Property) of such new Subsidiary (and confer such other rights as reasonably required by Administrative Agent in respect thereof) to Administrative Agent and Lender Parties, as security for the Obligations.  Upon creation of any new Subsidiary or any change to any fundamental information of any Credit Party from that set forth in Schedule 7.1 hereto, Credit Parties shall promptly (and in any event within three (3) days of such change) deliver to Administrative Agent an updated Schedule 7.1 hereto.
 
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Section 8.17.   Further Assurances .  Credit Parties shall execute and deliver, or cause to be executed and delivered, to Administrative Agent such documents and agreements, and shall take or cause to be taken such actions, as Administrative Agent may, from time to time, reasonably request to carry out the terms and conditions of this Agreement and the other Loan Documents.
Section 8.18.   Maintenance of Properties .  Each Credit Party will, and will cause its Subsidiaries to, keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted.
ARTICLE IX
NEGATIVE COVENANTS
Until termination of this Agreement and the payment and performance in full of the Obligations (other than contingent indemnification obligations), each Credit Party agrees, jointly and severally, as follows:
Section 9.1.   Fundamental Changes .  No Credit Party shall enter into any transaction of merger, reorganization, consolidation, wind-up, liquidation, recapitalization or dissolution (or suffer any liquidation or dissolution) except that (a) any Credit Party may merge with and into another Credit Party, provided , that Parent shall be the surviving entity of any such merger that it is party to  and any other Borrower shall be the survivor of any such merger with a Guarantor, (b) a Credit Party may merge with a Subsidiary that is not a Credit Party so long as such Credit Party is the surviving entity of any such merger, (c) any Credit Party (other than any Borrower) shall be permitted to liquidate or dissolve so long as the assets of such Credit Party are transferred to a Credit Party, and (d) any Immaterial Subsidiary may be liquidated or dissolved.  No Credit Party will change its name, identity, jurisdiction of organization, organizational type or location of its chief executive office or principal place of business unless such Credit Party (or Borrower Representative, on behalf of such Credit Party) gives Administrative Agent at least thirty (30) days prior written notice thereof and executes (or causes such applicable Credit Party to execute) all documents and takes (or causes such applicable Credit Party to take) all other actions that Administrative Agent reasonably requests in connection therewith, including but not limited to, to the extent requested by Administrative Agent, the delivery of a legal opinion to Administrative Agent, reasonably satisfactory in form and substance to Administrative Agent.
Section 9.2.   Collateral Locations .  Except for Inventory in transit to a Credit Party in the ordinary course of business, no Credit Party will maintain any Collateral at any location other than those locations listed on Schedule 7.11 unless it (i) gives the Administrative Agent at least thirty (30) days prior written notice thereof, (ii) delivers or causes to be delivered to Administrative Agent all documents that Administrative Agent reasonably requests in connection therewith and, in the case of any leased location, exercises commercially reasonable efforts to deliver to Administrative Agent a Collateral Access Agreement in accordance with the terms of Section 5.2 , signed by the owner of such location, and (iii) takes all other actions that Administrative Agent reasonably requests in connection therewith.
Section 9.3.   Use of Proceeds; Convertible Debt Proceeds .  Borrowers will not use any proceeds of any Loan, directly or indirectly, for any purpose other than (a) on the Agreement Date, to pay transactional fees, costs and expenses incurred in connection with the Loan Documents, (b) on the Agreement Date, to refinance or pay off indebtedness for money borrowed prior to the Agreement Date, and (c) on the Agreement Date and thereafter, with respect to the Revolving Loans, for working capital in the ordinary course of Borrowers' business.  Borrowers will not use any proceeds of any Loan, directly or indirectly, to purchase or carry margin stock, repay or otherwise refinance indebtedness incurred to purchase or carry Margin Stock or to extend credit for the purpose of purchasing or carrying any Margin Stock.  None of the Borrowers, the other Credit Parties or any of their Subsidiaries have used or procured, nor shall they use or procure the proceeds of any Loan or other extension of credit (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person or Blocked Person, or in any Sanctioned Country or (iii) in any manner that would result in the violation of any Sanctions applicable to any party hereto.  The proceeds of Convertible Debt that, as of the Agreement Date, have not been expended by the Borrowers shall not be used for any purpose other than for working capital in the ordinary course of the Borrowers' business.
 
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Section 9.4.   Business .  No Credit Party will (i) engage, directly or indirectly, in any line of business other than the businesses in which Credit Parties are engaged on the Agreement Date and similar or related businesses associated therewith, or (ii) make any expenditure or commitment or incur any obligation or enter into or engage in any transaction except, in each case, in the ordinary course of business.
Section 9.5.   Debt .  No Credit Party shall incur, create, assume or suffer to exist any Debt, other than the following (collectively " Permitted Debt "):
(a)   the Obligations,
(b)   trade payables and contractual obligations to suppliers and customers arising in the ordinary course of business;
(c)   Subordinated Debt;
(d)   Debt existing on the Agreement Date and described on Schedule 7.21 , and any related Refinancing Debt;
(e)   purchase money secured Debt incurred to purchase Equipment, provided that the aggregate amount of such Debt outstanding does not exceed $125,000 at any one time outstanding;
(f)   Debt of such Credit Party with respect to surety, appeal, indemnity, performance, or other similar bonds in the ordinary course of business;
(g)   Debt owing to any Person providing property, casualty, liability or other insurance to Credit Parties, so long as the amount of such Debt does not exceed the amount of the unpaid cost of, and shall be incurred only to defer the cost of, such insurance for the year in which such Debt is incurred and such Debt is outstanding only during such year;
(h)   Debt incurred in the ordinary course of business in respect of credit cards, credit card processing services, debit cards, stored value cards, purchase cards (including so-called "procurement cards" or "P-cards");
(i)   Debt constituting Permitted Investments;
 
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(j)   Debt arising from endorsement of instruments or other payment items for deposit;
(k)   unsecured guarantees by one Credit Party of Debt of another Credit Party otherwise permitted under this Section 9.5 ;
(l)   the incurrence by any Credit Party or its Subsidiaries of Debt under Hedge Agreements that are incurred for the bona fide purpose of hedging the interest rate, commodity, or foreign currency risks associated with Credit Parties' operations; and
(m)   unsecured Debt incurred in respect of netting services, overdraft protection, and other like services, in each case incurred in the ordinary course of business.
Section 9.6.   Subordinated Debt .  No Credit Party shall make any payment or prepayment of, or redemption, purchase, retirement, defeasance, sinking fund or similar payment with respect to (a) any Subordinated Debt, except as expressly permitted under the applicable Subordination Agreement or (b) any Debt owing to a holder of such Person's Equity Interests.
Section 9.7.   Liens .  No Credit Party shall create, incur, assume, or permit to exist any Lien on any property now owned or hereafter acquired by any of them, except Permitted Liens.  No Credit Party will enter into or become subject to any agreement whereby any Credit Party is prohibited from, or would otherwise be in default as a result of, creating, assuming, incurring, or suffering to exist, directly or indirectly, any Lien on any of its assets in favor of Administrative Agent or Lender Parties, except with respect to Excluded Property.
Section 9.8.   Disposition of Property .  No Credit Party will transfer, sell, assign, lease, license or otherwise dispose of any of its property, or agree to do any of the foregoing, except any of the following (collectively, " Permitted Dispositions "):
(a)   use of money or cash equivalents, not constituting proceeds of Collateral, in the ordinary course of business and in a manner that is not prohibited by this Agreement;
(b)   sale of Inventory in the ordinary course of business;
(c)   sale or other disposition of Equipment in the ordinary course of business that is obsolete, substantially worn, damaged, or no longer useable by such Credit Party in the ordinary course of its business, provided , that (i) if such sale or disposition is made without replacement of such Equipment, or such Equipment is replaced by Equipment leased by a Borrower, then such Borrower shall deliver to Administrative Agent, for the account of Lenders, all net proceeds of any such sale or disposition for application to the Obligations in accordance with the terms of Section 4.7 or (ii) if such sale or disposition is made in connection with the purchase by a Borrower of replacement Equipment, then such Borrower shall use the proceeds of such sale or disposition to purchase such replacement Equipment and shall deliver to Administrative Agent written evidence of the use of such proceeds for such purchase (and any net proceeds of such sale or disposition not used in connection with the purchase of replacement Equipment shall be delivered to Administrative Agent, for the account of Lenders, for application to the Obligations in accordance with the terms of Section 4.7 );
(d)   sales or assignments of past-due receivables which do not constitute Eligible Accounts to a collection agency in the ordinary course of business, and discount of such receivables only in connection with collection and compromise thereof;
 
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(e)   the license, on a non-exclusive basis, by such Credit Party of its Proprietary Rights in the ordinary course of business;
(f)   the granting of Permitted Liens;
(g)   transactions permitted by Section 9.1 ;
(h)   the issuance of Equity Interests and the making of Distributions that are expressly permitted by Section 9.10 ;
(i)   the lapse of registered Proprietary Rights of any Credit Party or the abandonment of Proprietary Rights in the ordinary course of business so long as, in each case (i) such Proprietary Rights are not material to the conduct of its or any other Credit Party's business, (ii) with respect to copyrights, such copyrights are not material revenue generating copyrights, and (iii) such lapse is not materially adverse to the interest of the Credit Parties;
(j)   so long as no Event of Default has occurred and is continuing or would result therefrom, transfers of assets (i) from any Credit Party to a Borrower, and (ii) from any Guarantor to another Guarantor;
(k)   dispositions of assets in connection with transaction permitted by Section 9.12 ;
(l)   the making of Permitted Investments;
(m)   sales or dispositions of assets (other than Accounts and Inventory) not otherwise permitted in clauses (a) through (m) above so long as (i) the consideration received for such assets is at least equal to fair market value, (ii) the aggregate fair market value of all assets disposed of pursuant to this clause (n) in any Fiscal Year (including the proposed disposition) would not exceed $500,000 and (iii) the net proceeds of such sale or disposition are delivered to Administrative Agent in accordance with the terms hereof; and
(n)   the lease of a portion of the Real Property Collateral to a third party in an arms-length transaction, the proceeds of which shall be applied to the Obligations in compliance with Section 4.4 , pursuant to usual and customary commercial lease documents typical of similar transactions in the central New Jersey market.
Section 9.9.   Sale and Leaseback .  No Credit Party shall directly or indirectly enter into any arrangement with any Person providing for any Credit Party to lease or rent property that such Credit Party has sold or will sell or otherwise transfer to such Person.
Section 9.10.   Distributions; Capital Contribution; Redemption .  No Credit Party shall directly or indirectly declare or make, or incur any liability to make, any Distribution, except (i) Distributions to any Credit Party by its Subsidiaries, and (ii) Distributions by Parent to holders of its Equity Interests in the form of issuance of additional Equity Interests (and not cash Distributions).  No Credit Party will, directly or indirectly:  (a) make any capital contribution of any nature to any Person, (b) purchase, redeem, acquire or retire any share of the capital stock of or partnership or limited liability company interests in any other Credit Party (whether such interests are now or hereafter issued, outstanding or created), or (c) cause or permit any reduction or retirement of the capital stock of any such other Credit Party in each of clauses (a), (b) or (c), while any Loan or commitment hereunder is outstanding, other that Parent's retirement of its Equity Interests to be held as treasury stock, which retirement shall in all events be on a non-cash basis.
 
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Section 9.11.   Investments .  No Credit Party will acquire any assets other than in the ordinary course of business and otherwise meeting the requirements of this Agreement.  No Credit Party will make any Investment other than a Permitted Investment.
Section 9.12.   Transactions with Affiliates .  No Credit Party will sell, lease or otherwise transfer any property or any assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with any Affiliate of any Credit Party, except:
(a)   transactions (not including payment of any management, consulting, monitoring, advisory or other similar fees) that are not otherwise restricted hereunder entered into between Credit Parties only in the ordinary course of such Credit Parties' business, consistent with past practices and undertaken in good faith, upon fair and reasonable terms fully disclosed to Administrative Agent in amounts and upon terms no less favorable to such Credit Parties than would be obtained in a comparable arm's-length transaction with a Person who is not an Affiliate;
(b)   so long as it has been approved by such Credit Party's board of directors (or comparable governing body) in accordance with Applicable Law and in the ordinary course of business, any indemnity provided for the benefit of directors (or comparable managers) of such Credit Party;
(c)   so long as it has been approved by such Credit Party's board of directors (or comparable governing body) in accordance with Applicable Law and in the ordinary course of business, the payment of reasonable compensation, severance, or employee benefit arrangements to employees, officers, and directors of such Credit Party that are consistent with industry practice; and
(d)   the transactions contemplated by the Convertible Debt Agreement, as the same may be amended from time to time with the consent of Administrative Agent in its Permitted Discretion (and any other agreements collateral thereto or contemplated thereby, as approved by Administrative Agent in its Permitted Discretion), subject to any limitations set forth in the Subordination Agreement relating thereto.
Section 9.13.   New Subsidiaries .  No Credit Party shall organize, create or acquire any new Subsidiary without the consent of Administrative Agent (which shall be in Administrative Agent's sole discretion) and unless such Credit Party and new Subsidiary complies with Section 8.16 hereof.
Section 9.14.   Financial Covenants .
(a)   The Fixed Charge Coverage Ratio for Parent and its consolidated Subsidiaries for any Fiscal Month of Parent, determined as of the last day of such Fiscal Month, shall not be less than 1.1 to 1.0.
(b)   The Leverage Ratio for Parent and its consolidated Subsidiaries, for any Fiscal Month of Parent, determined as of the last day of such Fiscal Month, shall not be more than 2.0 to 1.0.
(c)   Availability shall not at any time be less than $500,000.
Section 9.15.   Fiscal Year; Accounting Method .  No Credit Party will change its Fiscal Year or its method of accounting (other than as required to conform to GAAP).
Section 9.16.   Impairment of Security Interest .  Credit Parties will not take or fail to take any action which would in any manner impair the value of, or impair the enforceability of Administrative Agent's security interest in, any Collateral.  Further, Credit Parties will not adjust, settle, compromise, amend or modify any of their rights in the Collateral (other than in the ordinary course of business).
 
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Section 9.17.   Prohibited Contracts .  Except as expressly provided for in the Loan Documents, no Credit Party will, directly or indirectly, enter into, create, or otherwise allow to exist any contract or other consensual restriction on the ability of any Subsidiary of a Credit Party to: (a) pay dividends or make other distributions to such Credit Party, (b) redeem equity interests held in it by such Credit Party, (c) repay loans and other indebtedness owing by it to such Credit Party, or (d) transfer any of its assets to such Credit Party.  No Credit Party will amend or permit any amendment to any contract or lease which releases, qualifies, limits, makes contingent or otherwise materially and adversely affects the rights and benefits of Administrative Agent or any other Lender Party under or acquired pursuant to any Loan Document.
Section 9.18.   Deposit Accounts and Securities Accounts .  No Credit Party shall establish or maintain any new Deposit Account or Securities Account unless Administrative Agent shall have received a Control Agreement in respect thereof or shall otherwise have "control" over such Deposit Account or Securities Account under the UCC, in accordance with the terms of Section 5.3 ; provided , however , no such Control Agreement shall be required for Excluded Accounts.
Section 9.19.   Compliance with ERISA .  No Credit Party shall, nor shall it permit any of its Subsidiaries to:  (i) maintain, or permit any ERISA Affiliate to maintain, or become obligated to contribute, to any ERISA Benefit Plan other than those ERISA Benefit Plans disclosed on Schedule 7.8 , (ii) engage, or knowingly permit any ERISA Affiliate to engage, in any non-exempt "prohibited transaction", as that term is defined in section 406 of ERISA and Section 4975 of the IRC, (iii) incur, or permit any ERISA Affiliate to incur, any "accumulated funding deficiency", as that term is defined in Section 302 of ERISA or Section 412 of the IRC, (iv) terminate, or permit any ERISA Affiliate to terminate, any ERISA Benefit Plan where such event could result in any material liability of any Credit Party or any ERISA Affiliate or the imposition of a lien on the property of any Credit Party or any ERISA Affiliate pursuant to Section 4068 of ERISA, (v) assume, or permit any ERISA Affiliate to assume any obligation to contribute to any Multiemployer Plan, (vi) incur or permit any ERISA Affiliate to incur, any withdrawal liability to any Multiemployer Plan, (vii) fail promptly to notify the Administrative Agent of the occurrence of any Termination Event, (viii) fail to comply in any material respect, or permit an ERISA Affiliate to fail to comply in any material respect, with the requirements of ERISA or the IRC or other Applicable Law in respect of any ERISA Benefit Plan, (ix) fail to meet, or permit any ERISA Affiliate to fail to meet, all minimum funding requirements under ERISA or the IRC or postpone or delay or allow any ERISA Affiliate to postpone or delay any funding requirement with respect of any ERISA Benefit Plan.
ARTICLE X
EVENT OF DEFAULT
Section 10.1.   Event of Default .  Each of the following shall constitute an Event of Default under this Agreement:
(a)   any failure by Borrowers to timely pay any of the Obligations when due;
(b)   any representation or warranty made or deemed made by any Credit Party or Guarantor in any Loan Document, or any financial or other written statement, or any information furnished by such Person to Lenders or Administrative Agent shall be untrue in any material respect as of the date on which made, deemed made or furnished;
 
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(c)   any noncompliance or breach of any requirements contained in:
(i)
Sections 5.3 through 5.5 , Sections 8.1 through 8.7 , Sections 8.10 through 8.12 Section 8.16, or Article IX;
(ii)
Section 8.8 , or Section 8.9 , and any such failure continues for a period of five (5) days; or
(iii)
any provision of the Loan Documents other than those listed in clauses (i) and (ii) of this Section 10.1(c) , and such failure continues for a period of twelve (12) days after the earlier of Borrower's actual knowledge thereof or written or verbal notice thereof by Administrative Agent to Borrower Representative;
(d)   any Credit Party or any Guarantor shall (i) file a voluntary petition in bankruptcy or otherwise commence any action or proceeding seeking reorganization, arrangement or readjustment of its debts, or consent to or acquiesce in any such petition, action or proceeding; (ii) apply for or acquiesce in the appointment of a receiver, assignee, liquidator, custodian, trustee or similar officer for it or for all or any part of its property; (iii) make an assignment for the benefit of creditors; or (iv) be generally unable to pay (or admit in writing that it is unable to pay) its debts as they become due;
(e)   an involuntary petition shall be filed or an action or proceeding otherwise commenced seeking relief under the Bankruptcy Code in respect of, or seeking any reorganization, arrangement, consolidation or readjustment of the debts of, any Credit Party or any Guarantor under any other bankruptcy or insolvency law and any of the following events occur: (i) such Credit Party or Guarantor consents or acquiesces to the institution of such petition or proceeding, (ii) the petition commencing such proceeding is not timely controverted, (iii) the petition commencing such proceeding is not dismissed within sixty (60) calendar days of the filing date thereof, (iv) an interim trustee is appointed to take possession of all or any substantial portion of the property or assets of, or to operate all or any substantial portion of the business of, such Credit Party or Guarantor or (v) an order for relief shall have been issued or entered therein; provided that Lenders shall have no obligation to provide any extension of credit to Borrowers during such sixty (60) day calendar period specified in (iii) above;
(f)   a receiver, interim receiver, receiver manager, assignee, liquidator, sequestrator, custodian, trustee or similar officer shall be appointed for any Credit Party or for all or any part of its property, or a warrant of attachment, execution or similar process shall be issued against any part of the property of any Credit Party;
(g)   except as otherwise permitted by Section 9.1 , any Credit Party or any Guarantor shall file a certificate of dissolution or shall be liquidated, dissolved or wound-up or shall commence or have commenced against it any action or proceeding for dissolution, winding-up or liquidation, or shall take any action in furtherance thereof;
(h)   any default, event of default or other breach shall occur with respect to any Debt for borrowed money (other than the Obligations) of any Credit Party or any Guarantor in an outstanding principal amount which exceeds $250,000  and such default shall continue for more than the period of grace, if any, therein with respect thereto, if the effect thereof (with or without the giving of notice or further lapse of time or both) is to accelerate, or to permit the holder of any such Debt to accelerate, the maturity of any such Debt, or any such Debt shall be declared due and payable or be required to be prepaid (other than by a regularly scheduled required prepayment) prior to the stated maturity thereof;
 
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(i)   one or more judgments, orders, decrees or arbitration awards is entered against any Credit Party or any Guarantor involving in the aggregate liability (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage) of $250,000  or more and either (i) there is a period of sixty (60) consecutive days at any time after the entry of such judgment, order, decree or award during which (1) the same is not discharged, satisfied, vacated or bonded pending appeal or (2) a stay of enforcement thereof is not in effect or (ii) enforcement proceedings are commenced upon such judgment, order, decree or award;
(j)   the filing or commencement of any attachment, sequestration, garnishment, execution or other Lien or action against or with respect to any Collateral;
(k)   any Loan Document ceases to be in full force and effect or any Lien with respect to any material portion of the Collateral having a value in excess of $250,000 that is intended to be secured thereby ceases to be, or is not, valid, perfected (for any reason other than the failure of Administrative Agent to file a financing statement or continuation thereof to maintain perfection) and prior to all other Liens (other than Permitted Liens that are expressly allowed to be prior pursuant to the terms hereof) or is terminated, revoked or declared void, or any Loan Document shall terminate (other than in accordance with its terms with the written consent of Administrative Agent) or become void or unenforceable, or the validity or enforceability of any Loan Document shall be contested by any Credit Party or any Guarantor or any Affiliate of a Credit Party or a Guarantor;
(l)   any event or circumstance occurs which, in the Permitted Discretion of Administrative Agent exercised in good faith, causes Administrative Agent to suspect that any Credit Party has engaged in fraudulent activity;
(m)   the occurrence of a Material Adverse Effect;
(n)   the occurrence of a Change of Control;
(o)   the occurrence of a Termination Event;
(p)   any IP License Agreement (i) is terminated by the applicable licensor for any reason, or (ii) expires by its own terms (provided, however, that the expiration of any such IP License Agreement shall not be an Event of Default hereunder to the extent that (and only so long as) the applicable licensor continues to act according to the terms of such IP License Agreement, as though it shall not have so expired); or
(q)   any default, event of default or other breach shall occur with respect to any IP License Agreement and the licensor thereunder shall have given notification of such default, event of default or other breach to a Borrower, and such default, event of default or other breach shall continue for more than the period of grace, if any, therein with respect thereto.
ARTICLE XI
REMEDIES
Section 11.1.   Obligations .
(a)   Upon the occurrence of any Event of Default described in Sections 10.1(d) , 10.1(e) , 10.1(f) or 10.1(g) , this Agreement shall automatically and immediately terminate and all Obligations shall automatically become immediately due and payable without notice or demand of any kind.
 
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(b)   If an Event of Default exists, Administrative Agent (on behalf of Lender Parties) may and, upon request of Required Lenders, shall do any one or more of the following, at any time or times during such existence of an Event of Default and in any order, without notice to or demand on any Credit Party (except as otherwise expressly required under this Agreement or under Applicable Law): (i) reduce the Revolving Credit Limit, or the advance rates used in computing the Borrowing Base, (ii) restrict the amount of or refuse to make Loans, (iii) terminate the Agreement and the Lenders' Commitment to make Revolving Loans hereunder, (iv) declare the Obligations to be immediately due and payable and (v) pursue its other rights and remedies under the Loan Documents or otherwise under Applicable Law.
Section 11.2.   Collateral .  If an Event of Default has occurred and is continuing, Administrative Agent shall have, in addition to all other rights of Administrative Agent, the rights and remedies of a secured party under the UCC.  At any time when an Event of Default is in existence: (i) Administrative Agent may notify Account Debtors to make payment directly to Administrative Agent, for the account of Lender Parties, or to such address as Administrative Agent may specify, and enforce, settle or adjust Accounts, General Intangibles or Chattel Paper with Account Debtors or obligors thereon for amounts and upon terms which Administrative Agent considers appropriate, and in such case, Administrative Agent will credit the Obligations with only the net amounts received by Administrative Agent in payment thereof after deducting all Lender Expenses incurred or expended in connection therewith; (ii) Administrative Agent may take possession of the Collateral and keep it on Credit Parties' premises or remove all or any part of it to another location selected by Administrative Agent; (iii) on request by Administrative Agent, Credit Parties will, at Credit Parties' cost, assemble the Collateral and make it available to Administrative Agent at a place reasonably convenient to Administrative Agent; and (iv) Administrative Agent may, to the fullest extent permitted by Applicable Law, sell or otherwise dispose of any Collateral at public or private sales, for cash, upon credit or otherwise, at such prices and upon such terms as Administrative Agent deems appropriate.  Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Administrative Agent will give the appropriate Credit Party reasonable notice of the time and place of any public sale thereof or of the time after which any private sale or any other intended disposition thereof is to be made.  For this purpose, it is agreed that at least ten (10) days' notice of the time of sale or other intended disposition of the Collateral delivered in accordance with Section 14.6 shall be deemed to be reasonable notice in conformity with the UCC.  Administrative Agent may adjourn or otherwise reschedule any public sale by announcement at the time and place specified in the notice of such public sale, and such sale may be made at the time and place as so announced without necessity of further notice.  Administrative Agent shall not be obligated to sell or dispose of any Collateral, notwithstanding any prior notice of intended disposition.  If any Collateral is sold on terms other than payment in full at the time of sale, no credit shall be given in reduction of the Obligations until Administrative Agent receives payment in cash, and if any such buyer defaults in payment, Administrative Agent may resell the Collateral without further notice to Credit Parties.  In the event Administrative Agent seeks to take possession of all or any portion of the Collateral by judicial process, each Credit Party waives the posting of any bond, surety or security with respect thereto which might otherwise be required.  Each Credit Party agrees that Administrative Agent has no obligation to preserve rights to the Collateral or marshal any Collateral for the benefit of any Person.  Administrative Agent is hereby granted a license or other right to use, without charge, each Credit Party's Proprietary Rights in completing production of, advertising or selling any Collateral, and each Credit Party's rights under all licenses shall inure to Administrative Agent's benefit for such purpose.  The proceeds of any sale or disposition of Collateral shall be applied to the Obligations as set forth in Section 4.7.  The rights and remedies of the Administrative Agent and the other Lender Parties under this Agreement and the other Loan Documents shall be cumulative.  The Administrative Agent and each other Lender Party shall have all other rights and remedies not inconsistent herewith as provided under the UCC, other Applicable Law or in equity.
 
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Section 11.3.   Injunctive Relief .  All cash proceeds of Collateral from time to time existing, including without limitation collections and payments of Accounts, whether consisting of cash, checks or other similar items, at all times shall be subject to an express trust for the benefit of Administrative Agent.  All such proceeds shall be subject to Administrative Agent's Liens.  Except as may be specifically allowed otherwise by this Agreement (including use of cash not in violation of the terms hereof distributed to Borrowers by Administrative Agent pursuant to Section 4.7 ), Credit Parties are expressly prohibited from using, spending, retaining or otherwise exercising any dominion over such proceeds.  Each Credit Party acknowledges and agrees that an action for damages against a Credit Party for any breach of such prohibitions shall not be an adequate remedy at law.  In the event of any such breach, each Credit Party agrees to the fullest extent allowed by Applicable Law that Administrative Agent shall be entitled to injunctive relief to restrain such breach and require compliance with the requirements of this Agreement.
Section 11.4.   Setoff .  If an Event of Default shall have occurred and be continuing, Administrative Agent and each other Lender Party is hereby authorized at any time and from time to time to the fullest extent permitted by Applicable Law to set off and apply any and all cash and any and all deposits (whether general or special, time or demand, provisional or final) at any time held, and any obligations at any time owing, by such Lender Party to or for the credit or the account of any Borrower or other Credit Party against any Obligations held by such Lender Party, irrespective of whether or not such Lender Party shall have made any demand under the Loan Documents and regardless of whether such Obligations are contingent or unmatured.  The rights of each Lender Party under this Section 11.4 are in addition to other rights and remedies (including other rights of setoff) that such Lender Party may have.  Each Lender Party agrees to notify the Borrower Representative and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.
ARTICLE XII
TERM AND TERMINATION
Section 12.1.   Term and Termination .  Upon the effective date of termination of this Agreement for any reason, Lenders' obligation to make Loans shall automatically terminate and all Obligations shall become immediately due and payable in full.  Notwithstanding the termination of this Agreement, until all Obligations (other than contingent indemnity obligations which survive the termination of this Agreement in accordance with the terms hereof) are paid in immediately available funds and performed in full, Credit Parties shall remain bound by the terms of this Agreement and Administrative Agent and the other Lender Parties shall retain all rights and remedies under the Loan Documents.
ARTICLE XIII  
ADMINISTRATIVE AGENT
Section 13.1.   Appointment and Authority .  Each Lender hereby irrevocably appoints Sterling to act on its behalf as Administrative Agent hereunder and under the other Loan Documents, in the capacity of collateral and administrative agent, and authorizes Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article XIII are solely for the benefit of Administrative Agent and the other Lender Parties, and no Borrower or other Credit Party shall have any rights as a third party beneficiary of any of such provisions.  It is understood and agreed that the use of the term "agent" herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Applicable Law.  Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
 
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Section 13.2.   Exculpatory Provisions .
(a)   Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature.  Without limiting the generality of the foregoing, Administrative Agent:
(i)
shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or an Event of Default has occurred and is continuing;
(ii)
shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that Administrative Agent is required to exercise as directed in writing by the Required Lenders; provided that Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose Administrative Agent to liability or that is contrary to any Loan Document or Applicable Law; and
(iii)
shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to any Credit Party or any of its Affiliates that is communicated to or obtained by the Person serving as Administrative Agent or any of its Affiliates in any capacity.
(b)   Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of Required Lenders (or as Administrative Agent shall believe in good faith shall be necessary) or (ii) in the absence of its own gross negligence or willful misconduct.  Administrative Agent shall be deemed not to have knowledge of any Default or Event of Default unless and until notice describing such Default or Event of Default is given to Administrative Agent by Borrower Representative or a Lender.
(c)   Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article VI or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to Administrative Agent.
(d)   EACH OF THE LENDER PARTIES (NOT INCLUDING ADMINISTRATIVE AGENT)(COLLECTIVELY, " LP INDEMNITORS "), ON A RATABLE BASIS, SHALL, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, INDEMNIFY AND DEFEND THE ADMINISTRATIVE AGENT, ITS AFFILIATES AND EACH OF THEIR EQUITY INTEREST OWNERS, OFFICERS, DIRECTORS, MEMBERS, MANAGERS, EMPLOYEES, AGENTS AND REPRESENTATIVES (COLLECTIVELY, THE " AGENT PARTIES "), TO THE EXTENT NOT REIMBURSED BY OR ON BEHALF OF BORROWERS AND WITHOUT LIMITING THE OBLIGATION OF BORROWERS TO DO SO, FROM AND AGAINST ANY AND ALL INDEMNIFIED CLAIMS, INCLUDING THOSE INDEMNIFIED CLAIMS WHICH RELATE TO OR ARISE OUT OF ANY AGENT PARTY'S OWN NEGLIGENCE; provided , that no LP Indemnitor shall be liable for the payment to any Agent Party of any portion of such Indemnified Claims resulting solely from such Agent Party's gross negligence or willful misconduct, nor shall any LP Indemnitor be liable for the obligations of any Defaulting Lender in failing to make a Revolving Loan or other extension of credit hereunder.
 
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Section 13.3.   Reliance by Administrative Agent .  Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of a Loan that by its terms must be fulfilled to the satisfaction of a Lender, Administrative Agent may presume that such condition is satisfactory to such Lender (i) if such condition is satisfactory to Required Lenders, or (ii) unless Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan.  Administrative Agent may consult with legal counsel (who may be counsel for Borrowers), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
Section 13.4.   Non-Reliance on Administrative Agent and other Lenders .  Each Lender acknowledges that it has, independently and without reliance upon Administrative Agent or any other Lender or any of their Affiliates and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon Administrative Agent or any other Lender or any of their Affiliates and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
Section 13.5.   Rights as a Lender .  The Person serving as Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not Administrative Agent and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as Administrative Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with any Credit Party or any Subsidiary or other Affiliate thereof as if such Person were not Administrative Agent hereunder and without any duty to account therefor to the Lenders.
Section 13.6.   Sharing of Set-Offs and Other Payments .  Each Lender Party agrees that if it shall, whether through the exercise of rights under the Loan Documents or rights of banker's lien, set off, or counterclaim against any Credit Party or otherwise, obtain payment of a portion of the aggregate Obligations owed to it, taking into account all distributions made by Administrative Agent under Section 4.7, causes such Lender Party to have received more than it would have received had such payment been received by Administrative Agent and distributed pursuant to Section 4.7, then (a) it shall be deemed to have simultaneously purchased and shall be obligated to purchase interests in the Obligations as necessary to cause all Lender Parties to share ratably in all payments as provided for in Section 4.7, and (b) such other adjustments shall be made from time to time as shall be equitable to ensure that Administrative Agent and all Lender Parties share ratably in all payments of Obligations as provided in Section 4.7; provided, however, that nothing herein contained shall in any way affect the right of any Lender Party to obtain payment (whether by exercise of rights of banker's lien, set-off or counterclaim or otherwise) of indebtedness other than the Obligations.  Each Credit Party expressly consents to the foregoing arrangements and agrees that any holder of any such interest or other participation in the Obligations, whether or not acquired pursuant to the foregoing arrangements, may to the fullest extent permitted by Applicable Law exercise any and all rights of banker's lien, set-off, or counterclaim as fully as if such holder were a holder of the Obligations in the amount of such interest or other participation.  If all or any part of any funds transferred pursuant to this section is thereafter recovered from the seller under this section which received the same, the purchase provided for in this section shall be deemed to have been rescinded to the extent of such recovery, together with interest, if any, if interest is required pursuant to the order of a tribunal order to be paid on account of the possession of such funds prior to such recovery.
 
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Section 13.7.   Investments .  Whenever Administrative Agent in good faith determines that it is uncertain about how to distribute to Lender Parties any funds which it has received, or whenever Administrative Agent in good faith determines that there is any dispute among Lender Parties about how such funds should be distributed, Administrative Agent may choose to defer distribution of the funds which are the subject of such uncertainty or dispute.  If Administrative Agent in good faith believes that the uncertainty or dispute will not be promptly resolved, or if Administrative Agent is otherwise required to invest funds pending distribution to Lender Parties, Administrative Agent shall invest such funds pending distribution; all interest on any such investment shall be distributed upon the distribution of such investment and in the same proportion and to the same Persons as such investment.  All moneys received by Administrative Agent for distribution to Lender Parties (other than to the Person who is Administrative Agent in its separate capacity as a Lender Party) shall be held by Administrative Agent pending such distribution solely as Administrative Agent for such Lender Parties, and Administrative Agent shall have no equitable title to any portion thereof.
Section 13.8.   Resignation of Administrative Agent .  Administrative Agent may at any time give notice of its resignation to the Lenders and Borrower Representative.  Upon receipt of any such notice of resignation, the Required Lenders shall have the right to appoint a successor.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation or such earlier date as shall be agreed to by the Required Lenders (the " Resignation Effective Date "), then the retiring Administrative Agent may (but shall not be obligated to), on behalf of the Lenders appoint a successor Administrative Agent; provided , that in no event shall any successor Administrative Agent be a Defaulting Lender.  Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.  On and as of the Resignation Effective Date:  (1) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any Collateral held by Administrative Agent on behalf of the Lenders under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such Collateral until such time as a successor Administrative Agent is appointed) and (2) except for any indemnity payments owing to the retiring Administrative Agent, all payments, communications and determinations provided to be made by, to or through Administrative Agent shall be made by or to the newly appointed Administrative Agent (or, if no new Administrative Agent shall have been appointed, to each Lender Party directly until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this paragraph).  Upon the acceptance of a successor's appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent.  The fees payable by Borrowers to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between Borrowers and such successor.  After the retiring Administrative Agent's resignation hereunder and under the other Loan Documents, the provisions of this Article and Sections 14.5 and 14.10 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Affiliates in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.
 
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Section 13.9.   Delegation of Duties .  Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by Administrative Agent.  Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Affiliates.  The exculpatory provisions of this Article shall apply to any such sub-agent and to the Affiliates of Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.  The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub agents.
Section 13.10.   Collateral Matters .
(a)   The Lender Parties hereby irrevocably authorize and direct Administrative Agent, at its option and in its sole discretion, to (i) release any Lien on any Collateral (1) upon the termination of the Commitments and payment and satisfaction in full of all Obligations, (2) constituting property being sold or disposed of if a release is required or desirable in connection therewith and if Borrowers certify to Administrative Agent that the sale or disposition is permitted under this Agreement or the other Loan Documents (and Administrative Agent may rely conclusively on any such certificate, without further inquiry), (3) constituting property in which any Credit Party or its Subsidiaries owned no interest at the time the Administrative Agent's Lien was granted nor at any time thereafter, or (4) constituting property leased to any Credit Party or its Subsidiaries under a lease that has expired or is terminated in a transaction permitted under this Agreement or (ii) release any Guarantor from its obligations under a Guaranty Agreement if such Person ceases to be a Subsidiary of any Credit Party as a result of a transaction permitted hereunder.  Except as provided above and in connection with any disposition of Collateral permitted by Section 9.8 , Administrative Agent will not execute and deliver a release of any Lien on any Collateral without the prior written authorization of (y) if the release is of all or substantially all of the Collateral, all of the Lenders, or (z) otherwise, the Required Lenders.  Upon request by Administrative Agent or Borrowers at any time, the Lenders will confirm in writing Administrative Agent's authority to release any such Liens on particular types or items of Collateral pursuant to this Section 13.10 ; provided , however , that (1) Administrative Agent shall not be required to execute any document necessary to evidence such release on terms that, in Administrative Agent's opinion, would expose Administrative Agent to liability or create any obligation or entail any consequence other than the release of such Lien without recourse, representation, or warranty, and (2) such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of Borrowers in respect of) all interests retained by Borrowers, including, the proceeds of any sale, all of which shall continue to constitute part of the Collateral.
(b)   Administrative Agent shall have no obligation whatsoever to any of the Lender Parties to assure that the Collateral exists or is owned by the Credit Parties or their Subsidiaries or is cared for, protected, or insured or has been encumbered, or that the Administrative Agent's Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Administrative Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, subject to the terms and conditions contained herein, Administrative Agent may act in any manner it may deem appropriate, in its sole discretion given Administrative Agent's own interest in the Collateral in its capacity as one of the Lenders and that Administrative Agent shall have no other duty or liability whatsoever to any other Lender Party as to any of the foregoing, except as otherwise provided herein.
 
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Section 13.11.   Agency for Perfection .  Administrative Agent hereby appoints each other Lender as its agent (and each Lender hereby accepts such appointment) for the purpose of perfecting the Administrative Agent's Liens in assets which, in accordance with Article 8 or Article 9, as applicable, of the UCC can be perfected by possession or control.  Should any Lender obtain possession or control of any such Collateral, such Lender shall notify Administrative Agent thereof, and, promptly upon Administrative Agent's request therefor shall deliver possession or control of such Collateral to Administrative Agent or in accordance with Administrative Agent's instructions.
Section 13.12.   Concerning the Collateral and Related Loan Documents .  Each Lender Party authorizes and directs Administrative Agent to enter into this Agreement and the other Loan Documents.  Each Lender Party agrees that any action taken by Administrative Agent in accordance with the terms of this Agreement or the other Loan Documents relating to the Collateral and the exercise by Administrative Agent of its powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders.
ARTICLE XIV
MISCELLANEOUS
Section 14.1.   Waivers & Amendments .  No waiver or amendment of any provision of any Loan Document and no consent to any departure therefrom shall be effective unless it is in writing and signed as provided below in this Section, and then such waiver, amendment or consent shall be effective only in the specific instances and for the purposes for which given and to the extent specified in such writing.  No waiver, consent, release, modification or amendment of or supplement to this Agreement or the other Loan Documents shall be valid or effective against any party hereto unless the same is in writing and signed by (i) if such party is a Credit Party, by such Credit Party, (ii) if such party is Administrative Agent, by Administrative Agent and (iii) if such party is a Lender, by such Lender or by Administrative Agent on behalf of Lenders with the written consent of Required Lenders.  Notwithstanding anything to the contrary herein, Administrative Agent shall not, without the prior consent of each individual Lender, execute and deliver on behalf of such Lender any waiver or amendment which would:  (1) increase the maximum amount which such Lender is committed hereunder to lend, (2) reduce any principal, interest (other than waiving any Default Rate interest) or fees payable to such Lender hereunder, (3) extend the Maturity Date or postpone any date fixed for any payment of any such fees, principal or interest, (4) amend the definition herein of "Required Lenders" or otherwise change the aggregate amount of Percentage Shares which is required for Administrative Agent, Lenders or any of them to take any particular action under the Loan Documents, (5) release any Borrower from its obligation to pay such Lender's Obligations, (6) release all or substantially all of the Collateral, except for such releases relating to sales or dispositions of property permitted by the Loan Documents, or (7) amend this Section 14.1 .
Section 14.2.   Severability .  The illegality or unenforceability of any provision of any Loan Document shall not in any way affect or impair the legality or enforceability of the remaining provisions thereof.
 
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Section 14.3.   Governing Law; Venue .
(a)   THIS AGREEMENT HAS BEEN EXECUTED OR COMPLETED AND/OR IS TO BE PERFORMED IN NEW YORK, AND IT AND ALL TRANSACTIONS HEREUNDER OR PURSUANT HERETO SHALL BE GOVERNED AS TO INTERPRETATION, VALIDITY, EFFECT, RIGHTS, DUTIES AND REMEDIES OF THE PARTIES THEREUNDER AND IN ALL OTHER RESPECTS BY THE LAWS OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF, BUT INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW.
(b)   ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR IN ANY FEDERAL OR STATE COURT SITTING IN NEW YORK COUNTY, ROCKLAND COUNTY OR WESTCHESTER COUNTY, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH CREDIT PARTY, ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.  EACH CREDIT PARTY, ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO VENUE ON THE GROUNDS OF FORUM NON   CONVENIENS , WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH JURISDICTION.  NOTWITHSTANDING THE FOREGOING, ADMINISTRATIVE AGENT AND EACH LENDER SHALL EACH HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY CREDIT PARTY OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION AS ADMINISTRATIVE AGENT OR LENDERS, AS THE CASE MAY BE, DEEMS NECESSARY OR APPROPRIATE IN ORDER TO EXERCISE REMEDIES WITH RESPECT TO THE COLLATERAL.
Section 14.4.   WAIVER OF JURY TRIAL .  EACH CREDIT PARTY, ADMINISTRATIVE AGENT AND EACH OTHER LENDER PARTY EACH IRREVOCABLY WAIVES ITS RESPECTIVE RIGHT TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY KIND BROUGHT BY ANY SUCH PERSON AGAINST ANOTHER, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.  EACH CREDIT PARTY, ADMINISTRATIVE AGENT AND EACH OTHER LENDER PARTY EACH AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT WITHOUT A JURY.  WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, WHETHER OR NOT SPECIFICALLY SET FORTH THEREIN.
Section 14.5.   Fees and Expenses .  Credit Parties agree to pay to Administrative Agent, on demand, all costs, fees and expenses that Sterling (whether in its capacity as Administrative Agent, a Lender or a Lender Party) pays or incurs in connection with the negotiation, preparation, consummation, administration, enforcement, perfection and termination of this Agreement or any of the other Loan Documents, including: (a) reasonable attorney's fees and costs for preparation, negotiation and closing of the Loan Documents and any amendment, supplement, waiver, consent or subsequent closing in connection with the Loan Documents and the transactions contemplated thereby, (b) ongoing administration of the Loan Documents, including without limitation, reasonable and documented attorney's fees and costs incurred in consultation with attorneys, (c) costs and expenses of lien and title searches, (d) taxes, fees and other charges for filing financing statements and other actions to perfect, protect and continue Administrative Agent's Liens, (e) sums paid or incurred to pay any amount or take any action required of any Credit Party under the Loan Documents that Credit Parties fail to pay or take, (f) subject to Sections 5.4 and 5.5 , costs of appraisals, inspections and verifications of the Collateral, including travel, lodging, and meals for inspections of the Collateral and Credit Parties' operations by Administrative Agent, (g) costs and expenses of disbursing Loans and administering cash management of Collateral proceeds, including collection accounts and lock-boxes, (h) costs and expenses of preserving and protecting the Collateral, (i) costs, fees and expenses, including reasonable documented attorney's fees and costs, paid or incurred to enforce Administrative Agent's Liens, sell or dispose of the Collateral, and obtain payment of the Obligations and (j) costs and expenses, including reasonable and documented attorney's fees and costs, paid or incurred to defend any claims made or threatened against Sterling (whether in its capacity as Administrative Agent, a Lender or a Lender Party) arising out of the transactions contemplated by the Loan Documents (all such costs, expenses and fees described in this Section 14.5 , the " Lender Expenses ").  The foregoing shall not limit any other provisions of the Loan Documents regarding costs and expenses to be paid by any Credit Party.
 
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Section 14.6.   Notices .  Except as otherwise expressly provided in any Loan Document, all notices, demands and requests that any party is required to give to any other party shall be in writing and shall become effective (a) upon personal delivery or upon delivery by any nationally recognized courier service, (b) three (3) days after it shall have been mailed by United States mail, first class, certified or registered, with postage prepaid, or (c) when properly transmitted by telecopy or email, in each case addressed to the party to be notified as follows:
If to Sterling (both in its capacity as Administrative Agent and a Lender) :
Sterling National Bank
8401 North Central Expressway, Suite 600
Dallas, Texas  75225
Fax No.: (214) 242-5840
Attention:  Portfolio Manager, URGENT
With a copy to:
Sterling National Bank
21 Scarsdale Road
Yonkers, New York 10707
Attention:  General Counsel
Fax No.:  (914) 961-7378
 
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If to Borrowers, to Borrower Representative, as follows :
Blonder Tongue Laboratories, Inc.
One Jake Brown Road
Old Bridge, NJ 08857
Telephone:  (732) 679-400 x4325
Fax No.:  (732) 679-3259
Attention:  Eric S. Skolnik, Chief Financial Officer
With a copy to:
Stradley Ronon Stevens & Young, LLP
100 Park Avenue, Suite 2000
New York, New York 10017
Attention:  Gary P. Scharmett, Esq.
Telephone:  212-812-4125
Fax No.:  646-682-7180
or to such other address as each party may designate for itself by like notice.
Section 14.7.   Waiver of Notices .  Unless otherwise expressly provided in any Loan  Document, each Credit Party hereby waives presentment and notice of demand or dishonor and protest, notice of intent to accelerate the Obligations and notice of acceleration of the Obligations, as well as any and all other notices to which it might otherwise be entitled.  No notice to or demand on any Credit Party which Administrative Agent or the other Lender Parties may elect to give shall entitle such Credit Party or any other Credit Party to any or further notice or demand in the same, similar or other circumstances.
Section 14.8.   Non‑applicability of Chapter 346 of Texas Finance Code .  If and to the extent that Texas law is applicable to the transactions contemplated by this Agreement, except for the opt-out provision of Section 346.004 thereof, the provisions of Chapter 346 of the Texas Finance Code (regulating certain revolving credit loans and revolving tri-party accounts) shall not be applicable to this Agreement, any other Loan Document or the Loans.
Section 14.9.   Binding Effect .  This Agreement shall be binding upon and inure to the benefit of the Credit Parties, Administrative Agent and the other Lender Parties and their respective representatives, successors, and assigns, provided , that no interest herein may be assigned, and no obligation may be delegated, by any Credit Party without prior written consent of Administrative Agent.  Subject to Section 14.13 , the rights and benefits of Lender Parties under the Loan Documents shall inure to any Person acquiring any interest in the Obligations from such Lender Party, unless otherwise agreed by such Lender Party and any such Person.
Section 14.10.   INDEMNITY BY CREDIT PARTIES EACH CREDIT PARTY AGREES TO DEFEND, INDEMNIFY AND HOLD EACH INDEMNIFIED PERSON HARMLESS FROM AND AGAINST ANY AND ALL INDEMNIFIED CLAIMS INCLUDING THOSE INDEMNIFIED CLAIMS WHICH RELATE TO OR ARISE OUT OF ANY INDEMNIFIED PERSON'S OWN NEGLIGENCE,   provided , that no Credit Party shall have any obligation hereunder to any Indemnified Person with respect to Indemnified Claims resulting solely and directly from the willful misconduct or gross negligence of such Indemnified Person.  The agreements in this Section shall survive any termination of this Agreement or payment of all Obligations.
 
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Section 14.11.   Limitation of Liability .  To the fullest extent permitted by Applicable Law, no claim may be made by any party hereto against any other party hereto or any of their Affiliates, directors, officers, members, managers, stockholders, employees or agents (and their respective successors and assigns) for any special, indirect, consequential, exemplary or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document, or any agreement or instrument contemplated hereby or thereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof, or any act, omission or event occurring in connection therewith, and each party hereto hereby waives, releases and agrees not to sue upon any claim for such damages, whether or not accrued and whether or not known or suspected to exist in its favor; provided , that nothing in this Section 14.11 shall relieve any Credit Party of any obligations it may have to indemnify an Indemnified Person against special, indirect, or consequential Indemnified Claims by a third party.
Section 14.12.   Continuing Rights of Lenders in Respect of Obligations .  In the event any amount from time to time applied in reduction of the Obligations is subsequently set aside, avoided, declared invalid or recovered by any Credit Party or any trustee or in bankruptcy, or in the event any Lender Party is otherwise required to refund or repay any such amount pursuant to any Applicable Law, then the Obligations shall automatically, to the fullest extent permitted by Applicable Law, be deemed to be revived and increased to the extent of such amount and the same shall continue to be secured by the Collateral as if such amount had not been so applied.
Section 14.13.   Assignments .
(a)   A Lender may at any time sell, assign, delegate or otherwise transfer all or part of the rights and duties of such Lender under this Agreement and the other Loan Documents to any of the following Persons (an " Assignee "):  (i) any Affiliate of such Lender or (ii) any other Person with the prior written consent of the Borrowers (which consent may be given by Borrower Representative on behalf of all Borrowers and shall not be unreasonably withheld, conditioned or delayed; provided , however , Borrowers shall be deemed to have given their consent unless they (or Borrower Representative, on behalf of all Borrowers) shall object thereto by written notice to the Administrative Agent within five (5) Business Days after notice thereof has actually been delivered by the Administrative Agent or the assigning Lender to Borrower Representative); provided   that , the consent of Borrowers shall not be required under this sub-clause (ii) if an Event of Default has occurred and is continuing.  Subject to the provisions of Section 14.14 , each Credit Party hereby authorizes each Lender to disseminate any information it has pertaining to the Obligations, including without limitation, complete and current credit information on the Credit Parties and any of their principals to any Assignee or prospective Assignee.  Each Credit Party hereby acknowledges and agrees that any assignment will give rise to a direct obligation of Borrowers and each other Credit Party to the Assignee and that the Assignee shall be considered to be a Lender hereunder.
(b)   Administrative Agent, acting solely for this purpose as an agent of Borrowers, shall maintain at one of its offices a copy of each assignment delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the " Register ").  The entries in the Register shall be conclusive absent manifest error, and Borrowers, Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement.  The Register shall be available for inspection by Borrowers and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
 
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(c)   Except as otherwise provided herein, a Lender shall, as between Borrowers and such Lender, be relieved of any of its obligations hereunder as a result of any sale, assignment, delegation or other transfer of all or any part of the Loans or other Obligations owed to such Lender.  Such Lender may furnish any information concerning Credit Parties from time to time to Assignees and participants and to any Affiliate of such Lender or its parent company.
(d)   Notwithstanding anything in this Agreement or the other Loan Documents to the contrary, a Lender may pledge, or grant a security interest in, all or any portion of its rights and other obligations under or relating to Loans under this Agreement and the other Loan Documents to secure obligations of such Lender, including, without limitation, any pledge or assignment to secure obligations to a Federal Reserve lender; provided   that , no such pledge or grant of a security interest shall release the transferor Lender from any of its obligations hereunder or under any other Loan Document.
(e)   Each Lender shall have the right at any time to sell, without the consent of Borrowers, one or more participant rights to any Person (other than to a Borrower, any other Credit Party, or any Credit Party's Affiliates or Subsidiaries) in all or any part of its Commitments, Loans or in any other Obligation.  The holder of any such participation shall not be entitled to require such Lender to take or omit to take any action hereunder or under the other Loan Documents except with respect to any amendment, modification or waiver that would extend the final scheduled maturity of any Loan in which such participant is participating, or reduce the rate or extend the time of payment of interest or fees thereon (except in connection with a waiver of applicability of any post default increase in interest rates) or reduce the principal amount thereof, or increase the amount of the participant's participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default or of a mandatory reduction in the Commitment shall not constitute a change in the terms of such participation, and that an increase in any Commitment or Loan shall be permitted without the consent of any participant if the participant's participation is not increased as a result thereof).  Borrowers agree that each participant shall be entitled to the benefits of Sections 3.3 and 3.5 (subject to the requirements and limitations therein) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 14.3(a) ; provided that such participant shall not be entitled to receive any greater payment under Sections 3.3 or 3.5 with respect to any participation than such participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a change in Applicable Law that occurs after the participant acquired the applicable participation.  Each Lender that sells a participation shall, acting solely for this purpose as an agent of Borrowers, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant's interest in the Loans or other obligations under the Loan Documents (the " Participant Register "); provided , that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.  For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
Section 14.14.   Confidentiality .
(a)   Each Credit Party agrees, and agrees to cause each of its Affiliates, (i) not to transmit or disclose any provision of any Loan Document to any Person (other than (1) to such Credit Party's employees, auditors, advisors, consultants, Affiliates and counsel, (2) as may be required by statute judicial decision, or judicial or administrative order, rule or regulations, (3) as may be agreed in advance by Credit Parties and Administrative Agent or as requested or required by any Governmental Authority pursuant to any subpoena or other process, (4) as to any such information that is or becomes generally available to the public (other than as a result of a prohibited disclosure by any Credit Party), (5) in connection with any litigation or other adversary proceeding involving parties hereto which such litigation or adversary proceeding involves claims related to the rights or duties of such parties under this Agreement or the other Loan Documents or (6) public filings expressly required to be made by Parent and its Subsidiaries pursuant to the Securities Act, the Exchange Act or other Applicable Law) without Administrative Agent's prior written consent, (ii) to inform all Persons of the confidential nature of the Loan Documents and to direct them not to disclose the same to any other Person and to require each of them to be bound by these provisions.  Except in connection with public filings expressly required to b e made by Parent and its Subsidiaries pursuant to the Securities Act, the Exchange Act and other Applicable Law, each Credit Party agrees to submit to Administrative Agent and Administrative Agent reserves the right to review and approve all materials that such Credit Party or any of its Affiliates prepares that contain any Lender Party's name or describe or refer to any Loan Document, any of the terms thereof or any of the transactions contemplated thereby.  No Credit Party shall, and shall not permit any of its Affiliates to, use any Lender Party's name (or the name of any of their Affiliates) in connection with any of its business operations, including without limitation, advertising, marketing or press releases or such other similar purposes, without such Lender Party's prior written consent (except for public filings expressly required to be made by Parent and its Subsidiaries pursuant to the Securities Act, the Exchange Act or other Applicable Law or as otherwise required by Applicable Law).  Nothing contained in any Loan Document is intended to permit or authorize any Credit Party or any of its Affiliates to contract on behalf of any Lender Party.
 
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(b)   Administrative Agent and Lenders each individually (but not jointly or jointly and severally) agree that material, non-public information regarding the Credit Parties, their operations, assets, and existing and contemplated business plans shall be treated by Administrative Agent and the Lenders in a confidential manner, and shall not be disclosed by Administrative Agent or any Lender to Persons who are not parties to this Agreement, except:  (i) to attorneys for and other advisors, accountants, auditors, and consultants to any Lender Party, (ii) to Subsidiaries and Affiliates of any Lender Party, (iii) as may be required by statute, judicial decision, or judicial or administrative order, rule, or regulation, (iv) as may be agreed to in advance by the Credit Parties or as requested or required by any Governmental Authority pursuant to any subpoena or other legal process, (v) as to any such information that is or becomes generally available to the public (other than as a result of prohibited disclosure by a Lender Party), (vi) in connection with any assignment, participation or pledge of any Lender Party's interest under this Agreement, and (vii) in connection with any litigation or other adversary proceeding involving parties hereto which such litigation or adversary proceeding involves claims related to the rights or duties of such parties under this Agreement or the other Loan Documents.  Notwithstanding the foregoing, each Credit Party hereby expressly authorizes Administrative Agent to use the respective Credit Party's name and logo in tombstone advertisements and press releases regarding this transaction, provided that the Borrower Representative has had a chance to review and approve the contents of such tombstone or press release, such approval not to be unreasonably withheld or delayed.
Section 14.15.   USA Patriot Act Notice .  The Administrative Agent hereby notifies the Credit Parties that, pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies each Credit Party, which information includes the name and address of each Credit Party and other information that will allow the Administrative Agent to identify each Credit Party in accordance with the Patriot Act.
 
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Section 14.16.   Schedules .  All Schedules referenced herein and attached hereto are incorporated in this Agreement and made a part hereof for all purposes.
Section 14.17.   Counterparts .  This Agreement may be executed in any number of counterparts, and signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.  A telecopy or other electronic transmission of any such executed counterpart signature page shall be deemed valid as an original.
Section 14.18.   Captions .  The captions contained in this Agreement are for convenience of reference only, are without substantive meaning and may not be construed to modify, enlarge or restrict any provision of this Agreement.
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[Remainder of page intentionally left blank]
 
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IN WITNESS WHEREOF, the parties have entered into this Agreement as of the Agreement Date.
BLONDER TONGUE LABORATORIES, INC., as a Borrower and a Credit Party
 
 
By:
   
Name:
   
Title:
   
     
R. L. DRAKE HOLDINGS, LLC, as a Borrower and a Credit Party
 
 
By:
   
Name:
   
Title:
   
     
BLONDER TONGUE FAR EAST, LLC, as a Guarantor and a Credit Party
 
 
By:
   
Name:
   
Title:
   
     
 
 
LOAN AND SECURITY AGREEMENT - Signature Page
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STERLING NATIONAL BANK, as Administrative Agent, Swing Lender and as Lender
 
 
By:
   
Name:
   
Title:
   
 
EXHIBIT 10.2
TERM RE NOTE

$3,500,000.00                                                                                                                                                         December 28, 2016
FOR VALUE RECEIVED, the undersigned (collectively, " Borrowers "), hereby promise to pay to the order of STERLING NATIONAL BANK, a national banking association, and its successors and assigns (" Lender "), the principal sum of Three Million Five Hundred Thousand and No/100 Dollars ($3,500,000.00), or, if greater or less, the aggregate unpaid principal amount of the Term RE Loan made by Lender to Borrowers pursuant to the terms of the Loan Agreement (as hereinafter defined), together with interest thereon as set forth in the Loan Agreement, and all other Obligations under the Loan Agreement related to the Term RE Loan, all at the times and in the manner set forth in the Loan Agreement in lawful money of the United States of America at the offices of Administrative Agent (as hereinafter defined) under the Loan Agreement.
Reference is hereby made to that certain Loan and Security Agreement of even date herewith (as from time to time amended, supplemented, restated, or otherwise modified, the " Loan Agreement ") by and between Borrowers, Blonder Tongue Far East, LLC, as a guarantor, Lender, any other lenders party thereto from time to time, Sterling National Bank, a national banking association, as administrative and collateral agent (in such capacity, the " Administrative Agent ").  Reference is hereby made to the Loan Agreement for a description of certain rights, limitations of rights, obligations and duties of the parties hereto and for the meanings assigned to terms used and not defined herein and for a description of the nature and extent of the security thereby provided and the rights of the parties thereto.
This Term RE Note (a) is issued and delivered under the Loan Agreement and is a "Term RE Note" as defined therein, (b) is subject to the terms and provisions of the Loan Agreement, which contains provisions for payments and prepayments of the Obligations evidenced hereby and acceleration of the maturity hereof upon the happening of certain stated events, and (c) is secured by the Collateral.  Payments on this Term RE Note shall be made and applied as provided in the Loan Agreement.
The Borrowers promise to pay interest on the unpaid principal amount of this Term RE Note in accordance with, and at the rates per annum and on the dates specified in, the Loan Agreement.  The principal amount of this Term RE Note shall be due and payable in installments as provided in the Loan Agreement, and the remaining unpaid principal amount of this Term RE Note, together with all accrued and unpaid interest accrued hereon, shall be due and payable in full on the Termination Date.
Notwithstanding the foregoing paragraph and all other provisions of this Term RE Note, in no event shall the interest payable hereon, whether before or after maturity, exceed the maximum amount of interest which, under applicable law, may be contracted for, charged, or received on this Term RE Note, and this Term RE Note is expressly made subject to the provisions of the Loan Agreement which more fully set out the limitations on how interest accrues hereon.
 
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If this Term RE Note is placed in the hands of an attorney for collection after the occurrence and during the continuance of an Event of Default, or if all or any part of the indebtedness represented hereby is proved, established or collected in any court or in any bankruptcy, receivership, debtor relief, probate or other court proceedings, Borrowers and all endorsers, sureties and guarantors of this Term RE Note jointly and severally agree to pay reasonable attorneys' fees and collection costs to the holder hereof in addition to the principal and interest payable hereunder.
Borrowers and all endorsers, sureties and guarantors of this Term RE Note hereby severally waive demand, presentment, notice of demand and of dishonor and nonpayment of this Term RE Note, protest, notice of protest, notice of intention to accelerate the maturity of this Term RE Note, declaration or notice of acceleration of the maturity of this Term RE Note, diligence in collecting, the bringing of any suit against any party and any notice of or defense on account of any extensions, renewals, partial payments or changes in any manner of or in this Term RE Note or in any of its terms, provisions and covenants, or any releases or substitutions of any security, or any delay, indulgence or other act of any trustee or any holder hereof, whether before or after maturity.
THIS NOTE HAS BEEN EXECUTED OR COMPLETED AND/OR IS TO BE PERFORMED IN NEW YORK, AND IT AND ALL TRANSACTIONS HEREUNDER OR PURSUANT HERETO SHALL BE GOVERNED AS TO INTERPRETATION, VALIDITY, EFFECT, RIGHTS, DUTIES AND REMEDIES OF THE PARTIES THEREUNDER AND IN ALL OTHER RESPECTS BY THE LAWS OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF, BUT INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS NOTE MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR IN ANY FEDERAL OR STATE COURT SITTING IN NEW YORK COUNTY, ROCKLAND COUNTY OR WESTCHESTER COUNTY, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWERS CONSENT TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.  BORROWERS IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING ANY OBJECTION TO VENUE ON THE GROUNDS OF FORUM NON   CONVENIENS , WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH JURISDICTION.
[NO FURTHER TEXT ON THIS PAGE]
 
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BLONDER TONGUE LABORATORIES, INC.
 
 
By:
   
Name:
   
Title:
   
     
R. L. DRAKE HOLDINGS, LLC.
 
 
By:
   
Name:
   
Title:
   
     
.
 
 


 
TERM RE NOTE - Signature Page
DAL 79534125v5

 
 
 
 

EXHIBIT 10.3

 
GUARANTY AGREEMENT

This Guaranty Agreement (as may be amended, restated, or otherwise modified from time to time, this " Guaranty Agreement "), is executed and delivered by the undersigned Guarantor, in favor of STERLING NATIONAL BANK, a national banking association, in its capacity as administrative and collateral agent for the Lender Parties (in such capacity, together with its successors and assigns, the "Administrative Agent"), effective as of December 28, 2016, as provided hereinbelow:

Definitions :

The following terms shall have the following meanings where used in this Guaranty Agreement:

" Borrower " or " Borrowers " means each of Blonder Tongue Laboratories, Inc., a Delaware corporation (who is individually referred to herein as " Parent "), and R.L. Drake Holdings, LLC, a Delaware limited liability company (who is individually referred to herein as " Drake "), and their successors and assigns, including without limitation as debtor or debtor-in-possession in any bankruptcy proceedings.

" Guaranteed Obligations " means all indebtedness and obligations now or hereafter owing by Borrowers to Administrative Agent and the other Lender Parties under and in connection with the Loan Agreement and any other Loan Document (including, without limitation, all Obligations as defined thereunder), whether or not evidenced by any note, or other instrument or document, whether arising from or in connection with a loan, extension of credit, issuance of a letter of credit, acceptance, guaranty, indemnification, or otherwise, whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, as principal or guarantor, and including all principal, interest, charges, costs, fees, expenses, including reasonable costs, fees and expenses of attorneys employed or engaged by Administrative Agent and/or any other Lender Party in connection with any of the foregoing, filing fees, and any other sums chargeable to Borrowers or Guarantor under this Guaranty Agreement or any of the other Loan Documents.  Without limiting the foregoing, "Guaranteed Obligations" includes any of the foregoing arising during any bankruptcy proceedings of Borrowers and any interest or costs, fees expenses that, but for the existence of any such bankruptcy proceedings, would arise or accrue under the Loan Documents.

" Guarantor " means Blonder Tongue Far East, LLC, a Delaware limited liability company.

" Lenders " means each Lender under and as defined in the Loan Agreement, and their successors and assigns permitted thereunder.

" Lender Party " has the meaning given to such term in the Loan Agreement.

" Loan Agreement " means the certain Loan and Security Agreement dated as of the date hereof among the Borrowers, the Guarantor, the Lenders from time to time party thereto and Administrative Agent, as such agreement has been and hereafter may be renewed, amended, restated, or otherwise modified from time to time.
 
 
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Terms defined in the Loan Agreement, wherever used herein, unless otherwise defined herein, shall have the same meanings in this Guaranty Agreement as are set forth in the Loan Agreement, and each of such definitions is incorporated herein by reference. Guarantor expressly acknowledges that   it has read and is familiar with all such incorporated definitions and agrees that they shall have the same effect and enforceability in this Guaranty Agreement as though set forth herein at length.


Recitals :

WHEREAS, concurrently herewith, Borrowers, Guarantor, Lenders and Administrative Agent have executed and entered into the Loan Agreement, pursuant to which Lenders have agreed to make available to Borrowers a revolving line of credit and a term loan (terms used and not defined herein shall have the meaning assigned to such terms in the Loan Agreement).

WHEREAS, it is a condition precedent to Lenders' obligation to make the Loans and extensions of credit under the Loan Agreement that Guarantor execute and deliver to Administrative Agent this Guaranty Agreement.

WHEREAS, Guarantor has determined that (a) it will directly and indirectly benefit from the availability of extensions of credit to Borrowers under the Loan Agreement and from the other transactions evidenced by and contemplated in the Loan Documents, (b) it will benefit, directly and indirectly, from executing and delivering this Guaranty Agreement, (c) it is in Guarantor's best interest, and within its organizational purpose, to execute and deliver and, if called upon to do so, to perform its obligations under this Guaranty Agreement, and (d) execution and delivery of this Guaranty Agreement and the other Loan Documents to which Guarantor is a party is necessary or convenient to the conduct, promotion, and attainment of the business of Guarantor.

NOW, THEREFORE, in consideration of the foregoing and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Guarantor hereby agrees as follows:
1.   Guaranty of Guaranteed Obligations .  As an inducement to Lenders to make the Loans or otherwise extend credit and other financial accommodations to Borrowers under the Loan Agreement, Guarantor, for value received, does hereby unconditionally, irrevocably, and absolutely guarantee to Administrative Agent and Lenders the prompt and full payment and performance of the Guaranteed Obligations when due, whether at stated maturity, by acceleration or otherwise.  This Guaranty Agreement is and shall be an absolute, unconditional, irrevocable, and continuing unlimited guaranty of payment, and not solely of collection.  Notwithstanding anything in this Guaranty Agreement to the contrary, the amount of the Guaranteed Obligations shall be limited to a maximum aggregate amount equal to the largest amount that would not render this Guaranty Agreement subject to avoidance as a fraudulent transfer or conveyance under any Applicable Laws, after giving effect to all other liabilities of Guarantor, contingent or otherwise, that are relevant under such laws, and after giving effect to the value, as assets (as determined under the applicable provisions of such laws) of any rights of Guarantor to contribution, indemnity, and/or subrogation from any Borrower or any other Person.
2.   Representations and Warranties .  Guarantor hereby represents and warrants to Administrative Agent and each other Lender Party as follows:  Guarantor (a) is wholly-owned by Parent (who also wholly-owns Drake), (b) is an Affiliate of Drake and (c) has received and will receive a direct and indirect material benefit from the transactions evidenced by and contemplated in the Loan Agreement and the other Loan Documents.  This Guaranty Agreement is given by Guarantor in furtherance of the direct and indirect business interests, and is necessary to the conduct, promotion, and attainment of the businesses of Borrowers.  The value of the consideration received and to be received by Guarantor is reasonably worth at least as much as the liability and obligation of Guarantor hereunder.  Guarantor is currently informed of the financial condition of Borrowers and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Guaranteed Obligations.  Guarantor has read and understands the terms and conditions of the Loan Documents.  Guarantor is familiar with, and has had an opportunity to review the books and records regarding, the financial condition of Borrowers and is familiar with the value of any and all Collateral intended to be security for the payment of all or any part of the Guaranteed Obligations; provided , that Guarantor is not relying on such financial condition or the existence or value of any such security as an inducement to enter into this Guaranty Agreement. Guarantor has adequate means to obtain, on a continuing basis, information concerning the financial condition of Borrowers.  Guarantor has not been induced to enter into this Guaranty Agreement on the basis of a contemplation, belief, understanding, or agreement that any Person other than Borrowers or Guarantor will be liable to pay the Guaranteed Obligations.  No Lender Party has made any representation, warranty, or statement to Guarantor in order to induce Guarantor to execute this Guaranty Agreement.
 
 
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3.   Covenants .  Guarantor hereby agrees to comply with each covenant and agreement contained in the Loan Agreement applicable to it as a Credit Party or a Guarantor, as applicable.
4.   Obligations Not Impaired .  Guarantor agrees that its obligations under this Guaranty Agreement shall not be released, diminished, impaired, reduced, or affected by the occurrence of any one or more of the following events: (a) lack of organizational authority of any Borrower; (b) any receivership, insolvency, bankruptcy, or other proceedings affecting any Borrower or its property; (c) partial or total release or discharge of any Borrower or any other Person from the performance of any obligation contained in any instrument or agreement evidencing, governing, or securing all or any part of the Guaranteed Obligations, whether occurring pursuant to any Applicable Law or otherwise; (d) any change in the time, manner, or place of payment of, or in any other term of, or any increase or decrease in the amount of, all the Guaranteed Obligations, or any portion thereof, or any other amendment or waiver of any term of, or any consent to departure from any requirement of, any of the Loan Documents; (e) the taking or accepting of any collateral security for all or any part of the Guaranteed Obligations, this Guaranty Agreement, or any other guaranty; (f) the taking or accepting of any other guaranty for all or any part of the Guaranteed Obligations; (g) any failure to acquire, perfect, or continue any security interest or lien on Collateral securing all or any part of the Guaranteed Obligations or on any property securing this Guaranty Agreement; (h) any exchange, release, or subordination of any security interest or lien on any Collateral, or any release, amendment, waiver, or subordination of any term of any guaranty of the Guaranteed Obligations or any other impairment of any collateral security or guaranty now or hereafter securing all or any part of the Guaranteed Obligations; (i) any failure to dispose of any collateral security at any time securing all or any part of the Guaranteed Obligations or this Guaranty Agreement, provided such failure to dispose is commercially reasonable under the circumstances and is otherwise consistent with any Applicable Law; (j) any merger, reorganization, consolidation, or dissolution of any Borrower or any other Person at any time liable for any of the Obligations, any sale, lease, or transfer of any or all of the assets of any Borrower or any other Person at any time liable for any of the Obligations, or any change in name, business, organization, location, composition, structure, or organization of any Borrower or any other Person at any time liable for any of the Obligations; (k) any change of control or any other change in the capitalization or Equity Interest ownership   of any Borrower or any other Person at any time liable for any of the Obligations; (l) any invalidity or unenforceability of or defect or deficiency in any of the Loan Documents or all or any part of the Guaranteed Obligations; (m) avoidance or subordination of the Guaranteed Obligations, or any portion thereof, (n) the unenforceability of all or any part of the Guaranteed Obligations against any Borrower because any interest contracted for, charged, or received in respect of the Guaranteed Obligations exceeds the amount permitted by any Applicable Law; (o) any waiver, consent, extension, forbearance, or granting of any indulgence by Administrative Agent or any other Lender Party with respect to the Guaranteed Obligations or any provision of any of the Loan Documents; (p) any delay in or lack of enforcement of any remedies under the Loan Documents; (q) the act of creating all or any part of the Guaranteed Obligations is ultra vires, or the officers or other representatives creating all or any part of the Guaranteed Obligations acted in excess of their authority; (r) any election of remedies by Administrative Agent or any other Lender Party; (s) any of the Loan Documents were forged; (t) the election by Administrative Agent or any other Lender Party in any proceeding under the Bankruptcy Code of the application of Section 1111(b)(2) thereof; (u) any borrowing or grant of a security interest by any Borrower as debtor-in-possession, under Section 364 of the Bankruptcy Code; (v) any use by any Borrower (whether with the consent of Administrative Agent or any other Lender Party or otherwise) of cash collateral during the pendency of any bankruptcy proceeding; (w) the making of post-petition loans or any other provision for the extension of post-petition credit to any Borrower as debtor-in-possession in any bankruptcy proceedings; (x) the disallowance in bankruptcy of all or any portion of the claims of Administrative Agent or any other Lender Party for payment of any of the Guaranteed Obligations; or (y) any other circumstance which might otherwise constitute a legal or equitable discharge or defense available to any Borrower or Guarantor (other than that the Guaranteed Obligations shall have been paid and performed in full excluding any contingent indemnification Obligations that survive termination of the Loan Agreement and this Guaranty Agreement in accordance with the terms thereof and hereof).
 
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5.   Consent and Waiver .
(a)   Guarantor hereby waives: (i) notice of acceptance of this Guaranty Agreement; (ii) notice of any Loans or other financial accommodations or the creation or existence of any Guaranteed Obligations; (iii) notice of the amount of the Guaranteed Obligations; (iv) notice of any adverse change in the financial condition of any Borrower or any other Person or of any other fact that might increase or otherwise change Guarantor's risk with respect to the Guaranteed Obligations, any Borrower or any other Person under or in connection with this Guaranty Agreement; (v) notice of presentment for payment, demand, protest and notice thereof, notice of intent to accelerate, notice of acceleration, notice of dishonor, diligence or promptness in enforcement, and indulgences of every kind as to any promissory notes or other instruments; (vi) notice of any of the events or circumstances enumerated in Section 4 , and all other notices and demands to which Guarantor might otherwise be entitled (except if such notice is specifically required to be given to Guarantor hereunder or under any other Loan Documents or pursuant to Applicable Law); (vii) any requirement that Administrative Agent protect, secure, perfect, or insure its security interest and liens on any Collateral or other property as security for the Guaranteed Obligations or exhaust any right or take any action against Administrative Agent or any other Lender Party or any other Person or any Collateral or any other property subject to a security interest or lien; (viii) the benefit of any statute of limitation applicable to enforcement of the Guaranteed Obligations, or any portion thereof, or any security interests or liens in the Collateral or other property as security for the Guaranteed Obligations or this Guaranty Agreement; (ix) all rights by which Guarantor might be entitled to require suit on an accrued right of action in respect of any of the Guaranteed Obligations or require suit against any Borrower or any other Person; or (x) any other defense of any Borrower or any other Person (other than that the Guaranteed Obligations shall have been paid and performed in full, or in part, to the extent of any such partial payment or performance, excluding any contingent indemnification Obligations that survive termination of the Loan Agreement and this Guaranty Agreement in accordance with the terms thereof and hereof).
 
 
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(b)   Guarantor hereby waives and agrees not to assert against Administrative Agent or any other Lender Party, to the extent allowed by any Applicable Law: (i) any defense, setoff, counterclaim, or claim of any kind or nature available to any Borrower or any other Person against Administrative Agent or any other Lender Party arising directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of the Guaranteed Obligations or any security interest or lien in the Collateral or any other property as security for the Guaranteed Obligations; or (ii) any right or defense arising by reason of any claim or defense based upon an election of remedies by Administrative Agent or any other Lender Party under any Applicable Law.

(c)   Administrative Agent and any other Lender Party shall have the right to seek recourse against Guarantor to the fullest extent provided for herein, and no election by Administrative Agent or any other Lender Party to proceed in one form of action or proceeding, or against any party, or on any obligation, shall constitute a waiver of Administrative Agent's or any other Lender Party's right to proceed in any other form of action or proceeding or against other parties unless Administrative Agent has expressly waived such right in writing.  Without limiting the foregoing, no action or proceeding by Administrative Agent or any other Lender Party under any document or instrument evidencing the Guaranteed Obligations shall serve to diminish the liability of Guarantor under this Guaranty Agreement except to the extent that Lender Parties finally and unconditionally shall have realized payment in full of the Guaranteed Obligations, excluding any Guaranteed Obligations consisting of contingent indemnification Obligations that survive termination of the Loan Agreement and this Guaranty Agreement in accordance with the terms thereof and hereof.

(d)   Guarantor waives, and agrees that its liability hereunder shall not be affected by, any neglect, delay, omission, failure, or refusal of Administrative Agent or any other Lender Party to (i) exercise or properly or diligently exercise any right or remedy with respect to any or all of the Guaranteed Obligations or the collection thereof or any security interests or liens or other security for or guaranty of the Guaranteed Obligations, or any portion thereof, (ii) take or prosecute, or properly or diligently take or prosecute, any action for the collection of any or all of the Guaranteed Obligations against any Borrower, Guarantor or any other Person in respect of any or all of the Guaranteed Obligations, (iii) foreclose or prosecute, or properly or diligently foreclose or prosecute, any action in connection with any agreement, document or instrument or arrangement evidencing, securing, or otherwise affecting all or any part of the Guaranteed Obligations, or (iv) mitigate damages or take any other action to reduce, collect, or enforce the Guaranteed Obligations;

(e)   Administrative Agent, on behalf of Lender Parties, may at any time, without the consent of or notice to Guarantor, without incurring responsibility to Guarantor and without impairing, releasing, reducing, or affecting the obligations of Guarantor hereunder: (i) change the manner, place, or terms of payment of all or any part of the Guaranteed Obligations, or renew, extend, modify, rearrange, refinance, refund, increase or alter all or any part of the Guaranteed Obligations; (ii) sell, exchange, release, surrender, subordinate, realize upon, or otherwise deal with in any manner and in any order any Collateral and any security interest or lien securing all or any part of the Guaranteed Obligations or this Guaranty Agreement or setoff against all or any part of the Guaranteed Obligations; (iii) neglect, delay, omit, fail, or refuse to take or prosecute any action for the collection of all or any part of the Guaranteed Obligations or this Guaranty Agreement or to take or prosecute any action in connection with any of the Loan Documents; (iv) exercise or refrain from exercising any rights against any Borrower or other Person, or otherwise act or refrain from acting; (v) settle or compromise all or any part of the Guaranteed Obligations and subordinate the payment of all or any part of the Guaranteed Obligations to the payment of any indebtedness, liabilities, or obligations which may be due or become due to Lender Parties; (vi) release all or any one or more parties to any one or more of the Loan Documents or grant forbearance or other indulgences to any Borrower or any other Person in respect thereof; (vii) amend or modify in any manner and at any time (or from time to time) any of the Loan Documents; or (viii) partially or fully release or substitute Guarantor, or enforce, exchange, release, or waive any security for the Guaranteed Obligations, or any portion thereof; (ix) bring suit against any and all Persons liable or obligated in respect of the Guaranteed Obligations, collectively together, jointly and severally or separately, and apply any amounts obtained by Administrative Agent in such manner as Administrative Agent may elect, subject to the Loan Documents; and (x) apply to the Guaranteed Obligations any sums paid to Administrative Agent or any other Lender Party by any Borrower, Guarantor or any other Person as provided by the Loan Documents.
 
 
 
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(f)   Should Administrative Agent, on behalf of Lender Parties, seek to enforce this Guaranty Agreement by action in any court or otherwise, Guarantor waives any requirement, substantive or procedural, that (i) rights or remedies be enforced first against Borrowers or any other Person liable for all or any part of the Guaranteed Obligations, including, without limitation, that a judgment first be rendered against Borrowers or any such Person, or that Borrowers or any such Person should be joined in such cause or (ii) enforcement shall first be made against any Collateral or other property which shall ever have been given to secure all or any part of the Guaranteed Obligations or this Guaranty Agreement.

(g)   Guarantor's obligations under this Guaranty Agreement shall not be impaired by any action, if any, which results in the denial or impairment of any right to seek a deficiency against Borrowers.

(h)   Guarantor agrees that it has the sole responsibility for keeping itself informed of the financial condition of Borrowers and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations or any part thereof, and that none of Administrative Agent or any other Lender Party shall have any obligation or duty to advise Guarantor of information known to it regarding such condition or any such circumstance.

(i)   Guarantor consents and agrees that neither Administrative Agent nor any other Lender Party shall have any obligation to marshal assets securing the Guaranteed Obligations in favor of Guarantor.

(j)   Administrative Agent may, at any time and from time to time in its discretion (subject to the Loan Agreement) and with or without valuable consideration, allow substitution or withdrawal of Collateral or other security and release Collateral or other security without impairing or diminishing the indebtedness, liabilities, or obligations of Guarantor under this Guaranty Agreement.

(k)   Any determination by a court of competent jurisdiction of the amount of any principal and/or interest or other amount constituting any of the Guaranteed Obligations shall be conclusive and binding on Guarantor irrespective of whether Guarantor was a party to the suit or action in which such determination was made.

6.   Default .  Upon the occurrence and during the continuation of an Event of Default, Guarantor agrees to pay to Administrative Agent, on behalf of Lender Parties, at its office located in Dallas County, Texas, or at such other place as Administrative Agent may specify to Guarantor in writing, on written demand by Administrative Agent and without further notice of dishonor and without notice of any kind to Borrowers, Guarantor, or any other Person, the full unpaid amount of the Guaranteed Obligations, in immediately available funds, or such lesser amount, if any, as may then be due and payable and demanded by Administrative Agent, on behalf of Lender Parties, from time to time.  If acceleration of the time for payment of any amount payable by Borrowers under or with respect to any of the Guaranteed Obligations is stayed or otherwise delayed upon the insolvency, bankruptcy, or reorganization of any Borrower, all such amounts otherwise subject to acceleration under the terms of the Guaranteed Obligations shall nonetheless be payable by Guarantor hereunder promptly on demand by Administrative Agent, and Guarantor, expressly and unconditionally agrees to make such payment to Administrative Agent, on behalf of Lender Parties, in full.
 
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7.   No Waiver .  No failure on the part of either Administrative Agent or any other Lender Party to exercise, and no forbearance, delay or omission by either Administrative Agent or any other Lender Party in exercising, any right or remedy hereunder shall impair such right or remedy or operate or be construed as a waiver thereof or any acquiescence therein, nor shall any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right or remedy hereunder.
8.   Notice of Sale .  In the event that Guarantor is entitled to receive any notice under the UCC, as it exists in the state governing any such notice, of the sale or other disposition of any Collateral or other property securing all or any part of the Guaranteed Obligations or this Guaranty Agreement, it is agreed that at least ten (10) days written notice to Guarantor of the time and place of any public sale, or the time after which any private sale or other disposition may be made of any such Collateral or other property, shall be deemed to be reasonable notice in conformity with such requirements.
9.   Payment by Guarantor .  Whenever Guarantor pays any sum which is or may become due under this Guaranty Agreement, written notice must be delivered to Administrative Agent contemporaneously with such payment.
10.   Binding Effect .  This Guaranty Agreement is for the benefit of Administrative Agent, each other Lender Party and their successors, and in the event of an assignment by any Lender Party of the Guaranteed Obligations or any part thereof in accordance with the terms of the Loan Agreement, such Lender Party's assigns, and the rights and benefits hereunder, to the extent applicable to the indebtedness, liabilities, and obligations so assigned, shall be deemed transferred with such indebtedness, liabilities, and obligations without necessity of further express action.  This Guaranty Agreement is binding upon Guarantor and its successors and assigns.
11.   Subordination of Indebtedness and Liens .  The payment of any and all principal of and interest on all Debt of any Borrower to the Guarantor, whether direct, indirect, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, now or hereafter existing, due or to become due to Guarantor under any and all circumstances, including, without limitation, any rights of subrogation of Guarantor in respect of any payment by Guarantor under this Guaranty Agreement (herein called the " Subordinated Debt "), shall in all respects be subordinate and junior in right of payment and enforcement to the prior payment and enforcement in full of the Guaranteed Obligations as provided in this Section (excluding contingent Guaranteed Obligations that survive termination of the Loan Agreement and this Guaranty Agreement in accordance with the terms hereof and thereof).  Except to the extent, if any, as may be expressly permitted by the Loan Agreement, no payment shall be made on or with respect to the Subordinated Debt unless and until the Guaranteed Obligations shall have been paid and performed in full (excluding contingent Guaranteed Obligations that survive termination of the Loan Agreement and this Guaranty Agreement in accordance with the terms hereof and thereof).  In the event that Guarantor shall receive any payment on account of the Subordinated Debt in violation of this Section, Guarantor will hold, or cause to be held (as the case may be), any amount so received in trust for the benefit of Administrative Agent and the other Lender Parties and will forthwith deliver, or cause to be delivered (as the case may be), such payment to Administrative Agent, in the form received, to be applied to the Guaranteed Obligations.  All security interests and liens, if any, at any time securing payment of all or any part of the Subordinated Debt (herein called the " Subordinated Liens ") shall be and remain inferior and subordinate to the security interests and liens securing payment of all or any part of the Guaranteed Obligations, regardless of whether such Subordinated Liens presently exist or are hereafter created or when such Subordinated Liens were created, perfected, filed, or recorded ( provided that the foregoing shall not be interpreted or deemed to allow the existence of any security interests or liens that are prohibited by the Loan Documents).  Guarantor shall not exercise or enforce any creditors' rights or remedies that it   may have against any Borrower, or foreclose, repossess, sequester, or otherwise institute any action or proceeding (whether judicial or otherwise, including, without limitation, the commencement of, or joinder in, any bankruptcy, insolvency, reorganization, liquidation, receivership, or other debtor relief law) to enforce the Subordinated Debt or any Subordinated Lien on any assets of any Borrower unless and until the Guaranteed Obligations shall have been paid and performed in full (excluding contingent Guaranteed Obligations that survive termination of the Loan Agreement and this Guaranty Agreement in accordance with the terms hereof and thereof).  The terms and provisions of this Section are given by Guarantor as additional rights and benefits to any and all other subordination agreements heretofore, concurrently herewith, or hereafter executed by Guarantor to or in favor of Administrative Agent and the other Lender Parties, and nothing in this Guaranty Agreement shall be deemed to in any way negate or replace any other such previous, concurrent, or subsequent subordination agreements.
 
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12.   Right of Setoff .  Guarantor hereby grants to Lender Parties a right of offset to secure the payment of the Guaranteed Obligations and Guarantor's obligations and liabilities hereunder, which right of offset shall be upon any and all monies, securities, and other property of Guarantor, and the proceeds therefrom, now or hereafter held or received by or in transit to Administrative Agent or any other Lender Party from or for the account of Guarantor, whether for safekeeping, custody, pledge, transmission, collection, or otherwise, and also upon any and all deposits (general or special), credits and claims of Guarantor at any time existing against Administrative Agent and any other Lender Party.  Upon the occurrence of any Event of Default, Administrative Agent and each other Lender Party is hereby authorized at any time and from time to time after the occurrence of any Event of Default and during the continuance thereof, without notice to Guarantor, to offset, appropriate and apply any and all items hereinabove referred to against the Guaranteed Obligations and Guarantor's obligations and liabilities hereunder irrespective of whether or not Administrative Agent or such other Lender Party shall have made any demand under this Guaranty Agreement and although such obligations and liabilities may be contingent or unmatured.  Administrative Agent agrees promptly to notify Guarantor after any such offset and application made by Administrative Agent or any other Lender Party, provided that the failure to give such notice shall not affect the validity of such offset and application.  The rights of Administrative Agent and the other Lender Parties under this section are in addition to, and shall not be limited by, any other rights and remedies (including other rights of offset) which Administrative Agent and the other Lender Parties may have.
13.   Invalid Provisions .  If any provision of this Guaranty Agreement is held to be illegal, invalid, or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable, this Guaranty Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision was not a part hereof, and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance herefrom.  Notwithstanding any language to the contrary contained herein, no provision herein or in any other Loan Document evidencing the Guaranteed Obligations shall require the payment or permit the collection of interest in excess of the maximum permitted by any Applicable Law.
 
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14.   Modification in Writing .  No modification, consent, amendment, or waiver of any provision of this Guaranty Agreement, and no consent to any departure by Guarantor herefrom, shall be effective unless the same shall be in writing and signed by a duly authorized officer of Administrative Agent and, as to any modification or amendment, Guarantor, and then shall be effective only in the specific instance and for the specific purpose for which given.
15.   Limited Effect of Notices; Consents.   No notice to or demand on, or consent by, Guarantor in any case shall, of itself, entitle Guarantor to any other or further notice or demand, or right to grant or refuse consent, in similar or other circumstances.
16.   Cumulative Rights .  All rights and remedies of Administrative Agent and the other Lender Parties under this Guaranty Agreement are cumulative of each other and of every other right or remedy which Administrative Agent and the other Lender Parties may otherwise have under any applicable law or under any other agreement.
17.   Expenses .  Guarantor agrees to pay, without duplication of any amounts paid under Section 14.5 of the Loan Agreement, on written demand all reasonable costs and expenses incurred by Administrative Agent or any other Lender Party in connection with the negotiation, preparation, execution, and performance of this Guaranty Agreement and any and all amendments, modifications, renewals, restatements, and/or supplements hereto from time to time, including, without limitation, reasonable and documented attorneys fees.  If Guarantor should breach or fail to perform any provision of this Guaranty Agreement, Guarantor agrees to pay to Administrative Agent and Lender Parties all reasonable costs and expenses incurred by Administrative Agent and Lender Parties in the enforcement of this Guaranty Agreement from time to time, including, without limitation, reasonable attorneys fees.
18.   GOVERNING LAW; VENUE;   WAIVER OF JURY TRIAL .
(a)   THIS GUARANTY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND IT AND ALL TRANSACTIONS HEREUNDER OR PURSUANT HERETO SHALL BE GOVERNED AS TO INTERPRETATION, VALIDITY, EFFECT, RIGHTS, DUTIES AND REMEDIES OF THE PARTIES THEREUNDER AND IN ALL OTHER RESPECTS BY THE LAWS OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF, BUT INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW

(b)   ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY AGREEMENT OR ANY OTHER RELATIONSHIP BETWEEN ADMINISTRATIVE AGENT, ANY OTHER LENDER PARTY AND GUARANTOR MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR IN ANY FEDERAL OR STATE COURT SITTING IN NEW YORK COUNTY, ROCKLAND COUNTY OR WESTCHESTER COUNTY, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY AGREEMENT, GUARANTOR CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.  THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING ANY OBJECTION TO VENUE ON THE GROUNDS OF FORUM NON   CONVENIENS , WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH JURISDICTION.

(c)   GUARANTOR (AND ADMINISTRATIVE AGENT AND EACH OTHER LENDER PARTY BY ITS ACCEPTANCE OF THIS GUARANTY AGREEMENT) HEREBY (i) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR ASSOCIATED HEREWITH; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS; AND (D) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS GUARANTY AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION .
 
 
 
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19.   Notices .  All notices or demands by any party relating to this Guaranty Agreement shall be given as set forth in the Loan Agreement.
20.   Survival .  All representations, warranties, covenants, and agreements of Guarantor in this Guaranty Agreement shall survive the execution of this Guaranty Agreement.
21.   Counterparts .  This Guaranty Agreement may be executed in any number of counterparts and a telecopy or other electronic transmission of any such executed counterpart shall be deemed valid as an original.
22.   FINAL AGREEMENT .  THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO.
 
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REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE TO FOLLOW
IN WITNESS WHEREOF, the undersigned has executed this Guaranty Agreement as of the effective date specified in the introductory paragraph hereinabove.

GUARANTOR :

BLONDER TONGUE FAR EAST, LLC


By: _______________________________
Name:_____________________________    
Title: ______________________________    





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EXHIBIT 10.4
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT , dated as of December 28, 2016, is by and between STERLING NATIONAL BANK, a national banking association, as administrative and collateral agent for the Senior Lenders (as defined below) under the Senior Loan Documents (as defined below) (together with its successors and assigns, the " Senior Agent "), and the Junior Creditor under the Junior Debt Documents (as each term is defined below), and is acknowledged by BLONDER TONGUE LABORATORIES, INC., a Delaware corporation (" Parent "), and R.L. DRAKE HOLDINGS, LLC, a Delaware limited liability company (" Drake "; Parent, and Drake, along with their successors and assigns are herein collectively called " Borrower ").
RECITALS :
A.   Borrower, Senior Agent and Senior Lenders have entered into the Senior Loan Agreement (as further defined below) pursuant to which Senior Lenders have made, upon certain terms and conditions, loans and provided other financial accommodations to Borrower, secured by a security interest in all or substantially all of the assets and properties including, without limitation, any real property of Borrower.
B.   Junior Creditor has made one or more loans and other financial accommodations to Borrower, and Borrower's repayment and other obligations with respect to such loans and financial accommodations are evidenced by the Junior Debt Documents (as defined below).
C.   Senior Agent and Junior Creditor wish to enter into this Subordination Agreement to subordinate the Junior Debt (as hereinafter defined) to the Senior Debt (as hereinafter defined) and the Junior Liens to the Senior Liens in favor of Senior Agent.
In consideration of the mutual benefits accruing to the parties hereunder, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Senior Agent and Junior Creditor hereby agree as follows:
1.   DEFINITIONS .
As used in this Subordination Agreement, the following terms shall have the following meanings:
1.1.   " Agreements " shall mean, collectively, the Senior Loan Documents and the Junior Debt Documents, and " Agreement " shall mean any one of them, as the context requires.
1.2.   " Bankruptcy Code " shall mean Title 11 of the United States Code (as amended from time to time and any successor statute).
1.3.   " Bankruptcy Law " shall mean the Bankruptcy Code and any similar federal, state or foreign bankruptcy, insolvency, reorganization or other law of any jurisdiction affecting creditors' rights generally.
 
 
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1.4.   " Borrower " shall have the meaning set forth in the preamble of this Subordination Agreement.
1.5.   " Business Day " shall mean any day, other than a Saturday, Sunday, or other day on which commercial banks are authorized or required to close under the laws of the State of New York and a day on which Senior Agent, Senior Lenders and Junior Creditor are open for the transaction of business.
1.6.   " Collateral " shall mean all assets and properties of any kind or character whatsoever, real or personal, tangible or intangible, and wherever located, whether now owned or hereafter acquired, upon which a Lien is now or hereafter granted by any Obligor or otherwise exists in favor of any Creditor.
1.7.   " Creditors " or " Creditor " shall mean, collectively, Senior Agent, Senior Lenders and Junior Creditor, and their respective successors and assigns.
1.8.   " Default " shall mean an event that with the passage of any notice or cure period would become a default under any Agreement.
1.9.   " Event of Default " shall mean a default or event of default under, as such term is used and defined in, any Agreement.
1.10.   " Insolvency Proceeding " shall mean, as to any Person, any of the following:  (a) any case or proceeding with respect to such Person under the Bankruptcy Code, or any other Bankruptcy Law or any other or similar proceedings seeking any stay, reorganization, arrangement, composition or readjustment of the obligations and indebtedness of such Person, (b) any proceeding seeking the appointment of any trustee, receiver, liquidator, custodian or other insolvency official with similar powers with respect to such Person or any of its assets, (c) any proceeding for liquidation, dissolution or other winding up of the business of such Person, or (d) any assignment for the benefit of creditors or any marshaling of assets of such Person.
1.11.   " Junior Agent " shall mean Robert J. Pallé, in his capacity as agent for the Junior Lenders under the Junior Debt Documents.
1.12.   " Junior Creditor " shall mean, collectively, Junior Agent and Junior Lenders.
1.13.   " Junior Debt " shall mean all obligations, liabilities and indebtedness of every kind, nature and description owing by any Obligor to Junior Creditor arising under the Junior Debt Documents or any other indebtedness for borrowed money or related obligations owing by any Obligor to Junior Creditor that is evidenced by a promissory note, credit agreement or loan agreement, whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, including principal, interest, charges, fees, costs, indemnities and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Junior Debt Documents or after the commencement of any Insolvency Proceeding with respect to any Obligor (and including, without limitation, the payment of interest, fees, expenses and other amounts which accrue and become due after the commencement of such Insolvency Proceeding, whether or not such amounts are allowed or allowable in whole or in part in any such Insolvency Proceeding).  For the avoidance of doubt, Junior Debt shall not include any amount owing from time to time to any Junior Creditor in such Junior Creditor's capacity as an employee, officer, director or stockholder of any Obligor, including, but not limited to, Junior Creditor's rights under the Junior Debt Documents to convert all or any portion of the Junior Debt into capital stock of any Obligor as contemplated by the Junior Loan Agreement (" Excluded Junior Debt ").
 
 
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1.14.   " Junior Debt Documents " shall mean the Junior Loan Agreement, the Junior Security Documents and all other notes, agreements, documents and instruments at any time entered into, executed or delivered by any Obligor or any other person with, to or in favor of Junior Creditor in connection therewith or related thereto, as all of the foregoing now exist or,   in accordance with the terms hereof,   may hereafter be amended, modified, supplemented, extended, renewed, restated, replaced or refinanced.
1.15.   " Junior Lenders " means, collectively, (a) Robert J. Pallé and Carol M. Pallé, as "Initial Lenders" under and as defined in the Junior Loan Agreement, (b) Steven L. Shea, James H. Williams and each other person who may from time to time become party to the Junior Loan Agreement as a lender thereunder, as "Supplemental Lenders" under and as defined in the Junior Loan Agreement and (c) all successors and assigns of the foregoing.
1.16.   " Junior Lien " shall mean, collectively, the Liens and security interests granted by any Obligor in all or any part of the Collateral of such Obligor to or in favor of Junior Creditor under the Junior Security Documents as set forth therein and any and all other Liens of Junior Creditor in any Obligor's assets or properties, or any Obligor's rights, titles or interests therein or in respect thereof whether now existing or hereafter arising or acquired.
1.17.   " Junior Loan Agreement " shall mean that certain Amended and Restated Senior Subordinated Convertible Loan and Security Agreement dated March 28, 2016 by and between Borrower, Junior Lenders and Junior Agent, as amended, modified, supplemented, extended, renewed, restated, replaced, refinanced or otherwise modified from time to time.
1.18.   " Junior Security Documents " shall mean that certain Amended and Restated Mortgage and Security Agreement, dated as of March 28, 2016, by and between Parent, as mortgagor, and Junior Agent, as mortgagee, under which Parent granted the Junior Liens to Junior Creditor and all other agreements, instruments, financing statements and other documents made or entered into in connection therewith or otherwise executed by Borrower pursuant to which a Lien is granted to or for the benefit of Junior Agent or Junior Lenders, as any of the foregoing may be amended, restated, modified, extended or renewed from time to time.
1.19.   " Lien " shall mean any right or interest in property securing an obligation owed to, or a claim by, a Person other than the owner of the property or any other arrangement with such Person which provides for the payment of such liabilities out of such property or assets or which allows such Person to have such liabilities satisfied out of such property or assets prior to the general creditors of any owner thereof, whether such interest is based on the common law, statute, or contract, and including a security interest, collateral assignment, charge, claim, or lien arising from a security agreement, mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, conditional sale, trust receipt, lease, consignment or bailment for security purposes or similar agreement, or any contingent or other agreement to provide any of the foregoing, but excluding any right of offset which arises without agreement in the ordinary course of business.
 
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1.20.   " Obligors " shall mean, individually and collectively, Borrower, and any other person liable on or in respect of the Senior Debt or the Junior Debt, and each of their successors and assigns, including, without limitation, a receiver, trustee or debtor-in-possession on behalf of such Person or on behalf of any such successor or assign.
1.21.   " Person " shall mean any individual, sole proprietorship, partnership, corporation (including, without limitation, any corporation which elects Subchapter S status under the Internal Revenue Code of 1986, as amended), limited liability company, limited liability partnership, business or statutory trust, unincorporated association, joint stock company, trust, joint venture, or other entity or any government or any agency or instrumentality or political subdivision thereof.
1.22.   " Senior Agent " shall have the meaning set forth in the preamble of this Subordination Agreement.
1.23.   " Senior Debt " shall mean any and all obligations, liabilities and indebtedness, however evidenced, of every kind, nature and description owing by any Obligor to the Senior Lenders or the Senior Agent arising under the Senior Loan Documents, whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, including principal, interest, charges, fees, costs, indemnities and expenses (including attorneys fees and other costs and expenses of collection), whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Senior Loan Agreement or after the commencement of any Insolvency Proceeding with respect to any Obligor (and including, without limitation, the payment of interest, fees, expenses and other amounts which accrue after the commencement of such Insolvency Proceeding whether or not such amounts are allowed or allowable in whole or in part in any such Insolvency Proceeding).
1.24.   "Senior Lender Party" means, collectively, the Senior Agent and Senior Lender.
1.25.   "Senior Lenders" shall mean the lenders from time to time party to the Senior Loan Agreement as lenders thereunder (including any other lender or group of lenders that at any time succeeds to or refinances, replaces or substitutes for all or any portion of the Senior Debt at any time and from time to time).
1.26.   " Senior Liens " shall have the meaning set forth in Section 2.1.
1.27.   " Senior Loan Agreement " shall mean that certain Loan and Security Agreement dated as of December ___, 2016, among Borrower, Senior Agent and Senior Lenders, as the same may hereafter be amended, modified, supplemented, extended, renewed, restated, replaced or refinanced from time to time.
 
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1.28.   " Senior Loan Documents " shall mean the Senior Loan Agreement, the "Loan Documents" (as such term is defined in the Senior Loan Agreement) and all other agreements, documents and instruments at any time executed or delivered by any Obligor with, to or in favor of Senior Agent or any other Senior Lender Party in connection therewith or related thereto, as any of the foregoing may be amended, modified, supplemented, extended, renewed, restated, replaced or refinanced from time to time.
1.29.   " Senior Loan Termination Date " shall mean the date that Senior Agent, on account of the Senior Lender, has received indefeasible payment in full in cash, other immediately available funds or other consideration acceptable to Senior Agent of all of the Senior Debt and on which Senior Lenders shall have no further obligation to make any loans or advances under the Senior Loan Documents and such Senior Loan Documents have been terminated.  In the event that any Senior Lender Party is required by a decision of a court of competent jurisdiction (or by another governmental authority in a decision tantamount thereto) to return any payments received by it in respect of the Senior Debt after it had otherwise received payment in full, the Senior Debt to which such payment had been applied shall be reinstated as if it had never been repaid and a Senior Loan Termination Date shall not be deemed to have occurred (in which case, any actions taken hereunder as a result of the occurrence of the Senior Loan Termination Date shall be reversed and unwound retroactively).
1.30.   " Subordination Agreement " shall mean this agreement as may from time to time hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.
1.31.   " UCC " means the Uniform Commercial Code as in effect in the State of New York from time to time.
All terms used herein and defined in the UCC, unless otherwise defined herein, shall have the meanings ascribed to such terms in the UCC as in effect on the date hereof.  All references to any term in the plural shall include the singular and all references to any term in the singular shall include the plural.
2.   SECURITY INTERESTS; PRIORITIES; REMEDIES .
2.1.   Liens in Collateral .  Junior Creditor hereby acknowledges that Senior Agent, for the benefit of Senior Lender, has been granted Liens upon the Collateral pursuant to the Senior Loan Documents (the " Senior Liens ") to secure the Senior Debt.  Junior Creditor agrees that it will not contest or challenge the validity, perfection, priority or enforceability of the Senior Liens.  Junior Creditor hereby agrees with Senior Agent that Junior Creditor shall not obtain or be granted any Liens in or upon the assets or properties of any Obligor to secure the Junior Debt or other indebtedness or liabilities owing to it by the Obligors other than the Junior Liens.
2.2.   Priority of Debt and Liens .
(a)   Junior Creditor hereby, expressly and in all respects, subordinates and makes junior and inferior in all respects (i) all Junior Debt to the Senior Debt and (ii) the payment and enforcement of the Junior Debt to the payment and enforcement of the Senior Debt.
 
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(b)   Notwithstanding the order or time of attachment, or the order, time or manner of perfection, or the order or time of filing or recordation of any document, financing statement or instrument, or other method of perfecting a Lien in favor of a Creditor in any Collateral, and notwithstanding any conflicting or inconsistent terms or conditions which may be contained in any of the Agreements, the Senior Liens have and shall have priority over all Junior Liens, to the extent of the Senior Debt, and such Junior Liens are and shall be junior and subordinate in right of payment and enforcement to the Senior Liens, in each case, regardless of whether the Senior Liens are heretofore, now or at any time hereafter valid, enforceable or perfected and regardless of the relative priority of the Junior Liens and the Senior Liens under the UCC.
(c)   The priorities of the Liens provided in this Section 2.2 shall not be altered or otherwise affected by any amendment, modification, supplement, extension, renewal, restatement, replacement or refinancing of the Senior Debt or the Junior Debt, nor by any action or inaction which any Creditor may take or fail to take in respect of any Collateral.
2.3.   Payments on Junior Debt.   Solely for the benefit of Senior Lender Parties, Junior Creditor agrees that it will not demand, accept, hold or retain any payment or prepayment of principal, interest or any other amounts (whether in cash, property or by offset) in respect of the Junior Debt (including, without limitation, any balloon payment at maturity) prior to the Senior Loan Termination Date without the prior written consent of Senior Agent; provided, however, that Borrower may make regularly scheduled interest payments to Junior Creditor that are paid in-kind and added to the principal balance of the Junior Debt.
2.4.   Rights of Senior Agent .
(a)   If there shall occur any Insolvency Proceeding, in respect of any Obligor, the following provisions shall apply:  (i) the Senior Creditors shall first be entitled to receive payment in full of the Senior Debt, including without limitation, the principal thereof, premium, if any, and interest (including post-petition interest) due thereon before Junior Creditor or the holder of any Junior Debt is entitled to receive any payment on account of the principal of or interest on or any other amount owing in respect of the Junior Debt; (ii) any payment, dividend or distribution of assets of such Obligor of any kind or character whether in cash, property or securities to which Junior Creditor or the holder of the Junior Debt would be entitled except for the provisions of this Agreement, shall be paid by the liquidating trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or other trustee or agent, directly to Senior Agent, to the extent necessary to make payment in full of all Senior Debt remaining unpaid; (iii) in any such proceeding, Senior Agent is hereby irrevocably authorized and empowered (in the name of Junior Creditor or otherwise), but shall have no obligation, to demand, sue for, collect and receive every payment or distribution referred to in clauses (i) and (ii) of this subsection (a) and given aquittance therefor and to file claims and proofs of claim and take such other action as it may deem necessary or advisable for the exercise or enforcement of any of the rights or interests of the Senior Creditors hereunder; and (iv) upon the failure of Junior Creditor to do so prior to 15 days before expiration of the time in which to vote, make or prove such claims in any Insolvency Proceeding, make, prove and vote any and all claims for the Junior Debt in such Insolvency Proceeding, regardless of the existence or value of any Collateral held by Senior Agent as security for payment of the Senior Debt, including, without limitation, voting such claims at any meeting of creditors of any Obligor and voting such claims for or against any proposed plan in any such Insolvency Proceeding, all as Senior Agent deems in its sole discretion appropriate to protect its interest.
 
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(b)   Junior Creditor authorizes Senior Agent, without notice or demand and without affecting Junior Creditor's obligations hereunder, from time to time:  (i) to renew, extend, increase, accelerate or otherwise change the time for payment of the terms of, or the interest on, the Senior Debt or any portion thereof; (ii) to take from any party and hold Collateral for the payment of the Senior Debt or any portion thereof, and to exchange, enforce or release such collateral or any portion thereof; (iii) to accept and hold any endorsement or guaranty of payment of the Senior Debt or any portion thereof and to release or substitute any such endorser or guarantor, or any party who has given any security interest in any collateral as security for the payment of the Senior Debt or any portion thereof, or any other party in any way obligated to pay the Senior Debt or any portion thereof; (iv) to direct the order or manner of the disposition of any and all other Collateral and the enforcement of any and all endorsements and guaranties relating to the Senior Debt or any portion thereof as Senior Agent, in its sole discretion, may determine; (v) to settle or compromise any of the Senior Debt or any security therefor; (vi) to modify, amend or restate any of the Senior Loan Documents or waive any of the provisions thereto; (vii) to file UCC-3 termination and release statements in connection with a sale of the Collateral, or any portion thereof, permitted under the terms of the Senior Loan Documents, in each case in form suitable for filing in relevant jurisdictions with respect to financing statements filed by Junior Creditor and naming an Obligor as debtor, or (viii) to take any action or inaction with respect to the Senior Debt.
2.5.   Enforcement by Junior Creditor .  Notwithstanding any rights or remedies available to Junior Creditor under any of the Junior Debt Documents, applicable law or otherwise, prior to the Senior Loan Termination Date, Junior Creditor, in its capacity as such, shall not, directly or indirectly, take or seek to take any action against or assert any claims or interests in any Collateral or against any Obligor or otherwise take any action which would interfere with or impair the rights of Senior Agent and Senior Lenders against the Collateral or any Obligor (including, without limitation, the right to (i) accelerate the Junior Debt, (ii) take any action to foreclose, repossess, marshal control or exercise any remedies with respect to any assets or property of any Obligor, (iii) contact, communicate with or notify any account debtor or obligor with respect to any account, chattel paper, instrument or general intangible of any Obligor, or (iv) take any other action which would interfere with or impair the rights of Senior Agent and Senior Lenders against any Obligor.  In addition to and not in limitation of the foregoing, Junior Creditor shall not commence, or join with any other Person in commencing, any Insolvency Proceeding prior to the Senior Loan Termination Date.  Concurrently with the giving thereof to any Obligor, Junior Creditor agrees to give Senior Agent a copy of any written notice of a Default or an Event of Default under the Junior Debt Documents, or written notice of demand for payment from any Obligor.
2.6.   Actions Not Subject to Limitation .  Nothing in this Subordination Agreement shall be construed to in any way limit or impair the right of Junior Creditor to:  (a) file a claim or statement of interest with respect to the Junior Debt; (b) file any necessary responsive or defensive pleadings in opposition to any motion, claim, adversary proceeding or other pleading made by any person objecting to or otherwise seeking the disallowance of the claims of the Junior Creditor, in each case in accordance with the terms of this Subordination Agreement; (c) exercise any rights or remedies available to unsecured creditors or file any pleadings, objections, motions or agreements which assert rights or interests available to unsecured creditors of the Obligors arising under the Junior Debt Documents, any Insolvency Proceeding or applicable non-bankruptcy law; (d) vote on any plan of reorganization, file any proof of claim, make other filings and make any arguments and motions that are, in each case, in accordance with the terms of this Subordination Agreement, with respect to the Junior Debt; (e) pursue its rights pertaining to Excluded Junior Debt; and (f) exercise, in whole or in part, any conversion rights with respect to the Junior Debt.
 
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2.7.   Advances by Senior Lenders .  If any Senior Lender Party should honor or fail to honor a request by Borrower for a loan, advance or other financial accommodation under the Senior Loan Documents, whether or not such Senior Lender Party has knowledge that the honoring of such request or the failure to honor such request would result in an Event of Default, or act, condition or event which with notice or passage of time or both would constitute an Event of Default under the Junior Debt Documents, in no event shall any Senior Lender Party have any liability to Junior Creditor as a result of such breach or failure to act, and without limiting the generality of the foregoing, Junior Creditor agrees that no Senior Lender Party shall have any liability, as a result of honoring or failing to honor such request, for tortious interference with contractual relations or for inducement by such Senior Lender Party of Borrower to breach their contracts or otherwise.
1.1   Prior Payment of Senior Debt in Bankruptcy.
(a)   The provisions of this Subordination Agreement shall continue in full force and effect notwithstanding the occurrence of an Insolvency Proceeding against Borrower or any other Obligor or any of its or their respective properties or assets.
(b)   Upon the commencement and throughout the term of any Insolvency Proceeding, all Senior Debt shall be paid in full and satisfied in cash or other immediately available funds before any payment whatsoever shall be made on account of any Junior Debt.  Any payments or distributions made after the commencement of an Insolvency Proceeding which would, but for the provisions hereof, be payable or deliverable in respect of the Junior Debt, shall be paid or delivered by the liquidating trustee or any other Person making such payment or distribution directly to Senior Agent until all amounts owing upon Senior Debt shall have been indefeasibly paid in full in cash and all commitments under the Senior Loan Documents and the Senior Loan Documents shall have been irrevocably terminated.  If, notwithstanding the foregoing provisions in this Section 2.8(b), in any Insolvency Proceeding Junior Creditor receives a payment or distribution with respect to the Junior Debt, Junior Creditor (i) shall hold any such payment or distribution in trust for the Senior Agent in the same medium in which received, (ii) shall not commingle such payment or distribution with any of the assets or properties of Junior Creditor or any other Person, and (iii) will deliver such payment or distribution to the Senior Agent, in the form received, properly endorsed to permit collection, immediately after receipt thereof by Junior Creditor.
(c)   To the extent that Junior Creditor has or acquires any rights under Section 363, Section 364 or Section 1126 of the Bankruptcy Code with respect to the Collateral, Junior Creditor hereby agrees not to assert or attempt to exercise such rights without the prior written consent of Senior Agent.  In the event and during the continuation of any Insolvency Proceeding, Junior Creditor shall not object to or oppose any cash collateral order or plan proposed or approved by Senior Agent.
2.8.   Bankruptcy Financing .
(a)   If any Obligor shall become subject to a case under the Bankruptcy Code or any similar Bankruptcy Law and if as a debtor-in-possession, such Obligor moves for approval of financing to be provided in good faith by any Senior Lender (in such capacity, the " DIP Lender ") under Section 364 of the Bankruptcy Code or the use of cash collateral with the consent of the DIP Lender under Section 363 of the Bankruptcy Code or any similar Bankruptcy Law, Junior Creditor shall not object directly or indirectly to any such financing on the grounds of a failure to provide "adequate protection" for any Liens of Junior Creditor.
(b)   Nothing contained herein shall be deemed to limit the rights of Junior Creditor to (i) object to post-petition financing or use of cash collateral on any grounds other than the failure to provide "adequate protection" for the Liens of Junior Creditor or (ii) offer to Obligors a proposal for a financing under Section 364 of the Bankruptcy Code to be provided by the Junior Creditor.
 
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1.   MISCELLANEOUS .
1.1.   Representations and Warranties.
(a)   Junior Creditor represents and warrants to Senior Agent that:
(i)   the execution, delivery and performance of this Subordination Agreement by it (A) are within its powers, (B) have been duly authorized by it, and (C) do not contravene any law, any provision of any of the Junior Debt Documents or any agreement to which it is a party or by which it is bound; and
 
(ii)   this Subordination Agreement constitutes the legal, valid and binding obligations of Junior Creditor, enforceable against Junior Creditor in accordance with its terms and shall be binding on Junior Creditor, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally or by equitable principles.
(b)   Senior Agent hereby represents and warrants to Junior Creditor that:
(i)   the execution, delivery and performance of this Subordination Agreement by Senior Agent (A) are within the powers of Senior Agent, (B) have been duly authorized by Senior Agent, and (C) do not contravene any law, any provision of the Senior Loan Documents or any agreement to which Senior Agent is a party or by which it is bound; and
(ii)   this Subordination Agreement constitutes the legal, valid and binding obligations of Senior Agent, enforceable against Senior Agent in accordance with its terms and shall be binding on Senior Agent, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally or by equitable principles.
 
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3.2.   Amendments.   Any waiver, permit, consent or approval by either of Senior Agent or Junior Creditor of or under any provision, condition or covenant to this Subordination Agreement must be in writing and shall be effective only to the extent it is set forth in writing and as to the specific facts or circumstances covered thereby.  Any amendment of this Subordination Agreement must be in writing and signed by Senior Agent and Junior Creditor and acknowledged by Obligors to the extent such amendment affects the obligations of Obligors under this Subordination Agreement or the Consent and Acknowledgment to this Subordination Agreement.
3.3.   Successors and Assigns.
(a)   This Subordination Agreement shall be binding upon the Creditors and their respective successors and assigns and shall inure to the benefit of the Creditors and their respective successors, participants and assigns.
(b)   In the case of an assignment or transfer, the assignee or transferee acquiring any interest in the Junior Debt or the Senior Debt, as the case may be, shall execute and deliver to the applicable Creditor a written acknowledgment of receipt of a copy of this Subordination Agreement and the written agreement by such person to be bound by the terms of this Subordination Agreement which acknowledgment and agreement may be included in the assignment instrument between the assignor and assignee.  In addition, in the event of an assignment or transfer by Junior Creditor of less than all of the Junior Debt, the Junior Creditor shall agree with the assignee in the assignment instrument effecting such assignment to appoint Junior Creditor as an agent to act on their behalf under this Subordination Agreement for purposes of receiving payments and notices hereunder.
3.4.   Notices .  Unless otherwise specifically provided herein, any notice delivered under this Subordination Agreement shall be in writing addressed to the respective party as set forth below and may be personally served, telecopied or sent by overnight courier service or certified or registered United States mail and shall be deemed to have been given (a) if delivered in person, when delivered; (b) if delivered by telecopy, on the date of transmission if transmitted on a Business Day before 4:00 p.m. (Dallas, Texas time) or, if not, on the next succeeding Business Day; (c) if delivered by overnight courier, one business day after delivery to such courier properly addressed; or (d) if by United States mail, four business days after deposit in the United States mail, postage prepaid and properly addressed as provided below:
 
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To Senior Agent:
Sterling National Bank
8401 N. Central Expressway, Suite 600
Dallas, Texas  75225
Fax No.:  (214) 242-5840
Attention:  Portfolio Manager, URGENT
To Junior Creditor:
Robert J. Pallé
21 Desai Court
Freehold, New Jersey  07728
Fax No.:  [________]
To any Obligor:
Blonder Tongue Laboratories, Inc.
One Jake Brown Road
Old Bridge, New Jersey  08857
Fax No.:  [________]
Attention:  Eric Skolnik


Each of Senior Agent, Junior Creditor and Borrower may change the address(es) to which all notices, requests and other communications are to be sent by giving written notice of such address change to the other parties hereto in conformity with this Section 3.4, but such change shall not be effective until notice of such change has been received by such other parties.
3.5.   Counterparts .  This Subordination Agreement may be executed in any number of counterparts, each of which shall be an original with the same force and effect as if the signatures thereto and hereto were upon the same instrument.  Delivery of an executed counterpart of this Subordination Agreement by facsimile or other method of electronic transmission shall have the same force and effect as manual delivery of an original executed counterpart of this Subordination Agreement.
3.6.   Governing Law .  THIS SUBORDINATION AGREEMENT HAS BEEN EXECUTED OR COMPLETED AND/OR IS TO BE PERFORMED IN NEW YORK, AND IT AND ALL TRANSACTIONS HEREUNDER OR PURSUANT HERETO SHALL BE GOVERNED AS TO INTERPRETATION, VALIDITY, EFFECT, RIGHTS, DUTIES AND REMEDIES OF THE PARTIES THEREUNDER AND IN ALL OTHER RESPECTS BY THE LAWS OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF, BUT INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW.
3.7.   WAIVER OF JURY TRIAL .  EACH PARTY HERETO HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS SUBORDINATION AGREEMENT, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION HEREWITH, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY EACH PARTY HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE OTHER PARTIES TO ENTER INTO THIS SUBORDINATION AGREEMENT.
 
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3.8.   Complete Agreement .  This written Subordination Agreement is intended by the parties as a final expression of their agreement and is intended as a complete statement of the terms and conditions of their agreement with respect to the subject matter hereof.
3.9.   No Third Parties Benefited .  This Subordination Agreement is solely for the benefit of the Creditors and their respective successors, participants and assigns, and no other person shall have any right, benefit, priority or interest under, or because of the existence of, this Subordination Agreement.
3.10.   Disclosures; Non-Reliance.  Each Creditor has the means to, and shall in the future remain, fully informed as to the financial condition and other affairs of the Obligors and no Creditor shall have any obligation or duty to disclose any such information to the other Creditors.  Except as expressly set forth in this Subordination Agreement, the parties hereto have not otherwise made to each other nor do they hereby make to each other any warranties, express or implied, nor do they assume any liability to each other with respect to:  (a) the enforceability, validity, value or collectability of any of the Junior Debt or the Senior Debt or any guarantee or security which may have been granted to any of them in connection therewith, (b) any Obligor's title to or right to transfer any of the Collateral, or (c) any other matter except as expressly set forth in this Subordination Agreement.
3.11.   Term.  This Subordination Agreement is a continuing agreement and shall remain in full force and effect until the Senior Loan Termination Date (subject to the reinstatement provisions set forth in the definition of such term).
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IN WITNESS WHEREOF , the parties have caused this Subordination Agreement to be duly executed as of the day and year first above written.
SENIOR AGENT:


STERLING NATIONAL BANK

By:________________________________    
Name:______________________________    
Title:_______________________________    

 
JUNIOR CREDITOR:

 
Robert J. Pallé, in his capacity as Junior Agent
and a Junior Lender
 
Carol M. Pallé, in her capacity as a Junior Lender
 
Steven L. Shea, in his capacity as a Junior Lender
 
James H. Williams, in his capacity as a Junior Lender

 
SUBORDINATION AGREEMENT - Signature Page
DAL   79806227V2

CONSENT AND ACKNOWLEDGMENT

Each of the undersigned hereby acknowledges and agrees to the terms and provisions of the foregoing Subordination Agreement.  By its signature below, each of the undersigned agrees that it will, together with its successors and assigns, be bound by the provisions of this Consent and Acknowledgment.
Each of the undersigned acknowledges and agrees that:  (i) it is not a party to the Subordination Agreement and does not and will not receive any right, benefit, priority or interest under or because of the existence of the foregoing Subordination Agreement; and (ii) it will execute and deliver such additional documents and take such additional action as may be necessary or desirable in the reasonable opinion of any Creditor to effectuate the provisions and purposes of the foregoing Subordination Agreement.

BLONDER TONGUE LABORATORIES, INC.


By:___________________________________    
Name:_________________________________    
Title:__________________________________    
R.L. DRAKE HOLDINGS, LLC


By:___________________________________    
Name:_________________________________    
Title:__________________________________  
 
 
 
SUBORDINATION AGREEMENT - Consent and Acknowledement
DAL   79806227V2  
 
 
EXHIBIT 10.5
 
 
EXECUTION VERSION
THIS DOCUMENT WAS PREPARED UNDER
SUPERVISION OF NEW JERSEY COUNSEL,
AND AFTER RECORDING SHOULD
BE RETURNED TO:
Heather E. Moulder
Greenberg Traurig, LLP
2200 Ross Avenue
Suite 5200
Dallas, Texas 75201

Lot 8 in Block 9000 of the Tax Map of
Old Bridge, Middlesex County, New Jersey



[ SPACE ABOVE LINE FOR RECORDER'S USE ONLY]
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT, FIXTURE FILING AND FINANCING STATEMENT

Mortgagor's Organizational Identification Number:  2178484
This MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT, FIXTURE FILING AND FINANCING STATEMENT (this " Mortgage "), is made as of the 28 th day of December, 2016 and intended to be effective as of December 28, 2016, by BLONDER TONGUE LABORATORIES, INC., a Delaware corporation (herein referred to as " Mortgagor "), whose address is One Jake Brown Road, Old Bridge, New Jersey 08857 to STERLING NATIONAL BANK, a national banking association (" Administrative Agent "), whose address is 8401 North Central Expressway, Suite 600, Dallas, Texas 75225, as Administrative Agent for the benefit of itself and the other Lender Parties (as hereinafter defined).

RECITALS
A.   Administrative Agent and the other Lender Parties have made available to Mortgagor and certain subsidiaries of Mortgagor (Mortgagor and such subsidiaries herein collectively called " Borrowers ") a revolving line of credit in an aggregate principal amount of $5,000,000, and have made a term loan to Borrowers in an aggregate principal amount of $3,500,000 (collectively, the " Loan "), as evidenced by that certain Loan and Security Agreement dated of even date herewith (as modified, amended, renewed, restated or supplemented from time to time, the " Loan Agreement "), by and among Borrowers, one or more affiliates of Mortgagor, Administrative Agent, and the Lenders (herein so called) now or hereafter made a party to the Loan Agreement (Administrative Agent and Lenders, together with their respective successors and assigns, are herein called the " Lender Parties ").
 
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B.   This Mortgage is given to secure the Loan and the Loan Agreement and shall secure not only presently existing indebtedness pursuant to the Loan Agreement, but also all future indebtedness pursuant to the Loan Agreement, whether such indebtedness is obligatory or to be made at the option of Administrative Agent and the Lender Parties, or otherwise, to the same extent as if such indebtedness was made on the date of the execution of the Mortgage, although there may be no indebtedness due at the time of execution of the Mortgage.  The lien of the Mortgage shall be valid as to all obligations of Mortgagor and the other Borrowers under the Loan Agreement, including future advances, from the time it is placed of record in Middlesex County, New Jersey.  The total amount of such obligations may increase or decrease from time to time, as provided in the Loan Agreement, and any disbursements which Administrative Agent or the other Lender Parties may make under the Loan Agreement, or any other document with respect to the Mortgage (e.g., for payment of taxes, insurance premiums or other advances to protect the liens and security interests, as permitted by the Mortgage) shall be additional obligations secured by this Mortgage.
C.   In connection with and pursuant to the terms of the Loan Agreement, and intending to be legally bound hereby, Mortgagor hereby executes and delivers this Mortgage to Administrative Agent, for the ratable benefit of the Lender Parties.

ARTICLE 1
Definitions; Granting Clauses; Secured Indebtedness
Section 1.1.   Principal Secured .  This Mortgage secures the aggregate principal amount of Eight Million Five Hundred Thousand and No/100 Dollars ($8,500,000.00), plus such additional   amounts as Administrative Agent and the other Lender Parties may from time to time advance pursuant to the terms and conditions of the Loan Agreement and this Mortgage, with respect to an obligation secured by a lien or encumbrance prior to the lien of this Mortgage or for the protection of the lien of this Mortgage, together with interest thereon.  This Mortgage secures future advances and shall have lien priority in accordance with New Jersey Statutes Annotated (" N.J.S.A. "), Section 46:9-8.2, all as more particularly set forth in Section 6.26 of this Mortgage.
Section 1.2.   Definitions .
(a)   In addition to other terms defined herein, each of the following terms shall have the meaning assigned to it, such definitions to be applicable equally to the singular and the plural forms of such terms and to all genders (all capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Loan Agreement):
" Administrative Agent " means Sterling National Bank, a national banking association, whose address is 8401 North Central Expressway, Suite 600, Dallas, Texas 75225, together with its successors and assigns in such capacity, each acting hereunder on behalf of the other Lender Parties.
 
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" Debtor Relief Law " means any federal, state or local law, domestic or foreign, as now or hereafter in effect relating to bankruptcy, insolvency, liquidation, receivership, reorganization, arrangement, composition, extension or adjustment of debts, or any similar law affecting the right of creditors.
" Environmental Indemnity " means that certain Environmental Indemnity Agreement executed by Mortgagor to Administrative Agent for the benefit of the Lender Parties.
" Loan " has the meaning set forth in the Recitals above.
" Maturity Date " means December 28, 2019, as the same may be extended pursuant to the terms of the Loan Agreement.
 " Mortgagor " means Blonder Tongue Laboratories, Inc., a Delaware corporation, whose address is One Jake Brown Road, Old Bridge, New Jersey 08857, and its permitted successors and assigns.
 " UCC " means the Uniform Commercial Code of the State of New Jersey, as amended from time to time.
(b)   Any term used or defined in the UCC, as in effect from time to time, and not otherwise defined in this Mortgage has the meaning given to the term in the UCC, as in effect from time to time, when used in this Mortgage.  Any other term used but not defined herein shall have the meaning given to such term in the Loan Agreement.
Section 1.3.   Granting Clause .  In consideration of the provisions of this Mortgage and the sum of TEN DOLLARS ($10.00) cash in hand paid and other good and valuable consideration, the receipt and sufficiency of which are acknowledged by Mortgagor, Mortgagor does hereby MORTGAGE, GRANT, BARGAIN, SELL, CONVEY, TRANSFER, ASSIGN, SET OVER and CONFIRM to Administrative Agent as mortgagee, and its successors and assigns forever, with GENERAL WARRANTY all of the following:  all estate, right, title and interest which Mortgagor now has or may hereafter acquire in and to the following Premises (as defined below), Accessories (as defined below) and other rights, interests and properties described herein, and all rights, estates, powers and privileges appurtenant thereto  (collectively, the " Property "):
(a)   Mortgagor's right, title and interest in and to the real property described in Exhibit A which is attached hereto and incorporated herein by reference (the " Land ") together with (i) any and all buildings, structures, improvements, alterations or appurtenances now or hereafter situated or to be situated on the Land (collectively the " Improvements "); (ii) all rights, estates, powers, privileges and interests of whatever kind or character appurtenant or incident to the foregoing; and (iii) all right, title and interest of Mortgagor, now owned or hereafter acquired, in and to (1) all common area and other use rights, tenements, hereditaments, streets, roads, alleys, easements, rights‑of‑way, licenses, rights of ingress and egress, vehicle parking rights and public places, existing or proposed, abutting, adjacent, used in connection with or pertaining or appurtenant to any of the Land or the Improvements; (2) any strips or gores between the Land and abutting or adjacent properties; and (3) all options to purchase the Land or the Improvements or any portion thereof or interest therein, and any greater estate in the Land or the Improvements; and (4) all water and water rights or shares of stock evidencing water rights, timber, crops and mineral interests on or pertaining to the Land (the Land, Improvements and other rights, titles and interests referred to in this clause (a) being herein sometimes collectively called the " Premises ");
 
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(b)   all fixtures, equipment, systems, machinery, furniture, furnishings, appliances, inventory, goods, building and construction materials, supplies, and articles of personal property, of every kind and character, tangible and intangible (including software embedded therein), now owned or hereafter acquired by Mortgagor, which are now or hereafter attached to or situated in, on or about the Land or the Improvements, or used in or necessary to the complete and proper planning, development, use, occupancy or operation of the Land or the Improvements, or acquired (whether delivered to the Land or stored elsewhere) for use or installation in or on the Land or the Improvements, and all renewals and replacements of, substitutions for and additions to the foregoing (the properties referred to in this clause (b) being herein sometimes collectively called the " Accessories ," all of which are hereby declared to be permanent accessions to the Land);
(c)   all (i) plans and specifications for the Improvements; (ii) Mortgagor's rights, but not liability for any breach by Mortgagor, under all commitments, insurance policies (or additional or supplemental coverage related thereto, including  from an insurance provider meeting the requirements of the Loan Documents or from or through any state or federal government sponsored program or entity), contracts and agreements for the design, construction, operation or inspection of the Improvements and other contracts and general intangibles (including but not limited to payment intangibles, trademarks, trade names, goodwill, software and symbols) related to the Premises or the Accessories or the operation thereof; (iii) deposits and deposit accounts arising from or related to any transactions related to the Premises or the Accessories (including but not limited to Mortgagor's rights in deposits with respect to utility services to the Premises, and any deposits, deposit accounts or reserves hereunder or under any other Loan Documents (hereinafter defined) for taxes, insurance or otherwise), rebates or refunds of impact fees or other taxes, assessments or charges, money, accounts, instruments, documents, promissory notes and chattel paper (whether tangible or electronic) arising from or by virtue of any transactions related to the Premises or the Accessories, and any securities account or deposit account (including, without limitation, reserve accounts and escrow accounts) from which Mortgagor may from time to time authorize Administrative Agent to debit and/or credit payments due with respect to the Loan; (iv) permits, licenses, franchises, certificates, development rights, commitments and rights for utilities, and other rights and privileges obtained in connection with the Premises or the Accessories; (v) leases, rents, royalties, bonuses, issues, profits, revenues and other benefits of the Premises and the Accessories (without derogation of Article 3 hereof); (vi) as-extracted collateral produced from or allocated to the Land including, without limitation, oil, gas and other hydrocarbons and other minerals and all products processed or obtained therefrom, and the proceeds thereof; and (vii) engineering, accounting, title, legal, and other technical or business data concerning the Property, including software, which are in the possession of Mortgagor or in which Mortgagor can otherwise grant a security interest;
 
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(d)   all (i) accounts and proceeds (cash or non-cash and including payment intangibles) of or arising from the properties, rights, titles and interests referred to above in this Section 1.3 , including but not limited to proceeds of any sale, lease or other disposition thereof, proceeds of each policy of insurance (or additional or supplemental coverage related thereto, including  from an insurance provider meeting the requirements of the Loan Documents or from or through any state or federal government sponsored program or entity) relating thereto (including premium refunds), proceeds of the taking thereof or of any rights appurtenant thereto, including change of grade of streets, curb cuts or other rights of access, by condemnation, eminent domain or transfer in lieu thereof for public or quasi‑public use under any law, and proceeds arising out of any damage thereto; (ii) all letter-of-credit rights (whether or not the letter of credit is evidenced by a writing) Mortgagor now has or hereafter acquires relating to the properties, rights, titles and interests referred to in this Section 1.3 ; (iii) all commercial tort claims Mortgagor now has or hereafter acquires relating to the properties, rights, titles and interests referred to in this Section 1.3 ; and (iv) other interests of every kind and character which Mortgagor now has or hereafter acquires in, to or for the benefit of the properties, rights, titles and interests referred to above in this Section 1.3 and all property used or useful in connection therewith, including but not limited to rights of ingress and egress and remainders, reversions and reversionary rights or interests; and if the estate of Mortgagor in any of the property referred to above in this Section 1.3 is a leasehold estate, this conveyance shall include, and the lien and security interest created hereby shall encumber and extend to, all other or additional title, estates, interests or rights which are now owned or may hereafter be acquired by Mortgagor in or to the property demised under the lease creating the leasehold estate;
TO HAVE AND TO HOLD the foregoing rights, interests and properties, and all rights, estates, powers and privileges appurtenant thereto (herein collectively called the " Property "), unto Administrative Agent, and to its successors and assigns, forever, subject to the terms, provisions and conditions herein set forth, to secure the Secured Indebtedness (as hereinafter defined).
Section 1.4.   Security Interest .  Mortgagor hereby grants to Administrative Agent a security interest in all of the Property which constitutes personal property or fixtures to the extent the same does not constitute Excluded Property, all proceeds and products thereof, and all supporting obligations ancillary to or arising in any way in connection therewith (herein sometimes collectively called the " Collateral ") to secure the obligations of Mortgagor under the Loan Agreement and all other indebtedness and matters defined as Secured Indebtedness in Section 1.5 of this Mortgage.  In addition to its rights hereunder or otherwise, Administrative Agent shall have all of the rights of a secured party under the UCC, as in effect from time to time, or under the Uniform Commercial Code in force, from time to time, in any other state to the extent the same is applicable law.
 
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Section 1.5.   Secured Indebtedness, Loan Documents, Other Obligations .  This Mortgage is made to secure and enforce the payment and performance of the following obligations, indebtedness, duties and liabilities, and all renewals, extensions, supplements, increases, and modifications thereof in whole or in part from time to time (collectively the " Secured Indebtedness "): all indebtedness, liabilities, duties, covenants, promises and other obligations, whether joint or several, direct or indirect, fixed or contingent (other than contingent indemnification obligations to the extent that no claim giving rise thereto has been asserted), liquidated or unliquidated, and the cost of collection of all such amounts, now or hereafter incurred or arising under or pursuant to the Loan Agreement, this Mortgage, or any other document, instrument or agreement now or hereafter evidencing, governing, guaranteeing, or securing the Loan or otherwise executed by Mortgagor, any other Borrower or any other Credit Party, for the benefit of any of the Lender Parties in connection with the Loan, including but not limited to the Loan Agreement, this Mortgage, and the Environmental Indemnity, as they or any of them may have been or may be from time to time renewed, extended, supplemented, increased or modified, being herein sometimes collectively called the " Loan Documents ").
ARTICLE 2
Representations, Warranties and Covenants
Section 2.1.   Mortgagor represents, warrants, and covenants as follows (with respect to representations and warranties, except as otherwise disclosed to Administrative Agent in writing):
(a)   (a)   Payment and Performance .  Mortgagor will make due and punctual payment of the Secured Indebtedness.  Mortgagor will timely and properly perform and comply with all of the covenants, agreements, and conditions imposed upon it by this Mortgage and the other Loan Documents and will not permit a Default or Event of Default to occur hereunder or thereunder.
(b)   Title and Permitted Encumbrances .  Mortgagor has, in Mortgagor's own right, and Mortgagor covenants to maintain, lawful, good and indefeasible title to the Property, is lawfully seized and possessed of the Property and every part thereof, and has the right to convey the same, free and clear of all Liens other than Permitted Liens.  Mortgagor will warrant generally and forever defend title to the Property, subject as aforesaid, to Administrative Agent and its successors or substitutes and assigns, against the claims and demands of all persons claiming or to claim the same or any part thereof other than holders of Permitted Liens.  Mortgagor will, prior to delinquency, punctually pay, perform, observe and keep all covenants, obligations and conditions in or pursuant to any Permitted Lien and will not modify or permit modification of any Permitted Lien without the prior written consent of Administrative Agent (unless, as modified, the same continue to constitute Permitted Liens).  Inclusion of any matter as a Permitted Lien does not constitute approval or waiver by Administrative Agent of any existing or future violation or other breach thereof by Mortgagor, by the Property or otherwise.  If any right or interest of Administrative Agent in the Property or any part thereof shall be endangered or questioned or shall be attacked directly or indirectly, Administrative Agent (whether or not named as a party to legal proceedings with respect thereto), is hereby authorized and empowered to take such steps as in its Permitted Discretion may be proper for the defense of any such legal proceedings or the protection of such right or interest of Administrative Agent, including but not limited to the employment of independent counsel, the prosecution or defense of litigation, and the compromise or discharge of adverse claims.  All expenditures so made of every kind and character shall be a demand obligation (which obligation Mortgagor hereby promises to pay), and the party (Administrative Agent) making such expenditures shall be subrogated to all rights of the person receiving such payment.
 
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(c)   Taxes and Other Impositions .  Subject to Section 7.10 of the Loan Agreement, Mortgagor will pay, or cause to be paid, all taxes, assessments and other charges or levies imposed upon or against or with respect to the Property or the ownership, use, occupancy or enjoyment of any portion thereof, or any utility service thereto, prior to delinquency, including but not limited to all real estate taxes assessed against the Property or any part thereof; and shall deliver to Administrative Agent, within fifteen (15) days after request by Administrative Agent, such evidence of the payment thereof as Administrative Agent may require.
(d)   Insurance .  Mortgagor shall obtain and maintain at Mortgagor's sole expense: (1) property insurance with respect to all insurable Property, against loss or damage by fire, lightning, windstorm, explosion, hail, tornado and such additional hazards as are presently included in Special Form (also known as "all‑risk") coverage and against such other insurable hazards as Administrative Agent may require, in an amount not less than 100% of the full replacement cost, including the cost of debris removal, without deduction for depreciation and sufficient to prevent Mortgagor and Administrative Agent from becoming a coinsurer, such insurance to be in "builder's risk" completed value(non‑reporting) form during and with respect to any construction on the Premises; (2) if and to the extent any portion of the Improvements is, located totally or partially in (A) an area identified as an area having special flood hazards on the currently effective Flood Insurance Rate Map or Flood Hazard Boundary Map published by the Federal Insurance Administration and/or Federal Emergency Management Administration, (b) a community affected by the Coastal Barrier Resource Act (COBRA), or (c) an area which has been designated as a flood plain under the provisions of the Flood Hazard Area Control Act, N.J.S.A. 58:16A-50 et seq ., a flood insurance policy in an amount required by Administrative Agent, but in no event less than the amount sufficient to meet the requirements of applicable law and the Flood Disaster Protection Act of 1973, as such requirements may from time to time be in effect; (3) general liability insurance, on an "occurrence" basis against claims for "personal injury" liability, including bodily injury, death or property damage liability, for the benefit of Mortgagor as named insured and Administrative Agent as additional insured; (4) statutory workers' compensation
 
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insurance with respect to any work on or about the Premises (including employer's liability insurance, if required by Administrative Agent), covering all employees of Mortgagor and any contractor; (5) if there is a general contractor, commercial general liability insurance, including products and completed operations coverage, and in other respects similar to that described in clause (3) above, for the benefit of the general contractor as named insured and Mortgagor and Administrative Agent as additional insureds, in addition to statutory workers' compensation insurance with respect to any work on or about the Premises (including employer's liability insurance, if required by Administrative Agent), covering all employees of the general contractor and any contractor; and (6) such other insurance on the Property and endorsements as may from time to time be reasonably required by Administrative Agent and against other insurable hazards or casualties which at the time are commonly insured against in the case of premises similarly situated, due regard being given to the height, type, construction, location, use and occupancy of buildings and improvements.  All insurance policies shall be issued and maintained by insurers, in amounts, with deductibles, limits and retentions, and in forms reasonably satisfactory to Administrative Agent, and shall require not less than ten (10) days' prior written notice to Administrative Agent of any cancellation for nonpayment of premiums, and not less than thirty (30) days' prior written notice to Administrative Agent of any other cancellation or any change of coverage. All insurance companies must be licensed to do business in the state in which the Property is located and must have an A. M. Best Company financial and performance ratings of A-:IX or better.  All insurance policies maintained, or caused to be maintained, by Mortgagor with respect to the Property, except for general liability insurance, shall provide that each such policy shall be primary without right of contribution from any other insurance that may be carried by Mortgagor or Administrative Agent and that all of the provisions thereof, except the limits of liability, shall operate in the same manner as if there were a separate policy covering each insured.  If any insurer which has issued a policy of title, hazard, liability or other insurance required pursuant to this Mortgage or any other Loan Document becomes insolvent or the subject of any petition, case, proceeding or other action pursuant to any Debtor Relief Law, or if in Administrative Agent's reasonable opinion the financial responsibility of such insurer is or becomes inadequate, Mortgagor shall, in each instance promptly upon its discovery thereof or upon the request of Administrative Agent therefor, and at Mortgagor's expense, promptly obtain and deliver to Administrative Agent a like policy (or, if and to the extent permitted by Administrative Agent, acceptable evidence of insurance) issued by another insurer, which insurer and policy meet the requirements of this Mortgage or such other Loan Document, as the case may be.  Without limiting the discretion of Administrative Agent with respect to required endorsements to insurance policies, all such policies for loss of or damage to the Property shall contain a standard mortgagee clause (without contribution) naming Administrative Agent as mortgagee with loss proceeds payable to Administrative Agent notwithstanding (i) any act, failure to act or negligence of or violation of any warranty, declaration or condition contained in any such policy by any named or additional
 
 
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insured; (ii) the occupation or use of the Property for purposes more hazardous than permitted by the terms of any such policy; (iii) any foreclosure or other action by Administrative Agent under the Loan Documents; or (iv) any change in title to or ownership of the Property or any portion thereof, such proceeds to be held for application as provided in the Loan Documents.  Certificates (or other evidence) of each initial insurance policy shall be delivered to Administrative Agent at the time of execution of this Mortgage, with all premiums fully paid current, and each renewal or substitute policy (or evidence of insurance) shall be delivered to Administrative Agent, with all premiums fully paid current, at least ten (10) days before the termination of the policy it renews or replaces.  Mortgagor shall pay all premiums on policies required hereunder as they become due and payable and promptly deliver to Administrative Agent evidence satisfactory to Administrative Agent of the timely payment thereof.  If any loss occurs at any time when Mortgagor has failed to perform Mortgagor's covenants and agreements in this paragraph with respect to any insurance payable because of loss sustained to any part of the Property, whether or not such insurance is required by Administrative Agent, Administrative Agent shall nevertheless be entitled to the benefit of all insurance covering the loss and held by or for Mortgagor, to the same extent as if it had been made payable to Administrative Agent.  Upon any foreclosure hereof or transfer of title to the Property in extinguishment of the whole or any part of the Secured Indebtedness, all of Mortgagor's right, title and interest in and to the insurance policies referred to in this Section (including unearned premiums) and all proceeds payable thereunder shall thereupon vest in the purchaser at foreclosure or other such transferee, to the extent permissible under such policies.  Administrative Agent shall have the right (but not the obligation) to make proof of loss for, settle and adjust any claim under, and receive the proceeds of, all insurance for loss of or damage to the Property regardless of whether or not such insurance policies are required by Administrative Agent, and the expenses incurred by Administrative Agent in the adjustment and collection of insurance proceeds shall be a part of the Secured Indebtedness and shall be due and payable to Administrative Agent on demand.  Administrative Agent shall not be, under any circumstances, liable or responsible for failure to collect or exercise diligence in the collection of any of such proceeds or for the obtaining, maintaining or adequacy of any insurance or for failure to see to the proper application of any amount paid over to Mortgagor.  Subject to Section 8.11 of the Loan Agreement, any such proceeds received by Administrative Agent shall, after deduction therefrom of all reasonable and documented expenses actually incurred by Administrative Agent, including reasonable and documented attorneys' fees, at Administrative Agent's option be (1) released to Mortgagor, or (2) applied (upon compliance with such terms and conditions as may be required by Administrative Agent) to repair or restoration, either partly or entirely, of the Property so damaged, or (3) applied to the payment of the Secured Indebtedness in such order and manner as Administrative Agent, in its sole discretion, may elect, whether or not due.  In any event, the unpaid portion of the Secured Indebtedness shall remain in full force and effect and the payment thereof shall not be excused.  Mortgagor shall at all times comply with the requirements of the insurance policies required hereunder and of the issuers of such policies and of any board of fire underwriters or similar body as applicable to or affecting the Property.
 
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(e)   Reserve for Insurance, Taxes and Assessments .  Upon the request of Administrative Agent following the occurrence of an Event of Default (as defined below) which is then continuing, to secure the payment and performance of the Secured Indebtedness, but not in lieu of such payment and performance, Mortgagor will deposit with Administrative Agent a sum equal to real estate taxes, assessments and charges (which charges for the purposes of this paragraph shall include without limitation any recurring charge which could result in a lien against the Property) against the Property for the current year and the premiums for such policies of insurance for the current year, all as estimated by Administrative Agent and prorated to the end of the calendar month following the month during which Administrative Agent's request is made, and thereafter will deposit with Administrative Agent, on each date when an installment of principal and/or interest is as required in the Loan Agreement, sufficient funds (as estimated from time to time by Administrative Agent) to permit Administrative Agent to pay at least fifteen (15) days prior to the due date thereof, the next maturing real estate taxes, assessments and charges and premiums for such policies of insurance.  Administrative Agent shall have the right to rely upon tax information furnished by applicable taxing authorities in the payment of such taxes or assessments and shall have no obligation to make any protest of any such taxes or assessments.  To the extent permitted by Applicable Law, any excess over the amounts required for such purposes shall be held by Administrative Agent for future use, applied to any Secured Indebtedness or refunded to Mortgagor, at Administrative Agent's option, and any deficiency in such funds so deposited shall be made up by Mortgagor upon demand of Administrative Agent.  All such funds so deposited shall bear no interest, may be comingled with the general funds of Administrative Agent and shall be applied by Administrative Agent toward the payment of such taxes, assessments, charges and premiums when statements therefor are presented to Administrative Agent by Mortgagor (which statements shall be presented by Mortgagor to Administrative Agent a reasonable time before the applicable amount is due); provided, however, that, if an Event of Default shall have occurred hereunder, such funds may at Administrative Agent's option be applied to the payment of the Secured Indebtedness in the order determined by Administrative Agent in its sole discretion, and that Administrative Agent may (but shall have no obligation) at any time, in its discretion, apply all or any part of such funds toward the payment of any such taxes, assessments, charges or premiums which are past due, together with any penalties or late charges with respect thereto.  The conveyance or transfer of Mortgagor's interest in the Property for any reason (including without limitation the foreclosure of a subordinate lien or security interest or a transfer by operation of law) shall constitute an assignment or transfer of Mortgagor's interest in and rights to such funds held by Administrative Agent under this paragraph but subject to the rights of Administrative Agent hereunder.
(f)   Condemnation .  Mortgagor shall notify Administrative Agent immediately upon obtaining knowledge thereof, of any threatened or pending proceeding for condemnation affecting the Property or arising out of damage to the Property, and Mortgagor shall, at Mortgagor's expense, diligently prosecute any such proceedings.  Administrative Agent shall have the right (but not the obligation) to participate in any such proceeding and to be represented by counsel of its own choice.  Administrative Agent shall be entitled to receive all sums which may be awarded or become payable to Mortgagor for the condemnation of the Property, or any part thereof, for public or quasi‑public use, or by virtue of private sale in lieu thereof, and any sums which may be awarded or become payable to Mortgagor for injury or damage to the Property.  Mortgagor shall, promptly upon request of Administrative Agent, execute such additional assignments and other documents as may be necessary from time to time to permit such participation and to enable Administrative Agent to collect and receipt for any such sums.  All such sums are hereby assigned to Administrative Agent, and shall, after deduction therefrom of all reasonable expenses actually incurred by Administrative Agent, including reasonable and documented attorneys' fees, at Administrative Agent's option be (1) released to Mortgagor, or (2) applied (upon compliance with such terms and conditions as may be required by Administrative Agent) to repair or restoration of the Property so affected, or (3) applied to the payment of the Secured Indebtedness in such order and manner as provided in Section 4.7 of the Loan Agreement, whether or not due.  In any event the unpaid portion of the Secured Indebtedness shall remain in full force and effect and the payment thereof shall not be excused.  Administrative Agent shall not be, under any circumstances, liable or responsible for failure to collect or to exercise diligence in the collection of any such sum or for failure to see to the proper application of any amount paid over to Mortgagor.  Administrative Agent is hereby authorized, in the name of Mortgagor, to execute and deliver valid acquittances for, and to appeal from, any such award, judgment or decree.  All costs and expenses (including but not limited to attorneys' fees) incurred by Administrative Agent in connection with any condemnation shall be a demand obligation owing by Mortgagor (which Mortgagor hereby promises to pay) to Administrative Agent pursuant to this Mortgage.
 
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(g)   Compliance with Legal Requirements .  The Mortgagor, the Property and the use, operation and maintenance thereof and all activities thereon do and shall at all times comply with the terms, conditions, covenants, representations and warranties of the Loan Agreement and, except where such failure to comply could not reasonably be expected to have a Material Adverse Effect, all applicable Legal Requirements (hereinafter defined).  The Property is not, and shall not be, dependent on any other property or premises or any interest therein other than the Property to fulfill any requirement of any Legal Requirement.  Mortgagor shall not, by act or omission, permit any building or other improvement not subject to the lien of this Mortgage to rely on the Property or any interest therein to fulfill any requirement of any Legal Requirement.  No improvement upon or use of any part of the Property constitutes a nonconforming use under any zoning law or similar law or ordinance.  Mortgagor has obtained and shall preserve in force all requisite zoning, utility, building, health, environmental and operating permits, including, without limitation, certificates of occupancy (if required), from the governmental authorities having jurisdiction over the Property.  The absence of or failure to obtain and maintain any certificate of occupancy does not constitute a violation of any Applicable Law to the extent that any such violation would reasonably be expected to have a Material Adverse Effect.
If Mortgagor receives a notice or claim from any person that the Property, or any use, activity, operation or maintenance thereof or thereon, is not in compliance with any Legal Requirement, Mortgagor will promptly furnish a copy of such notice or claim to Administrative Agent.  Mortgagor has received no notice and has no knowledge of any such noncompliance.  As used in this Mortgage, the term " Legal Requirement " means any Applicable Law, and any other agreement, covenant, restriction, easement or condition (including, without limitation of the foregoing, any condition or requirement imposed by any insurance or surety company), as any of the same now exists or may be changed or amended or come into effect in the future.
 
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(h)   Maintenance, Repair and Restoration .  Mortgagor will keep the Property in good working order and repair, operating condition and appearance, ordinary wear and tear excepted, causing all necessary repairs, renewals, replacements, additions and improvements to be promptly made, and will not allow any of the Property to be misused, abused or wasted or to deteriorate.  Notwithstanding the foregoing, Mortgagor will not, without the prior written consent of Administrative Agent or as otherwise expressly permitted in the Loan Agreement, (i) remove from the Property any fixtures or personal property covered by this Mortgage except such as is replaced by Mortgagor by an article of equal suitability and value, owned by Mortgagor, free and clear of any lien or security interest (except that created by this Mortgage and Permitted Liens), or (ii) make any structural alteration to the Property or any other alteration thereto which materially impairs the value thereof.  If any act or occurrence of any kind or nature (including any condemnation or any casualty for which insurance was not obtained or obtainable) shall result in damage to or loss or destruction of the Property, Mortgagor shall give prompt notice thereof to Administrative Agent and Mortgagor shall promptly, at Mortgagor's sole cost and expense and regardless of whether insurance or condemnation proceeds (if any) shall be available or sufficient for the purpose, secure the Property as necessary and commence and continue diligently to completion to restore, repair, replace and rebuild the Property as nearly as possible to its value, condition and character immediately prior to the damage, loss or destruction.
(i)   No Other Liens .  Mortgagor will not, without the prior written consent of Administrative Agent, create, place or permit to be created or placed, or through any act or failure to act, acquiesce in the placing of, or allow to remain, any Lien against or covering the Property, or any part thereof, other than the Permitted Liens, regardless of whether the same are expressly or otherwise subordinate to the Lien created by this Mortgage, and should any Lien (other than Permitted Liens) become attached hereafter in any manner to any part of the Property without the prior written consent of Administrative Agent, Mortgagor will cause the same to be promptly discharged and released.  Mortgagor will own all parts of the Property and, except as permitted under the Loan Agreement, will not acquire any fixtures, equipment or other property (including software embedded therein) forming a part of the Property pursuant to a lease, license, security agreement or similar agreement, whereby any party has or may obtain the right to repossess or remove same, without the prior written consent of Administrative Agent.
(j)   Further Assurances .  Mortgagor will, within a reasonable period of time following  request of Administrative Agent, (i) correct any defect, error or omission which may be discovered in the contents, execution or acknowledgment of this Mortgage or any other Loan Document; (ii) execute, acknowledge, deliver, procure and record and/or file such further documents (including, without limitation, further mortgages, deeds of trust, security agreements, and assignments of rents or leases) and do such further acts as may be necessary, desirable or proper to carry out more effectively the purposes of this Mortgage, to more fully identify and subject to the liens and security interests hereof any property intended to be covered hereby (including specifically, but without limitation, any renewals, additions, substitutions, replacements, or appurtenances to the Property) or as deemed advisable by Administrative Agent in its commercially reasonable judgment to protect the lien or the security interest hereunder against the rights or interests of third persons; and (iii) use best efforts to provide such certificates, documents, reports, information, affidavits and other instruments and do such further acts as may be necessary, desirable or proper in the reasonable determination of Administrative Agent to enable Administrative Agent to comply with the requirements or requests of any agency having jurisdiction over Administrative Agent or any examiners of such agencies with respect to the Secured Indebtedness, Mortgagor or the Property.  Mortgagor shall pay all costs connected with any of the foregoing, which shall be a demand obligation owing by Mortgagor (which Mortgagor hereby promises to pay) to Administrative Agent pursuant to this Mortgage.
 
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(k)   Indemnification.
(i)   Mortgagor will indemnify and hold harmless the Lender Parties from and against, and reimburse them on demand for, any and all Indemnified Matters (hereinafter defined).  For purposes of this subparagraph (i), the term " Administrative Agent " shall include Administrative Agent and any persons owned or controlled by, owning or controlling, or under common control or affiliated with Administrative Agent and the directors, officers, partners, employees, attorneys, agents and representatives of each of them.  WITHOUT LIMITATION, THE FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO MATTERS WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF, OR ARE CLAIMED TO BE CAUSED BY OR ARISE OUT OF, THE NEGLIGENCE (WHETHER SOLE, COMPARATIVE OR CONTRIBUTORY) OR STRICT LIABILITY OF SUCH (AND/OR ANY OTHER) INDEMNIFIED PERSON.  HOWEVER, SUCH INDEMNITIES SHALL NOT APPLY TO A PARTICULAR INDEMNIFIED PERSON TO THE EXTENT THAT THE SUBJECT OF THE INDEMNIFICATION IS CAUSED BY OR ARISES OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THAT INDEMNIFIED PERSON OR TO THE EXTENT THAT SUCH MATTERS FIRST AROSE SOLELY AFTER ADMINISTRATIVE AGENT ASSUMED EXCLUSIVE POSSESSION OR OWNERSHIP OF THE PROPERTY.   Any amount to be paid under this paragraph (k) by Mortgagor to the Lender Parties shall be a demand obligation owing by Mortgagor (which Mortgagor hereby promises to pay) to the Lender Parties pursuant to this Mortgage.  Upon demand by Administrative Agent, Mortgagor shall diligently defend any Indemnified Matter which affects the Property or is made or commenced against the Lender Parties, whether alone or together with Mortgagor or any other person, all at Mortgagor's own cost and expense and by counsel to be approved by Administrative Agent in the exercise of its Permitted Discretion.  In the alternative, at any time Administrative Agent may elect to conduct its own defense through counsel selected by Administrative Agent and at the cost and expense of Mortgagor.  Nothing in this paragraph, elsewhere in this Mortgage or in any other Loan Document shall limit or impair any rights or remedies of the Lender Parties (including without limitation any rights of contribution or indemnification) against Mortgagor or any other person under any other provision of this Mortgage, any other Loan Document, any other agreement or any applicable Legal Requirement.
 
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(ii)   For purposes of this subparagraph (ii), the term " Lender Parties " shall include the Lender Parties and the directors, officers, partners, employees and agents of each of the Lender Parties, respectively, and any persons owned or controlled by, owning or controlling, or under common control or affiliated with the Lender Parties, respectively As used herein, the term " Indemnified Matters " means any and all claims, demands, liabilities (including strict liability), losses, damages (including consequential damages), causes of action, judgments, penalties, fines, costs and expenses (including without limitation, reasonable and documented fees and expenses of attorneys and other professional consultants and experts, and of the investigation and defense of any claim, whether or not such claim is ultimately withdrawn or defeated, and the settlement of any claim or judgment including all value paid or given in settlement) of every kind, known or unknown, foreseeable or unforeseeable, which may be imposed upon, asserted against or incurred or paid by any of the Lender Parties at any time and from time to time, whenever imposed, asserted or incurred, because of, resulting from, in connection with, or arising out of any transaction, act, omission, event or circumstance in any way connected with the Property or with this Mortgage or any other Loan Document, including but not limited to any bodily injury or death or property damage occurring in or upon or in the vicinity of the Property through any cause whatsoever at any time on or before the Release Date (hereinafter defined), any act performed or omitted to be performed hereunder or under any other Loan Document, any breach by Mortgagor of any representation, warranty, covenant, agreement or condition contained in this Mortgage or in any other Loan Document, any Default or Event of Default as defined herein, and any claim under or with respect to any Lease; provided, however, for the avoidance of doubt, "Indemnified Matters" shall not include any of the foregoing to the extent the same arises or results from the gross negligence or willful misconduct of any Lender Party.  The term " Release Date " as used herein means the earlier of the following two dates:  (i) the date on which the Secured Indebtedness (other than contingent indemnification claims) has been paid and performed in full and the commitment of the Lender to make Loans under the Loan Agreement has been terminated; or (ii) the date on which the lien of the Mortgage is fully and finally foreclosed or a conveyance by deed in lieu of such foreclosure is fully and finally effective and possession of the Property has been given to and accepted by the purchaser or grantee free of occupancy and claims to occupancy by Mortgagor and their heirs, devisees, representatives, successors and assigns; provided that, if such payment, performance, release, foreclosure or conveyance is challenged, in bankruptcy proceedings or otherwise, the Release Date shall be deemed not to have occurred until such challenge is validly released, dismissed with prejudice or otherwise barred by law from further assertion.  The indemnities in this paragraph (k) shall not terminate upon the Release Date or upon the release, foreclosure or other termination of this Mortgage but will survive the Release Date, foreclosure of this Mortgage or conveyance in lieu of foreclosure, the repayment of the Secured Indebtedness, the discharge and release of this Mortgage and the other Loan Documents, any bankruptcy or other debtor relief proceeding, and any other event whatsoever.
 
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(l)   Operation of Property .  Mortgagor will operate the Property in a good and workmanlike manner and in accordance in all material respects with all Legal Requirements and, subject to Section 8.12 of the Loan Agreement, will pay all fees or charges of any kind in connection therewith.  Mortgagor will keep the Property occupied so as not to impair the insurance carried thereon.  Mortgagor will not use or occupy or conduct any activity on, or allow the use or occupancy of or the conduct of any activity on, the Property in any manner which violates in any material respect any Legal Requirement or which constitutes a public or private nuisance or which makes void, voidable or cancelable, or increases the premium of, any insurance then in force with respect thereto.  Mortgagor will not initiate or consent to any zoning reclassification of the Property or seek any variance under existing zoning ordinances applicable to the Property or use or permit the use of the Property in such a manner which would result in such use becoming a nonconforming use under applicable zoning ordinances or other Legal Requirement.  Mortgagor will not impose any easement, restrictive covenant or encumbrance upon the Property, execute or file any subdivision plat or condominium declaration affecting the Property or consent to the annexation of the Property to any municipality, without the prior written consent of Administrative Agent and except for Permitted Liens.  Mortgagor will not do or suffer to be done any act whereby the value of any part of the Property may be lessened in any material respect (it being understood and agreed that this covenant shall not include general market fluctuations).  Mortgagor will preserve, protect, renew, extend and retain all material rights and privileges granted for or applicable to the Property.  Without the prior written consent of Administrative Agent, there shall be no drilling or exploration for or extraction, removal or production of any mineral, hydrocarbon, gas, natural element, compound or substance (including sand and gravel) from the surface or subsurface of the Land regardless of the depth thereof or the method of mining or extraction thereof.  Mortgagor will cause all debts and liabilities of any character (including without limitation all debts and liabilities for labor, material and equipment (including software embedded therein) and all debts and charges for utilities servicing the Property) incurred in the construction, maintenance, operation and development of the Property to be promptly paid.
(m)   Environmental Issues .  The Mortgagor hereby further represents, warrants, and covenants that, except as expressly disclosed in that certain Phase I Environmental Site Assessment dated November 21, 2016, prepared by Pennoni Associates Inc.:
(i)   None of the real property owned and/or occupied by the Mortgagor and located in the State of New Jersey, including, without limitation, the Property, has ever been used by previous owners and/or operators of such real property to refine, produce, store, handle, transfer, process or transport "Hazardous Substances" or "Hazardous Wastes" (as such terms are defined in the Applicable Environmental Laws) unless in de minimis quantities in compliance with Applicable Environmental Laws and the Mortgagor has not used in the past, nor does the Mortgagor intend to use in the future, any such real property, including, without limitation, the Property, for the purposes of refining, producing, storing, handling, transferring, processing, or transporting said Hazardous Substances or Hazardous Wastes other than in de minimis quantities in compliance with Applicable Environmental Laws.
 
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(ii)   None of the real property owned and/or occupied by the Mortgagor and located in the State of New Jersey, including, without limitation, the Property, has been or is now being used as a "Major Facility" (as such term is defined in N.J.S.A. 58:10-23.11b(l)), and none of said real property, including, but not limited to, the Property, will be used in the future as a Major Facility.
(iii)   Should the Mortgagor, any tenant of the Property or any other Person cause or permit any intentional or unintentional action or omission resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of Hazardous Substances or Hazardous Waste into the waters or onto the lands in the State of New Jersey, or into the waters outside the jurisdiction of the State of New Jersey resulting in damage to the lands, waters, fish, shellfish, wildlife, biota, air, or other resources owned, managed or held in trust or otherwise controlled by the State of New Jersey, without having obtained a permit issued by the appropriate governmental authorities, the Mortgagor shall promptly clean up such spill, leak, etc., in accordance with Applicable Environmental Laws.
(iv)   No lien has been attached to any revenues or any real or any personal property owned by the Mortgagor and located in the State of New Jersey, including, without limitation, the Property, as a result of the administrator of the New Jersey Spill Compensation Fund expending monies from said fund to pay for "Damages" (as such term is defined in N.J.S.A. 58:10-23.11g) and/or "Clean up and Removal Costs" (as such term is defined in N.J.S.A. 58:10-23.11b (d)), arising from an intentional or unintentional action or omission by the Mortgagor or any previous owner and/or operator of said real property resulting in the releasing, spilling, pumping, pouring, emitting, emptying or dumping of Hazardous Substances or Hazardous Wastes into the waters of the State of New Jersey or onto land from which it might flow or drain into said waters or into waters outside the jurisdiction of the State of New Jersey where damage may have resulted to the lands, waters, fish, shellfish, wildlife, biota, air and other resources owned, managed, held in trust or otherwise controlled by the State of New Jersey.
(v)   If applicable, the Mortgagor has furnished the New Jersey Department of Environmental Protection with all the information required by N.J.S.A. 58:10-23.11d with respect to the Property and any other real property owned and/or operated by the Mortgagor and located in the State of New Jersey which is used as a Major Facility.
(vi)   The Mortgagor is not in receipt of any summons, citation, directive, letter, or other communication, written or oral, from the New Jersey Department of Environmental Protection concerning any intentional or unintentional action or omission on the Mortgagor's part resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of Hazardous Substances or Hazardous Wastes into the waters or onto the lands of the State of New Jersey, or into the waters outside the jurisdiction of the State of New Jersey resulting in damage to the land, waters, fish, shellfish, wildlife, biota, air, and/or other resources owned, managed, held in trust or otherwise controlled by the State of New Jersey, which has not been withdrawn or complied with.
 
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(vii)   In connection with any purchase of the Property or any other real property acquired by the Mortgagor on or after January 1, 1984, to the best of the Mortgagor's knowledge, the Mortgagor required that the seller of said real property, including the Property, comply with the applicable provisions of the New Jersey Industrial Site Recovery Act, formerly known as the Environmental Cleanup Responsibility Act, (N.J.S.A. 13:1K-6 et seq .), as amended, and the seller did comply therewith.
(viii)   The Mortgagor shall not cause or permit to exist, as a result of an intentional or unintentional action or omission on its part, a releasing, spilling, leaking, pumping, emitting, pouring, emptying, or dumping of a Hazardous Substance or Hazardous Waste into waters of the State of New Jersey or onto the lands from which it might flow or drain into said waters, or into waters outside the jurisdiction of the State of New Jersey where damage may result to the lands, waters, fish, shellfish, wildlife, biota, air, and/or other resources owned, managed, held in trust or otherwise controlled by the State of New Jersey, unless said release, spill, leak, etc., is pursuant to and in compliance with the conditions of a permit issued by the appropriate Federal or state governmental authorities.
(ix)   So long as the Mortgagor shall own or operate any real property located in the State of New Jersey which is used as a Major Facility, the Mortgagor shall duly file or cause to be duly filed with the Director or the Division of Taxation in the New Jersey Department of the Treasury, a tax report or return and shall pay or make provision in accordance with and pursuant to N.J.S.A. 58:10-23.11h.
(x)   In the event that there shall be filed a lien against the Property by the New Jersey Department of Environmental Protection pursuant to and in accordance with the provisions of N.J.S.A. 58:10-23.11(f), as a result of the administrator of the New Jersey Spill Compensation Fund having expended monies from said fund to pay for "Damages" (as such term is defined in N.J.S.A. 58:10-23.11g), and/or "Cleanup and Removal Costs" (as such term is defined in N.J.S.A. 58:10-23.11b(d)), arising from an intentional or unintentional action or omission of the Mortgagor, resulting in the releasing, spilling, pumping, pouring, emitting, emptying or dumping of Hazardous Substances or Hazardous Wastes into the waters of the State of New Jersey or onto lands from which it might flow or drain into said waters, the Mortgagor shall, within forty-five (45) days from the date that any Mortgagor is given notice that the lien has been placed against the Property or within such shorter period of time in the event that the State of New Jersey has commenced steps to cause the Property to be sold pursuant to the lien, either (a) pay the claim and remove the lien from the Property or (b) furnish (1) a bond reasonably satisfactory to First American Title Insurance Company and the Administrative Agent in the amount of the claim out of which the lien arises, (2) a cash deposit in the amount of the claim out of which the lien arises, or (3) other security reasonably satisfactory to the Administrative Agent in an amount sufficient to discharge the claim out of which the lien arises.
 
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(xi)   The Mortgagor hereby agrees that in the event the provisions of the New Jersey Industrial Site Recovery Act (N.J.S.A. 13:1K-6 et seq .) become applicable to all or any portion of the Property subsequent to the date hereof, the Mortgagor shall give prompt written notice thereof to the Administrative Agent and shall take prompt requisite action to insure full compliance with the Act.
(xii)   Should the Mortgagor cause or permit any intentional or unintentional action or omission resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying, or dumping of Hazardous Substances or Hazardous Wastes into the waters or onto the lands in the State of New Jersey, or into the waters outside the jurisdiction of the State of New Jersey resulting in damage to the lands, waters, fish, shellfish, wildlife, biota, air, and/or other resources owned, managed, held in trust or otherwise controlled by the State of New Jersey, without having obtained a permit issued by the appropriate governmental authorities, the Mortgagor shall promptly clean up such spill, leak, etc. in accordance with the provisions of the New Jersey Spill Compensation and Control Act.
(xiii)   Subject to the terms and conditions of the Environmental Indemnity, the Mortgagor hereby agrees that the Administrative Agent shall have the right to conduct or have conducted by its agents or contractors, such environmental inspections as the Administrative Agent shall deem necessary or advisable from time to time, if the Administrative Agent, in good faith, has reason to believe that a discharge may have occurred, at the sole cost and expense of the Mortgagor.  The Mortgagor shall, and shall cause each tenant of the Property, if any, to, cooperate with such inspection efforts; such cooperation shall include, without limitation, supplying such information concerning the operations conducted, and Hazardous Substances or Hazardous Wastes located at the Property.
(xiv)   No lien has been attached to any real property owned by the Mortgagor and located within the State of New Jersey, including, without limitation, the Property, as a result of the Administrator of the United States Environmental Protection Agency expending monies from the Hazardous Substance Superfund for "Damages" and/or "Response Costs" (as such terms are defined and described in 42 U.S.C. §9607(a)), arising from an intentional or unintentional action or omission of the Mortgagor resulting in any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing of any Hazardous Substances or Hazardous Wastes into the navigable waters, the waters of the contiguous zone, or the ocean waters of which the natural resources are under the exclusive managing authority of the United States under the Magnuson Fishery Conservation and Management Act (16 U.S.C. §1801 et seq .), or any other surface water, ground water, drinking water supply, land surface or subsurface strata, or ambient air within the United States or under the jurisdiction of the United States when damage may have resulted to the land, fish, wildlife, biota, air, water, ground water, drinking supplies, and other resources belonging to, managed by, held in trust by, appertaining to or otherwise controlled by the United States and any State or local government.
 
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(xv)   In the event that there shall be a lien filed against the Property by the United States Environmental Protection Agency pursuant to and in accordance with the provisions of 42 U.S.C. §9607(1), as a result of the Administrator of the Hazardous Substance Superfund having expended monies from said fund to pay for Damages and Response Action Costs arising from an intentional or unintentional action of the Mortgagor, resulting in any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing of any Hazardous Substances or Hazardous Wastes into the navigable waters, the waters of the contiguous zone, or the ocean waters of which the natural resources are under the exclusive managing authority of the United States under the Magnuson Fishery Conservation and Management Act (16 U.S.C. §1801 et seq .), or any other surface water, ground water, drinking water supply, land surface of subsurface strata or ambient air within the United States or under the jurisdiction of the United States where damage resulted to the lands, waters, or natural resources of the United States, then the Mortgagor shall, within forty-five (45) days from the date that the Mortgagor is given notice that the lien has been placed against the Property, or within such shorter period of time in the event that the United States Government has commenced steps to cause the Property to be sold pursuant to the lien, either (a) pay the claim and remove the lien from the Property or (b) furnish (1) a bond satisfactory to First American Title Insurance Company and the Administrative Agent in an amount of the claim out of which the lien arises, (2) a cash deposit in the amount of the claim out of which the lien arises, or (3) other security reasonably satisfactory to the Administrative Agent in an amount sufficient to discharge the claim out of which the lien arises.
(xvi)   The Mortgagor hereby represents and warrants that neither the Mortgagor nor the Property is in violation of or subject to any existing, pending or, to the best of Mortgagor's knowledge, threatened investigation or inquiry by any governmental authority pertaining to any Applicable Environmental Law.  The Mortgagor shall not cause or permit the Property to be in violation of, or do anything which would subject the Property to any remedial obligations under, any Applicable Environmental Law and the Mortgagor shall promptly notify the Administrative Agent, in writing, of any existing, pending or, to the best of Mortgagor's knowledge, threatened investigation or inquiry by any governmental authority in connection with any Applicable Environmental Law.
Section 2.2.   Performance by Administrative Agent on Mortgagor's Behalf .  Mortgagor agrees that, if Mortgagor fails to perform any act or to take any action which under this Mortgage Mortgagor is required to perform or take, or to pay any money which under this Mortgage Mortgagor is required to pay, and such failure constitutes an Event of Default under this Mortgage, then Administrative Agent, in Mortgagor's name or its own name, may (but shall not be obligated to) perform or cause to be performed such act or take such action or pay such money, and any reasonable and documented expenses so incurred by Administrative Agent and any money so paid by Administrative Agent shall be a demand obligation owing by Mortgagor to Administrative Agent (which obligation Mortgagor hereby promises to pay), shall be a part of the Secured Indebtedness, and Administrative Agent, upon making such payment, shall be subrogated to all of the rights of the person, entity or body politic receiving such payment.  Administrative Agent and its designees shall have the right to enter upon the Property for any such purposes during normal business hours upon reasonable prior written notice prior to the occurrence of an Event of Default, and at any time from and after the occurrence and during the continuance of an Event of Default.  No such payment or performance by Administrative Agent shall waive or cure any default or waive any right, remedy or recourse of Administrative Agent.  Any such payment may be made by Administrative Agent in reliance on any statement, invoice or claim without inquiry into the validity or accuracy thereof.  Each amount due and owing by Mortgagor to Administrative Agent pursuant to this Mortgage shall bear interest, from the date such amount becomes due until paid, at the rate per annum provided in the Loan Agreement for interest on past due principal owed on the Loan, which interest shall be payable to Administrative Agent on demand; and all such amounts, together with such interest thereon, shall automatically and without notice be a part of the Secured Indebtedness.  The amount and nature of any expense by Administrative Agent hereunder and the time when paid shall be fully established by the certificate of Administrative Agent or any of Administrative Agent's officers or agents.
 
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Section 2.3.   Absence of Obligations of Administrative Agent with Respect to Property .  Notwithstanding anything in this Mortgage to the contrary, including, without limitation, the definition of "Property" and/or the provisions of Article 3 hereof, (i) to the extent permitted by Applicable Law, the Property is composed of Mortgagor's rights, title and interests therein but not Mortgagor's obligations, duties or liabilities pertaining thereto, (ii) Administrative Agent neither assumes nor shall have any obligations, duties or liabilities in connection with any portion of the items described in the definition of "Property" herein, either prior to or after obtaining title to such Property, whether by foreclosure sale, the granting of a deed in lieu of foreclosure or otherwise, and (iii) Administrative Agent may, at any time prior to or after the acquisition of title to any portion of the Property as above described, advise any party in writing as to the extent of Administrative Agent's interest therein and/or expressly disaffirm in writing any rights, interests, obligations, duties and/or liabilities with respect to such Property or matters related thereto.  Without limiting the generality of the foregoing, it is understood and agreed that Administrative Agent shall have no obligations, duties or liabilities prior to or after acquisition of title to any portion of the Property, as lessee under any lease or purchaser or seller under any contract or option unless Administrative Agent elects otherwise by written notification.
Section 2.4.   Authorization to File Financing Statements; Power of Attorney .  Mortgagor hereby authorizes Administrative Agent at any time and from time to time to file any initial financing statements, amendments thereto and continuation statements as authorized by Applicable Law, required by Administrative Agent to establish or maintain the validity, perfection and priority of the security interests granted in this Mortgage.  For purposes of such filings, Mortgagor agrees to furnish any information reasonably requested by Administrative Agent promptly upon request by Administrative Agent.  Mortgagor also ratifies its authorization for Administrative Agent to have filed any like initial financing statements, amendments thereto or continuation statements if filed prior to the date of this Mortgage.
 
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ARTICLE 3
Assignment of Rents and Leases
Section 3.1.   Assignment.   Mortgagor hereby unconditionally, absolutely and presently sells, grants, transfers, releases, conveys and assigns to Administrative Agent all Rents (hereinafter defined) and all of Mortgagor's rights in and under all Leases (hereinafter defined).  This grant, transfer, assignment and conveyance of Leases gives Administrative Agent the present unconditional and absolute right and title to the Leases and Rents and to collect and receive the Rents.  So long as no Event of Default has occurred, Mortgagor shall have a limited revocable license (which license shall terminate automatically and without further notice upon the occurrence of an Event of Default hereunder), in the place and stead of Administrative Agent to collect, but not more than one (1) month in advance, the Rents under the Leases and, where applicable, subleases, such Rents to be held in trust for Administrative Agent and to otherwise deal with all Leases as permitted by this Mortgage.  Each month, provided no Event of Default has occurred, Mortgagor may retain such Rents as were collected that month and held in trust for Administrative Agent; provided, however, that all Rents collected by Mortgagor shall be applied solely to the ordinary and necessary expenses of owning and operating the Property or paid to Administrative Agent.  Upon the revocation of such license, all Rents shall be paid directly to Administrative Agent and not through Mortgagor, all without the necessity of any further action by Administrative Agent, including, without limitation, any action to obtain possession of the Land, Improvements or any other portion of the Property or any action for the appointment of a receiver.  Mortgagor hereby authorizes and directs the tenants under the Leases to pay Rents to Administrative Agent upon the termination of Mortgagor's license to collect the Rents, without further consent of Mortgagor, without any obligation to determine whether an Event of Default has in fact occurred and regardless of whether Administrative Agent has taken possession of any portion of the Property, and the tenants may rely upon any written statement delivered by Mortgagor to the tenants.  Any such payment to Administrative Agent shall constitute payment to Mortgagor under the Leases, and Mortgagor hereby irrevocably appoints Administrative Agent as its attorney-in-fact to do all things, after the occurrence and during the continuance of an Event of Default, which Mortgagor might otherwise do with respect to the Property and the Leases thereon, including, without limitation, (i) collecting Rents with or without suit and applying the same, less expenses of collection, to any of the obligations secured hereunder or under the Loan
 
 
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 Documents or to expenses of operating and maintaining the Property (including reasonable reserves for anticipated expenses), at the option of the Administrative Agent, all in such manner as may be determined by Administrative Agent in its Permitted Discretion, or at the option of Administrative Agent, holding the same as security for the payment of the Secured Obligations, (ii) leasing, in the name of Mortgagor, the whole or any part of the Property which may become vacant, and (iii) employing agents therefor and paying such agents reasonable compensation for their services.  The curing of such Event of Default, unless other Events of Default also then exist, shall entitle Mortgagor to recover its aforesaid license to do any such things which Mortgagor might otherwise do with respect to the Property and the Leases thereon and to again collect such Rents.  The powers and rights granted in this paragraph shall be in addition to the other remedies herein provided for upon the occurrence and during the continuance of an Event of Default and may be exercised independently of or concurrently with any of said remedies.  Nothing in the foregoing shall be construed to impose any obligation upon Administrative Agent to exercise any power or right granted in this paragraph or to assume any liability under any Lease of any part of the Property and no liability shall attach to Administrative Agent for failure or inability to collect any Rents under any such Lease.  The assignment contained in this Section shall become null and void upon the release of this Mortgage.  As used herein:  (i) " Lease " means each existing or future lease, sublease (to the extent of Mortgagor's rights thereunder) or other agreement under the terms of which any Person has or acquires any right to occupy or use any part of or interest in the Property, and each existing or future guaranty of payment or performance thereunder, and all extensions, renewals, modifications, supplements and replacements of each such lease, sublease, agreement or guaranty (it being understood and agreed that there are no Leases in existence as of the date hereof); and (ii) " Rents " means all of the rents, revenue, income, profits and proceeds derived and to be derived from the Property or arising from the use of enjoyment of any portion thereof or from any Lease, including but not limited to liquidated damages following default under any such Lease, or payments applicable to a termination of a Lease, all proceeds payable under any policy of insurance covering loss of rents resulting from damage to any part of the Property, all of Mortgagor's rights to recover monetary amounts from any tenant in bankruptcy including, without limitation, rights of recovery for use and occupancy and damage claims arising out of Lease defaults, including rejections, under any applicable Debtor Relief Law, together with any sums of money that may now or at any time hereafter be or become due and payable to Mortgagor by virtue of any and all royalties, overriding royalties, bonuses, delay rentals and any other amount of any kind or character arising under any and all present and all future oil, gas, mineral and mining leases covering the Property or any part thereof, and all proceeds and other amounts paid or owing to Mortgagor under or pursuant to any and all contracts and bonds relating to the construction or renovation of the Property.
Section 3.2.   Covenants, Representations and Warranties Concerning Leases and Rents .  Mortgagor covenants, represents and warrants that: (a) Mortgagor has good title to, and is the owner of the entire landlord's interest in, the Leases and Rents hereby assigned and authority to assign them subject only to Permitted Liens; (b) all Leases are valid and enforceable, and in full force and effect, and
 
 
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 are unmodified except as stated therein; (c) neither Mortgagor nor, to Mortgagor's knowledge, any tenant in the Property is in default under its Lease (and no event has occurred which with the passage of time or notice or both would result in a default under its Lease) or is the subject of any bankruptcy, insolvency or similar proceeding; (d) unless otherwise stated in a Permitted Lien, no Rents or Leases have been or will be assigned, mortgaged, pledged or otherwise encumbered and no other person has or will acquire any right, title or interest in such Rents or Leases; (e) no Rents have been waived, released, discounted, set off or compromised; (f) except as stated in the Leases, Mortgagor has not received any funds or deposits from any tenant for which credit has not already been made on account of accrued Rents; (g) Mortgagor shall perform all of its obligations under the Leases and enforce the tenants' obligations under the Leases to the extent enforcement is prudent under the circumstances; (h) Mortgagor will not without the prior written consent of Administrative Agent, enter into any Lease after the date hereof, or waive, release, discount, set off, compromise, reduce or defer any Rent, receive or collect Rents more than one (1) month in advance, grant any rent‑free period to any tenant, reduce any Lease term or waive, release or otherwise modify any other material obligation under any Lease, renew or extend any Lease except in accordance with a right of the tenant thereto in such Lease, approve or consent to an assignment of a Lease or a subletting of any part of the premises covered by a Lease, or settle or compromise any claim against a tenant under a Lease in bankruptcy or otherwise; (i) Mortgagor will not, without the prior written consent of Administrative Agent, terminate or consent to the cancellation or surrender of any Lease having an unexpired term of one (1) year or more; (j) Mortgagor will not execute any Lease except in the ordinary course of business and otherwise in accordance with the Loan Documents and for actual occupancy by the tenant thereunder; (k) Mortgagor shall give prompt notice to Administrative Agent, as soon as Mortgagor first obtains notice, of any claim, or the commencement of any action, by any tenant or subtenant under or with respect to a Lease regarding any claimed damage, default, diminution of or offset against Rent, cancellation of the Lease, or constructive eviction, excluding, however, notices of default under residential Leases, and Mortgagor shall defend, at Mortgagor's expense, any proceeding pertaining to any Lease, including, if Administrative Agent so requests, any such proceeding to which Administrative Agent is a party; (l) Mortgagor shall as often as requested by Administrative Agent, within fifteen (15) days of each request, deliver to Administrative Agent a complete rent roll of the Property in such detail as Administrative Agent may require and financial statements of the tenants, subtenants and guarantors under the Leases to the extent available to Mortgagor, and deliver to such of the tenants and others obligated under the Leases specified by Administrative Agent written notice of the assignment in Section 3.1 hereof in form and content satisfactory to Administrative Agent; and (m) promptly upon request by Administrative Agent, Mortgagor shall deliver to Administrative Agent executed originals of all Leases and copies of all records relating thereto.
Section 3.3.   No Liability of Administrative Agent .  Administrative Agent's acceptance of this assignment shall not be deemed to constitute Administrative Agent a "Administrative Agent in possession," nor obligate Administrative Agent to appear in or defend any proceeding relating to any Lease or to the Property, or to take any action hereunder, expend any money, incur any expenses, or perform any obligation or liability under any Lease, or assume any obligation for any deposit delivered to Mortgagor by any tenant and not as such delivered to and accepted by Administrative Agent.  Administrative Agent shall not be liable for any injury or damage to Person or property in or about the Property, or for Administrative Agent's failure to collect or to exercise diligence in collecting Rents, but shall be accountable only for Rents that it shall actually receive.  Neither the assignment of Leases and Rents nor enforcement of Administrative Agent's rights regarding Leases and Rents (including collection of Rents) nor possession of the Property by Administrative Agent nor Administrative Agent's consent to or approval of any Lease (nor all of the same), shall render Administrative Agent liable on any obligation under or with respect to any Lease or constitute affirmation of, or any subordination to, any Lease, occupancy, use or option except to the extent that Administrative Agent has entered into a separate non-disturbance, subordination and attornment agreement with any lessee of the Property.  If Administrative Agent seeks or obtains any judicial relief regarding Rents or Leases, the same shall in no way prevent the concurrent or subsequent employment of any other appropriate rights or remedies nor shall same constitute an election of judicial relief for any foreclosure or any other purpose.  Administrative Agent neither has nor assumes any obligations as lessor or landlord with respect to any Lease.  The rights of Administrative Agent under this Article 3 shall be cumulative of all other rights of Administrative Agent under the Loan Documents or otherwise.
 
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Section 3.4.   Unilateral Subordination and Merger .  There shall be no merger of the leasehold estates created by the Leases with the fee estate of the Property without the prior written consent of Administrative Agent.  Administrative Agent may at any time and from time to time by specific written instrument intended for the purpose, unilaterally subordinate the lien of this Mortgage to any Lease, without joinder or consent of, or notice to, Mortgagor, any tenant or any other Person, and notice is hereby given to each tenant under a Lease of such right to subordinate. No such subordination shall constitute a subordination to any lien or other encumbrance, whenever arising, or improve the right of any junior lienholder.  Nothing herein shall be construed as subordinating this Mortgage to any Lease.
ARTICLE 4
Event of Default
Section 4.1.   Events of Default .  The occurrence of any one of the following shall be a default under this Mortgage (" Event of Default "):
(a)   Nonperformance of Covenants .  Any covenant, agreement or condition in this Mortgage (other than covenants otherwise addressed in another paragraph of this Section) is not fully and timely performed, observed or kept, and such failure is not cured within the applicable notice and cure period (if any) provided for in this Mortgage.
(b)   Event of Default under the Loan Documents .  The occurrence of an Event of Default under (and as defined in) the Loan Agreement or a default or event of default (however defined in) any other Loan Document (after giving effect to any notice or cure periods provided therein, if any).
 
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Section 4.2.   Notice and Cure .  If any provision of this Mortgage or any other Loan Document provides for Administrative Agent to give to Mortgagor any notice regarding a default or incipient default, then if Administrative Agent shall fail to give such notice to Mortgagor as provided, the sole and exclusive remedy of Mortgagor for such failure shall be to seek appropriate equitable relief to enforce the agreement to give such notice and to have any acceleration of the maturity of the Loan and the Secured Indebtedness postponed or revoked and foreclosure proceedings in connection therewith delayed or terminated pending or upon the curing of such default in the manner and during the period of time permitted by such agreement, if any, and Mortgagor shall have no right to damages or any other type of relief not herein specifically set out against Administrative Agent, all of which damages or other relief are hereby waived by Mortgagor.  Nothing herein or in any other Loan Document shall operate or be construed to add on or make cumulative any cure or grace periods specified in any of the Loan Documents.
ARTICLE 5
Remedies
Section 5.1.   Certain Remedies .  If an Event of Default shall occur and be continuing, Administrative Agent may (but shall have no obligation to) exercise any one or more of the following remedies, without notice (unless notice is required by applicable statute):
(a)   Acceleration; Termination .  Administrative Agent may at any time and from time to time declare any or all of the Secured Indebtedness immediately due and payable.  Upon any such declaration, such Secured Indebtedness shall, thereupon be immediately due and payable, without presentment, demand, protest, notice of protest, notice of acceleration or of intention to accelerate or any other notice or declaration of any kind, all of which are hereby expressly waived by Mortgagor.
(b)   Enforcement of Assignment of Rents .  In addition to the rights of Administrative Agent under Article 3 hereof, prior or subsequent to taking possession of any portion of the Property or taking any action with respect to such possession, Administrative Agent may: (1) collect and/or sue for the Rents in Administrative Agent's own name, give receipts and releases therefor, and after deducting all reasonable and documented expenses of collection, including reasonable and documented attorney's fees and expenses, apply the net proceeds thereof to the Secured Indebtedness in such manner and order as Administrative Agent may elect and/or to the operation and management of the Property, including the payment of reasonable and documented management, brokerage and attorney's fees and expenses; and (2) require Mortgagor to transfer all security deposits and records thereof to Administrative Agent together with original counterparts of the Leases.
(c)   Foreclosure .  Administrative Agent shall have the right, in one or several concurrent or consecutive proceedings, to foreclose the lien hereof upon the Property or any part thereof, for the Secured Indebtedness, or any part thereof, by any proceedings appropriate under applicable law.  Administrative Agent or its nominee may bid and become the purchaser of all or any part of the Property at any foreclosure or other sale hereunder, and the amount of Lender's successful bid shall be credited on the Secured Indebtedness.  Without limiting the foregoing, Administrative Agent may proceed by a suit or suits in law or equity, whether for specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or for any foreclosure under the judgment or decree of any court of competent jurisdiction.  Notwithstanding any statute or rule of law to the contrary, the failure to join any tenant or tenants of the Property as party defendant or defendants in any foreclosure action or the failure of any such order or judgment to foreclose their rights shall not be asserted by Mortgagor as a defense in any civil action instituted to collect (i) the Secured Indebtedness, or any part thereof or (ii) any deficiency remaining unpaid after foreclosure and sale of the Property.
 
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(d)   Uniform Commercial Code .  Without limitation of Administrative Agent's rights of enforcement with respect to the Collateral or any part thereof in accordance with the procedures for foreclosure of real estate, Administrative Agent may exercise its rights of enforcement with respect to the Collateral or any part thereof under the UCC, as in effect from time to time (or under the Uniform Commercial Code in force, from time to time, in any other state to the extent the same is applicable law) and in conjunction with, in addition to or in substitution for those rights and remedies: (1)  Administrative Agent may enter upon Mortgagor's premises to take possession of, assemble and collect the Collateral or, to the extent and for those items of the Collateral permitted under applicable law, to render it unusable; (2) Administrative Agent may require Mortgagor to assemble the Collateral and make it available at a place Administrative Agent designates which is mutually convenient to allow Administrative Agent to take possession or dispose of the Collateral; (3) written notice mailed to Mortgagor as provided herein at least ten (10) days prior to the date of public sale of the Collateral or prior to the date after which private sale of the Collateral will be made shall constitute reasonable notice; provided that, if Administrative Agent fails to comply with this clause (3) in any respect, its liability for such failure shall be limited to the liability (if any) imposed on it as a matter of law under the UCC, as in effect from time to time (or under the Uniform Commercial Code, in force from time to time, in any other state to the extent the same is applicable law); (4) any sale made pursuant to the provisions of this paragraph shall be deemed to have been a public sale conducted in a commercially reasonable manner if held contemporaneously with and upon the same notice as required for the sale of the Property under power of sale as provided in paragraph (c) above in this Section 5.1 ; (5) in the event of a foreclosure sale, whether made by Administrative Agent under the terms hereof, or under judgment of a court, the Collateral and the other Property may, at the option of Administrative Agent, be sold as a whole; (6) it shall not be necessary that Administrative Agent take possession of the Collateral or any part thereof prior to the time that any sale pursuant to the provisions of this Section is conducted and it shall not be necessary that the Collateral or any part thereof be present at the location of such sale; (7) with respect to application of proceeds from disposition of the Collateral under Section 5.2 hereof, the costs and expenses incident to disposition shall include the reasonable and documented expenses of retaking, holding,
 
 
 
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 preparing for sale or lease, selling, leasing and the like and the reasonable and documented attorneys' fees and legal expenses (including, without limitation, the allocated costs for in-house legal services) incurred by Administrative Agent; (8) any and all statements of fact or other recitals made in any bill of sale or assignment or other instrument evidencing any foreclosure sale hereunder as to nonpayment of the Secured Indebtedness or as to the occurrence of any Event of Default, or as to Administrative Agent having declared all of such indebtedness to be due and payable, or as to notice of time, place and terms of sale and of the properties to be sold having been duly given, or as to any other act or thing having been duly done by Administrative Agent, shall be taken as prima facie evidence of the truth of the facts so stated and recited; (9) Administrative Agent may appoint or delegate any one or more persons as agent to perform any act or acts necessary or incident to any sale held by Administrative Agent, including the sending of notices and the conduct of the sale, but in the name and on behalf of Administrative Agent; (10) Administrative Agent may comply with any applicable state or federal law or regulatory requirements in connection with a disposition of the Collateral, and such compliance will not be considered to affect adversely the commercial reasonableness of any sale of the Collateral; (11) Administrative Agent may sell the Collateral without giving any warranties as to the Collateral, and specifically disclaim all warranties including, without limitation, warranties relating to title, possession, quiet enjoyment and the like, and all warranties of quality, merchantability and fitness for a specific purpose, and this procedure will not be considered to affect adversely the commercial reasonableness of any sale of the Collateral; (12) Mortgagor acknowledges that a private sale of the Collateral may result in less proceeds than a public sale; and (13) Mortgagor acknowledges that the Collateral may be sold at a loss to Mortgagor, and that, in such event, subject to applicable law, Administrative Agent shall have no liability or responsibility to Mortgagor for such loss.
(e)   Lawsuits .  Administrative Agent may, to the fullest extent permitted by applicable law, proceed by a suit or suits in equity or at law, whether for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or for any foreclosure hereunder or for the sale of the Property under the judgment or decree of any court or courts of competent jurisdiction.
(f)   Entry on Property .  Administrative Agent is authorized, prior or subsequent to the institution of any foreclosure proceedings, to the fullest extent permitted by applicable law, to enter upon the Property, or any part thereof, and to take possession of the Property and all books and records, and all recorded data of any kind or nature, regardless of the medium of recording including, without limitation, all software, writings, plans, specifications and schematics relating thereto, and to exercise without interference from Mortgagor any and all rights which Mortgagor has with respect to the management, possession, operation, protection or preservation of the Property.  Administrative Agent shall not be deemed to have taken possession of the Property or any part thereof except upon the exercise of its right to do so, and then only to the extent evidenced by its demand and overt act specifically for such purpose.  All reasonable and documented costs, expenses and liabilities of every character incurred by Administrative Agent in managing, operating, maintaining, protecting or preserving the Property shall constitute a demand obligation of Mortgagor (which obligation Mortgagor hereby promises to pay) to Administrative Agent pursuant to this Mortgage.  If necessary to obtain the possession provided for above, Administrative Agent may invoke any and all legal remedies to dispossess Mortgagor.  In connection with any action taken by Administrative Agent pursuant to this Section, Administrative Agent shall not be liable for any loss sustained by Mortgagor resulting from any failure to let the Property or any part thereof, or from any act or omission of Administrative Agent in managing the Property unless such loss is caused by the gross negligence, willful misconduct or bad faith of Administrative Agent, nor shall Administrative Agent be obligated to perform or discharge any obligation, duty or liability of Mortgagor arising under any lease or other agreement relating to the Property or arising under any Permitted Encumbrance or otherwise arising.  Mortgagor hereby assents to, ratifies and confirms any and all lawful actions of Administrative Agent with respect to the Property taken under this Section.
 
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(g)   Receiver .  Administrative Agent shall as a matter of right be entitled to the appointment of a receiver or receivers for all or any part of the Property whether such receivership be incident to a proposed sale (or sales) of such property or otherwise, and without regard to the value of the Property or the solvency of any person or persons liable for the payment of the Secured Indebtedness, and Mortgagor does hereby irrevocably consent to the appointment of such receiver or receivers, waives notice of such appointment, of any request therefor or hearing in connection therewith, and any and all defenses to such appointment, agrees not to oppose any application therefor by Administrative Agent, and agrees that such appointment shall in no manner impair, prejudice or otherwise affect the rights of Administrative Agent to application of Rents as provided in this Mortgage.  Nothing herein is to be construed to deprive Administrative Agent of any other right, remedy or privilege it may have under the law to have a receiver appointed.  Any money advanced by Administrative Agent in connection with any such receivership shall be a demand obligation (which obligation Mortgagor hereby promises to pay) owing by Mortgagor to Administrative Agent pursuant to this Mortgage.
(h)   Powers of Administrative Agent .  Administrative Agent may, either directly or through an agent or court-appointed receiver, and without regard to the adequacy of any security for the Secured Indebtedness:
(i)   enter, take possession of, manage, operate, protect, preserve and maintain, and exercise any other rights of an owner of, the Property, and use any other properties or facilities of Mortgagor relating to the Property, all without payment of rent or other compensation to Mortgagor;
(ii)   enter into such contracts and take such other action as Administrative Agent deems appropriate to complete all or any part of the Improvements or any other construction on the Land, subject to such modifications and other changes in the Improvements or the plan of development as Administrative Agent may deem appropriate;
 
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(iii)   make, cancel, enforce or modify leases, obtain and evict tenants, fix or modify Rents and, in its own name or in the name of Mortgagor, otherwise conduct any business of Mortgagor in relation to the Property and deal with Mortgagor's creditors, debtors, tenants, agents and employees and any other persons having any relationship with Mortgagor in relation to the Property, and amend any contracts between them, in any manner Administrative Agent may determine in its commercially reasonable judgment;
(iv)   either with or without taking possession of the Property, notify obligors on any contracts that all payments and other performance are to be made and rendered directly and exclusively to Administrative Agent, and in its own name supplement, modify, amend, renew, extend, accelerate, accept partial payments or performance on, make allowances and adjustments and issue credits with respect to, give approvals, waivers and consents under, release, settle, compromise, compound, sue for, collect or otherwise liquidate, enforce or deal with any contracts or other rights, including collection of amounts past due and unpaid (Mortgagor agreeing not to take any such action, with respect to any obligation in excess of $5,000,  during the continuation of an Event of Default without prior written authorization from Administrative Agent);
(v)   endorse, in the name of Mortgagor, all checks, drafts and other evidences of payment relating to the Property, and receive, open and dispose of all mail addressed to Mortgagor and notify the postal authorities to change the address for delivery of such mail to such address as Administrative Agent may designate; and
take such other action as Administrative Agent deems appropriate to protect the security of this Mortgage.
(i)   Termination of Commitment to Lend .  To the extent provided under the Loan Agreement, Administrative Agent may terminate any commitment or obligation to lend or disburse funds under any Loan Document or enter into any other credit arrangement to or for the benefit of Mortgagor.
(j)   Intentionally Deleted .
(k)   Other Rights and Remedies .   Administrative Agent may exercise any and all other rights and remedies which Administrative Agent may have under the Loan Documents, or at law or in equity or otherwise.
Section 5.2.   Proceeds of Foreclosure .  The proceeds held by Administrative Agent or any receiver or public officer in foreclosure of the liens and security interests evidenced hereby shall be applied in accordance with the requirements of applicable Laws and to the extent consistent therewith as follows:  (i) FIRST , to the payment of all necessary reasonable and documented costs and
 
 
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 expenses incident to such foreclosure sale, including but not limited to all reasonable and documented attorneys' fees and legal expenses, advertising costs, auctioneer's fees, costs of title rundowns and lien searches, inspection fees, appraisal costs, fees for professional services, environmental assessment and remediation fees,  all court costs and charges of every character and to the payment of the other Secured Indebtedness, including specifically without limitation the principal, accrued interest and reasonable and documented attorneys' fees due and unpaid on the Loan and the amounts due and unpaid and owed to Administrative Agent under this Mortgage the order and manner of application to the items in this clause (all with interest at the rate per annum provided in the Loan Agreement all in Administrative Agent's sole discretion; and (ii) SECOND , the remainder, if any, shall be paid to Mortgagor, or to Mortgagor's successors or assigns, or such other persons (including the Administrative Agent or beneficiary of any inferior lien) as may be entitled thereto by law; provided, however, that if Administrative Agent is uncertain which person or persons are so entitled, Administrative Agent may interplead such remainder in any court of competent jurisdiction, and the amount of any attorneys' fees, court costs and expenses incurred in such action shall be a part of the Secured Indebtedness and shall be reimbursable (without limitation) from such remainder.
Section 5.3.   Administrative Agent as Purchaser .  Administrative Agent or any Lender Party shall have the right to become the purchaser at any sale held by Administrative Agent or substitute or successor or by any receiver or public officer or at any public sale, and Administrative Agent or any Lender Party shall have the right to credit upon the amount of Administrative Agent's or such Lender Party's successful bid, to the extent necessary to satisfy such bid, all or any part of the Secured Indebtedness in such manner and order as Administrative Agent or such Lender Party may elect.
Section 5.4.   Foreclosure as to Matured Debt .  Upon the occurrence and during the continuance of an Event of Default, Administrative Agent shall have the right to proceed with foreclosure (judicial or nonjudicial) of the liens and security interests hereunder without declaring the entire Secured Indebtedness due, and in such event any such foreclosure sale may be made subject to the unmatured part of the Secured Indebtedness; and any such sale shall not in any manner affect the unmatured part of the Secured Indebtedness, but as to such unmatured part this Mortgage shall remain in full force and effect just as though no sale had been made.  The proceeds of such sale shall be applied as provided in Section 5.2 hereof except that the amount paid under clause FIRST thereof shall be only the matured portion of the Secured Indebtedness and any proceeds of such sale in excess of those provided for in clause FIRST (modified as provided above) shall be applied to the prepayment (without penalty) of any other Secured Indebtedness in such manner and order and to such extent as Administrative Agent deems advisable, and the remainder, if any, shall be applied as provided in clause SECOND of Section 5.2 hereof.  Several sales may be made hereunder without exhausting the right of sale for any unmatured part of the Secured Indebtedness.
Section 5.5.   Remedies Cumulative .  All rights and remedies provided for herein and in any other Loan Document are cumulative of each other and of any and all other rights and remedies existing at law or in equity, and Administrative Agent shall, in addition to the rights and remedies provided herein or in any other Loan Document, be entitled to avail themselves of all such other rights and remedies as may now or hereafter exist at law or in equity for the collection and enforcement of the Secured Indebtedness and the enforcement of the covenants herein and the foreclosure of the liens and security interests evidenced hereby, and by the Loan Documents.  The resort to any right or remedy provided for hereunder or under any such other Loan Document or provided for by law or in equity shall not prevent the concurrent or subsequent employment of any other appropriate right or rights or remedy or remedies.
 
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Section 5.6.   Discretion as to Security .  Administrative Agent may resort to any security given by this Mortgage or to any other security now existing or hereafter given to secure the payment of the Secured Indebtedness, in whole or in part, and in such portions and in such order as may seem best to Administrative Agent in its sole and uncontrolled discretion, and any such action shall not in anywise be considered as a waiver of any of the rights, benefits, liens or security interests evidenced by this Mortgage.
Section 5.7.   Mortgagor's Waiver of Certain Rights .  To the full extent Mortgagor may do so, Mortgagor agrees that Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of any law now or hereafter in force providing for any appraisement, valuation, stay, extension or redemption, homestead, moratorium, reinstatement, marshalling of forbearance, and Mortgagor, for Mortgagor, Mortgagor's heirs, devisees, representatives, successors and assigns, and for any and all Persons ever claiming any interest in the Property, to the extent permitted by Applicable Law, hereby waives and releases all rights of redemption, valuation, appraisement, stay of execution, notice of election to mature or declare due the whole of the Secured Indebtedness and all rights to a marshaling of assets of Mortgagor, including the Property, or to a sale in inverse order of alienation in the event of foreclosure of the liens and/or security interests hereby created.  To the extent permitted by Applicable Law, Mortgagor shall not have or assert any right under any Applicable Law pertaining to the marshaling of assets, sale in inverse order of alienation, the exemption of homestead, the administration of estates of decedents, or other matters whatever to defeat, reduce or affect the right of Administrative Agent under the terms of this Mortgage to a sale of the Property for the collection of the Secured Indebtedness without any prior or different resort for collection, or the right of Administrative Agent under the terms of this Mortgage to the payment of the Secured Indebtedness out of the proceeds of sale of the Property in preference to every other claimant whatever.  To the extent permitted by applicable law, Mortgagor waives any right or remedy which Mortgagor may have or be able to assert pursuant to the UCC, or any other provision of Applicable Law, pertaining to the rights and remedies of sureties.  If any Law referred to in this Section and now in force, of which Mortgagor or Mortgagor's heirs, devisees, representatives, successors or assigns or any other Persons claiming any interest in the Property might take advantage despite this Section, shall hereafter be repealed or cease to be in force, such Law shall not thereafter be deemed to preclude the application of this Section.
Section 5.8.   Delivery of Possession After Foreclosure .  In the event there is a foreclosure sale hereunder and at the time of such sale, Mortgagor or Mortgagor's successors as owners of the Property are occupying or using the Property, or any part thereof, each and all shall immediately become the tenant of the purchaser at such sale, which tenancy shall be a tenancy from day to day, terminable at the will of purchaser, at a reasonable rental per day based upon the value of the property occupied, such rental to be due daily to the purchaser; and to the extent permitted by applicable law, the purchaser at such sale shall, notwithstanding any language herein apparently to the contrary, have the sole option to demand immediate possession following the sale or to permit the occupants to remain as tenants at will.  After such foreclosure, any leases to tenants or subtenants that are subject to this Mortgage (either by their date, their express terms, or by agreement of the tenant or subtenant) shall, at the sole option of Administrative Agent or any purchaser at such sale, but subject to any express agreement between Administrative Agent and such tenant or subtenant, either (i) continue in full force and effect, and the tenant(s) or subtenant(s) thereunder will, upon request, attorn to and acknowledge in writing to the purchaser or purchasers at such sale or sales as landlord thereunder, or (ii) upon notice to such effect from Administrative Agent or any purchaser or purchasers, terminate within thirty (30) days from the date of sale.  In the event the tenant fails to surrender possession of the Property upon demand, the purchaser shall be entitled to institute and maintain a summary action for possession of the Property (such as an action for forcible detainer) in any court having jurisdiction.
 
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ARTICLE 6
Miscellaneous
Section 6.1.   Scope of Mortgage .  This Mortgage is a mortgage of both real and personal property, a security agreement, an assignment of rents and leases, a financing statement and fixture filing and a collateral assignment, and also covers proceeds and fixtures.
Section 6.2.   Effective as a Financing Statement and Fixture Filing .  This Mortgage covers goods which are or are to become fixtures.  This Mortgage shall be effective as a financing statement filed as a fixture filing with respect to all fixtures now or hereafter included within the Property and is to be filed for record in the real estate records of each county where any part of the Property (including said fixtures) is situated.  This Mortgage shall also be effective as a financing statement covering minerals or the like (including oil and gas) and accounts and general intangibles under the UCC, as amended, and similar provisions (if any) of the Uniform Commercial Code as enacted in any other state where the Property is situated which will be financed at the wellhead or minehead of the wells or mines located on the Property and is to be filed for record in the real estate records of each county where any part of the Property is situated.  This Mortgage shall also be effective as a financing statement covering any other Property and may be filed in any other appropriate filing or recording office.  The owner of the Property is Mortgagor.  The mailing address of Mortgagor is the address of Mortgagor set forth at the beginning of this Mortgage and the address of Administrative Agent from which information concerning the security interests hereunder may be obtained is the address of Administrative Agent set forth at the beginning of this Mortgage.  Mortgagor is a corporation organized under the laws of the state of Delaware and Mortgagor's Organizational Identification Number is 2178484.  A carbon, photographic or other reproduction of this Mortgage or of any financing statement relating to this Mortgage shall be sufficient as a financing statement for any of the purposes referred to in this Section.
 
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Section 6.3.   Notice to Account Debtors .  Subject to the terms set forth in the Loan Agreement, in addition to the rights granted elsewhere in this Mortgage, Administrative Agent may at any time notify the account debtors or obligors of any accounts, chattel paper, general intangibles, negotiable instruments or other evidences of indebtedness included in the Collateral to pay Administrative Agent directly.
Section 6.4.   Waiver by Administrative Agent .  Administrative Agent may at any time and from time to time by a specific writing intended for the purpose: (a) waive compliance by Mortgagor with any covenant herein made by Mortgagor to the extent and in the manner specified in such writing; (b) consent to Mortgagor's doing any act which hereunder Mortgagor is prohibited from doing, or to Mortgagor's failing to do any act which hereunder Mortgagor is required to do, to the extent and in the manner specified in such writing; (c) release any part of the Property or any interest therein from the lien and security interest of this Mortgage; or (d) release any party liable, either directly or indirectly, for the Secured Indebtedness or for any covenant herein or in any other Loan Document, without impairing or releasing the liability of any other party.  No such act shall in any way affect the rights or powers of Administrative Agent hereunder except to the extent specifically agreed to by Administrative Agent in such writing.
Section 6.5.   No Impairment of Security .  The lien, security interest and other security rights of Administrative Agent hereunder or under any other Loan Document shall not be impaired (except to the extent expressly stated therein) by any indulgence, moratorium or release granted by Administrative Agent including, but not limited to, any renewal, extension or modification which Administrative Agent may grant with respect to any Secured Indebtedness, or any surrender, compromise, release, renewal, extension, exchange or substitution which Administrative Agent may grant in respect of the Property, or any part thereof or any interest therein, or any release or indulgence granted to any endorser, guarantor or surety of any Secured Indebtedness.  The taking of additional security by Administrative Agent shall not release or impair the lien, security interest or other security rights of Administrative Agent hereunder or affect the liability of Mortgagor or of any endorser, guarantor or surety, or improve the right of any junior lienholder in the Property (without implying hereby Administrative Agent's consent to any junior lien).
Section 6.6.   Acts Not Constituting Waiver by Administrative Agent .  Administrative Agent may waive any Default or Event of Default without waiving any other prior or subsequent Default or Event of Default.  Administrative Agent may remedy any Default or Event of Default without waiving the Default or Event of Default remedied.  Neither failure by Administrative Agent to exercise, nor delay by Administrative Agent in exercising, nor discontinuance of the exercise of any right, power or remedy (including but not limited to the right to accelerate the maturity of the Secured Indebtedness or any part thereof) upon or after any Default or Event of Default shall be construed as a waiver of such Default or Event of Default or as a waiver of the right to exercise any such right, power or remedy at a later date.  No single or partial exercise by Administrative Agent of any right, power or remedy hereunder shall exhaust the same or shall preclude any other or further exercise thereof, and every such right, power or remedy hereunder may be exercised at any time and from time to time.  No modification or waiver of any provision hereof nor consent to any departure by Mortgagor therefrom shall in any event be effective unless the same shall be in writing and signed by Administrative Agent and then such waiver or consent shall be effective only in the specific instance, for the purpose for which given and to the extent therein specified.  No notice to nor demand on Mortgagor in any case shall of itself entitle Mortgagor to any other or further notice or demand in similar or other circumstances.  Remittances in payment of any part of the Secured Indebtedness other than in the required amount in immediately available U.S. funds shall not, regardless of any receipt or credit issued therefor, constitute payment until the required amount is actually received by Administrative Agent in immediately available U.S. funds and shall be made and accepted subject to the condition that any check or draft may be handled for collection in accordance with the practice of the collecting bank or banks.  Acceptance by Administrative Agent of any payment in an amount less than the amount then due on any Secured Indebtedness shall be deemed an acceptance on account only and shall not in any way excuse the existence of a default hereunder notwithstanding any notation on or accompanying such partial payment to the contrary.
 
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Section 6.7.   Mortgagor's Successors .  If the ownership of the Property or any part thereof becomes vested in a person other than Mortgagor, Administrative Agent may, without notice to Mortgagor, deal with such successor or successors in interest with reference to this Mortgage and to the Secured Indebtedness in the same manner as with Mortgagor, without in any way vitiating or discharging Mortgagor's liability hereunder or for the payment of the indebtedness or performance of the obligations secured hereby.  No transfer of the Property, no forbearance on the part of Administrative Agent, and no extension of the time for the payment of the Secured Indebtedness given by Administrative Agent shall operate to release, discharge, modify, change or affect, in whole or in part, the liability of Mortgagor hereunder for the payment of the indebtedness or performance of the obligations secured hereby or the liability of any other person hereunder for the payment of the Secured Indebtedness.  Mortgagor agrees that it shall be bound by any modification of this Mortgage or any of the other Loan Documents made by Administrative Agent and any subsequent owner of the Property, with or without notice to such Mortgagor, and no such modifications shall impair the obligations of such Mortgagor under this Mortgage or any other Loan Document. Nothing in this Section or elsewhere in this Mortgage shall be construed to imply Administrative Agent's consent to any transfer of the Property.
Section 6.8.   Place of Payment; Forum; Waiver of Jury Trial .  All Secured Indebtedness which may be owing hereunder at any time by Mortgagor shall be payable at the place designated in the Loan Agreement (or if no such designation is made, at the address of Administrative Agent indicated at the end of this Mortgage).  Mortgagor hereby irrevocably submits generally and unconditionally for itself and in respect of its property to the non‑exclusive jurisdiction of any state court, or any United States federal court, sitting in New York County, Rockland County or Westchester County, New York, and to the non‑exclusive jurisdiction of any state court or any United States federal court sitting in the state in which any of the Property is located, over any suit, action or proceeding arising out of or relating to this Mortgage or the Secured Indebtedness.  Mortgagor hereby irrevocably waives, to the fullest extent permitted by law, any objection that Mortgagor may now or hereafter have to the laying of venue in any such court and any claim that any such court is an inconvenient forum.  Mortgagor hereby agrees and consents that, in addition to any methods of service of process provided for under applicable law, all service of process in any such suit, action or proceeding in any state court in which the Property is located, or any United States federal court, sitting in the state in which the Secured Indebtedness is payable may be made by certified or registered mail, return receipt requested, directed to Mortgagor at its address stated at the end of this Mortgage, or at a subsequent address of Mortgagor of which Administrative Agent received actual notice from Mortgagor in accordance with this Mortgage, and service so made shall be complete five (5) days after the same shall have been so mailed.  Nothing herein shall affect the right of Administrative Agent to serve process in any manner permitted by law or limit the right of Administrative Agent to bring proceedings against Mortgagor in any other court or jurisdiction.  TO THE FULLEST EXTENT PERMITTED BY LAW, MORTGAGOR, ADMINISTRATIVE AGENT AND THE LENDER PARTIES EACH WAIVE THE RIGHT TO TRIAL BY JURY IN CONNECTION WITH ANY ACTION, SUIT OR OTHER PROCEEDING ARISING OUT OF OR RELATING TO THIS MORTGAGE OR ANY OTHER LOAN DOCUMENT.
 
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Section 6.9.   Subrogation to Existing Liens; Vendor's/Purchase Money Lien . To the extent that proceeds of the Loan are used to pay indebtedness secured by any outstanding lien, security interest, charge or prior encumbrance against the Property, such proceeds have been advanced by Administrative Agent at Mortgagor's request, and Administrative Agent shall be subrogated to any and all rights, security interests and liens owned by any owner or Administrative Agent of such outstanding liens, security interests, charges or encumbrances, however remote, irrespective of whether said liens, security interests, charges or encumbrances are released, and all of the same are recognized as valid and subsisting and are renewed and continued and merged herein to secure the Secured Indebtedness, but the terms and provisions of this Mortgage shall govern and control the manner and terms of enforcement of the liens, security interests, charges and encumbrances to which Administrative Agent is subrogated hereunder.  It is expressly understood that, in consideration of the payment of such indebtedness by Administrative Agent, Mortgagor hereby waives and releases all demands and causes of action for offsets and payments in connection with the said indebtedness.  If all or any portion of the proceeds of the Loan or of any other Secured Indebtedness has been advanced for the purpose of paying the purchase price for all or a part of the Property, no vendor's or purchase money lien is waived.  Administrative Agent shall have, and is hereby granted, a vendor's or purchase money lien on the Property as cumulative additional security for the Secured Indebtedness.  Administrative Agent may foreclose under this Mortgage or under the vendor's or purchase money lien without waiving the other or may foreclose under both.
 
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Section 6.10.   Application of Payments to Certain Indebtedness .  If any part of the Secured Indebtedness cannot be lawfully secured by this Mortgage or if any part of the Property cannot be lawfully subject to the lien and security interest hereof to the full extent of such Secured Indebtedness, then all payments made shall be applied on said Secured Indebtedness first in discharge of that portion thereof which is not secured by this Mortgage.
Section 6.11.   Compliance with Usury Laws .  It is the intent of Mortgagor and Administrative Agent and all other parties to the Loan Documents to conform to and contract in strict compliance with applicable usury law from time to time in effect.  All agreements between Administrative Agent and Mortgagor (or any other party liable with respect to any indebtedness under the Loan Documents) are hereby limited by the provisions of Section 3.6 of the Loan Agreement.
Section 6.12.   Release .
(a)   Release from Mortgage .  If all of the Secured Indebtedness (other than contingent indemnification obligations) are paid in full and all other obligations under the Loan Documents, if any, of Administrative Agent and the Lender Parties for further advances have been terminated, then, and in that event only, all rights under this Mortgage shall terminate (except to the extent expressly provided herein with respect to indemnifications, representations and warranties and other rights which are to continue following the release hereof) and the Property shall become wholly clear of the Liens evidenced hereby, and the Property shall be released by Administrative Agent in due form at Mortgagor's cost.  Without limitation, all provisions herein for indemnity of Administrative Agent shall survive discharge of the Secured Indebtedness and any foreclosure, release or termination of this Mortgage.
(b)   Partial Release; No Release in Default .  Administrative Agent may, regardless of consideration, cause the release of any part of the Property from the lien of this Mortgage without in any manner affecting or impairing the lien or priority of this Mortgage as to the remainder of the Property.   No partial release shall be sought, requested or required if an Event of Default has occurred which has not been cured.
(c)   Release Fee .  Mortgagor agrees to pay reasonable and documented fees, not to exceed the maximum amounts legally permitted, for Administrative Agent's rendering of services in connection with each partial or complete release of the Property from the lien of this Mortgage.
Section 6.13.   Notices .  Except to the extent otherwise required by applicable law, all such notices, demands, requests, consents and other communications shall be deemed sufficiently given or furnished if delivered in accordance with the terms of the Loan Agreement.
Section 6.14.   Invalidity of Certain Provisions .  A determination that any provision of this Mortgage is unenforceable or invalid shall not affect the enforceability or validity of any other provision and the determination that the application of any provision of this Mortgage to any person or circumstance is illegal or unenforceable shall not affect the enforceability or validity of such provision as it may apply to other persons or circumstances.
 
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Section 6.15.   Gender; Titles; Construction .  Within this Mortgage, words of any gender shall be held and construed to include any other gender, and words in the singular number shall be held and construed to include the plural, unless the context otherwise requires.  Titles appearing at the beginning of any subdivisions hereof are for convenience only, do not constitute any part of such subdivisions, and shall be disregarded in construing the language contained in such subdivisions.  The use of the words " herein ," " hereof ," " hereunder " and other similar compounds of the word " here " shall refer to this entire Mortgage and not to any particular Article, Section, paragraph or provision.  The term " person " and words importing persons as used in this Mortgage shall include firms, associations, partnerships (including limited partnerships), joint ventures, trusts, corporations, limited liability companies and other legal entities, including public or governmental bodies, agencies or instrumentalities, as well as natural persons.
Section 6.16.   Reporting Compliance .  Mortgagor agrees to comply with any and all reporting requirements imposed upon Mortgagor, Mortgagor's affiliates with respect to the transaction evidenced by the Loan Documents and secured by this Mortgage which are set forth in any law, statute, ordinance, rule, regulation, order or determination of any governmental authority, including but not limited to The International Investment Survey Act of 1976, The Agricultural Foreign Investment Disclosure Act of 1978, The Foreign Investment in Real Property Tax Act of 1980 and the Tax Reform Act of 1984 and further agrees upon request of Administrative Agent to furnish Administrative Agent with evidence of such compliance.
Section 6.17.   Section 6.17.  Mortgagor .  The obligations of Mortgagor hereunder shall be joint and several.  If any Mortgagor, or any signatory who signs on behalf of any Mortgagor, is a corporation, partnership or other legal entity, Mortgagor and any such signatory, and the person or persons signing for it, represent and warrant to Administrative Agent that this instrument is executed, acknowledged and delivered by Mortgagor's duly authorized representatives. If Mortgagor is an individual, no power of attorney granted by Mortgagor herein shall terminate on Mortgagor's disability.
Section 6.18.   Execution; Recording .  This Mortgage may be executed in several counterparts, all of which are identical, and all of which counterparts together shall constitute one and the same instrument.  The date or dates reflected in the acknowledgments hereto indicate the date or dates of actual execution of this Mortgage, but such execution is as of the date shown on the first page hereof, and for purposes of identification and reference the date of this Mortgage shall be deemed to be the date reflected on the first page hereof.  Mortgagor will cause this Mortgage and all amendments and supplements thereto and substitutions therefor and all financing statements and continuation statements relating thereto to be recorded, filed, re‑recorded and refiled in such manner and in such places as Administrative Agent shall reasonably request and will pay all such recording, filing, re‑recording and refiling taxes, mortgage registry tax, fees and other charges.
 
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Section 6.19.   Successors and Assigns .  The terms, provisions, covenants and conditions hereof shall be binding upon Mortgagor, and the successors and assigns of Mortgagor, and shall inure to the benefit of Administrative Agent and shall constitute covenants running with the Land.  All references in this Mortgage to Mortgagor shall be deemed to include all such successors and assigns of Mortgagor.
Section 6.20.   No Partnership, Etc. .  The relationship between Administrative Agent and Mortgagor is solely that of lender and borrower.  Administrative Agent has no fiduciary or other special relationship with Mortgagor.  Nothing contained in the Loan Documents is intended to create any partnership, joint venture, association or special relationship between Mortgagor and Administrative Agent or in any way make Administrative Agent a co‑principal with Mortgagor with reference to the Property.  All agreed contractual duties between or among Administrative Agent and Mortgagor are set forth herein and in the other Loan Documents and any additional implied covenants or duties are hereby disclaimed.  Any inferences to the contrary of any of the foregoing are hereby expressly negated.
Section 6.21.   Applicable Law .  THIS MORTGAGE, AND ITS VALIDITY, ENFORCEMENT AND INTERPRETATION, SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH AND PURSUANT TO THE LAWS OF THE STATE OF NEW JERSEY (WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND APPLICABLE UNITED STATES FEDERAL LAW.
Section 6.22.   No Merger of Estates .  So long as any part of the Secured Indebtedness remain unpaid and unperformed or undischarged, the fee and leasehold estates to the Property shall not merge but rather shall remain separate and distinct, notwithstanding the union of such estates either in Mortgagor, Administrative Agent, any lessee, or any third party purchaser or otherwise.
Section 6.24.   Administrative Agent's Consent .  Except where otherwise expressly provided herein, in any instance hereunder where the approval, consent or the exercise of judgment of Administrative Agent is required or requested, (a) the granting or denial of such approval or consent and the exercise of such judgment shall be within the Permitted Discretion of Administrative Agent, and (b) no approval or consent of Administrative Agent shall be deemed to have been given except by a specific writing intended for the purpose and executed by an authorized representative of Administrative Agent.
Section 6.25.   Entire Agreement .  The Loan Documents constitute the entire understanding and agreement between Mortgagor and Administrative Agent with respect to the transactions arising in connection with the Secured Indebtedness and supersede all prior written or oral understandings and agreements between Mortgagor and Administrative Agent with respect to the matters addressed in the Loan Documents.  Mortgagor hereby acknowledges that, except as incorporated in writing in the Loan Documents, there are not, and were not, and no persons are or were authorized by Administrative Agent to make, any representations, understandings, stipulations, agreements or promises, oral or written, with respect to the matters addressed in the Loan Documents.
 
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Section 6.26.   Future Advances .  This Mortgage shall secure the payment of any additional amounts advanced, from time to time, by Lender Parties to Borrower under the Loan Agreement or other Loan Documents.  The maximum amount of unpaid loan indebtedness secured hereby shall be $17,000,000.00, exclusive of interest thereon, unpaid balances of advance made with respect to the Property for the payment of taxes, assessments, insurance premiums, costs incurred for the protection of the Property and other costs which the Administrative Agent is authorized by this Mortgage, the Loan Agreement or any other Loan Document to pay on Administrative Agent's behalf, all of which shall be secured by this Mortgage.
Section 6.27.   Certain Matters Relating to Property Located in the State of New Jersey .  With respect to the Property which is located in the State of New Jersey, notwithstanding anything contained to the contrary:
(a)   THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF A TRUE COPY OF THIS MORTGAGE WITHOUT CHARGE.
(b)   THIS IS A FIRST MORTGAGE
(c)   Mortgagor, Administrative Agent and Lenders may agree to change the interest rate, maturity date, or terms of this Mortgage or the Loan Agreement.  Any such agreement shall be in writing, duly executed by both Mortgagor and Administrative Agent.  In the event that any such agreement shall occur, it shall, to the extent provided by law, be deemed a "modification" as defined in N.J.S.A. 46:9-8.1 et seq., and this Mortgage shall be subject to, and Administrative Agent shall be the beneficiary of, the mortgage lien priority provisions of such statute.
Section 6.28.   Intentionally Deleted .
Section 6.29.   Waivers .  Mortgagor hereby waives all rights of statutory redemption of the Property and all rights of appraisement of the Property.
THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
 
 
 
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THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
 
 
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IN WITNESS WHEREOF, Mortgagor has executed this instrument as of the date first written on page 1 hereof.
MORTGAGOR :

 
 
 
BLONDER TONGUE LABORATORIES, INC.,
a Delaware Corporation
 
By:   ______________________________
Name:          ______________________________
Title:            ______________________________
 
STATE OF ____________               :
:   ss.
COUNTY OF __________               :

BE IT REMEMBERED , that on this ____ day of __________, 2016, before me the subscriber, an officer duly authorized to take acknowledgments for use in the State of _______________, personally appeared ________________________   who I am satisfied is the person who executed the within Instrument as the _____________ of ________________, a ____________________, the ___________ of ___________________ , a ____________________, the Mortgagor named therein, and I having first made known to him the contents thereof, he did thereupon acknowledge that said Instrument made by said Mortgagor is his voluntary act and deed and delivered by him as said ______________ of said Mortgagor and is the voluntary act and deed of said Mortgagor, made by virtue of authority from said Mortgagor's _________________ for the uses and purposes therein expressed.

_________________________________


The undersigned hereby certifies that the correct address of the within named Administrative Agent is:
8401 North Central Expressway, Suite 600
Dallas, Texas 75225

On behalf of the Administrative Agent:
STERLING NATIONAL BANK

By: _________________________________
Name: _______________________________
Title: ________________________________
 
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EXHIBIT A
Real property in the City of Old Bridge, County of Middlesex, State of New Jersey, described as follows:
ALL THAT CERTAIN lot, piece or parcel of land, situate, lying and being in the Township of Old Bridge, County of Middlesex, State of New Jersey:

BEGINNING at a point in the Easterly line of Jake Brown Road, variable width, distant 346.37 feet on a course bearing North 06 degrees 50 minutes 00 seconds East, from the intersection of the said line of Jake Brown Road extended Southerly with the Northerly line of Patio Greens Drive, extended Westerly, and running; thence

1. North 06 degrees 50 minutes 00 second East, 32.39 feet along the Easterly line of Jake Brown Road, as shown on a plat entitled Final Map Section 2 Patio Greens dated 9/5/84, filed with the Middlesex County Clerk on 8/20/85 as Map No. 4886, File No. 972, to a point of curvature; thence

2. Northeasterly, continuing along the easterly line of Jake Brown Road, along a curve to the left, having a radius of 1,000.00 feet, an arc distance of 76.55 feet, a delta angle of 04 degrees 23 minutes 10 seconds, a chord distance of 76.53 feet and a chord bearing of North 04 degrees 38 minutes 25 seconds East to a ½" steel pin with plastic identification cap set to a point of tangency; thence

3. North 02 degrees 26 minutes 52 seconds East, 541.66 feet along the Easterly line of Jake Brown Road to a point of curvature, being the beginning of the second course in Deed Book 2669, Page 827; thence

4. Northeasterly, continuing along the said easterly line of Jake Brown Road, along a curve to the right, having a radius of 50.00 feet, an arc distance of 78.54 feet, a delta angle of 90 degrees 00 minutes 00 seconds, a chord distance of 70.71 feet and a chord bearing of North 47 degrees 26 minutes 50 seconds East to a masonry nail with metal disk set at a point of tangency; thence;

5. South 87 degrees 33 minutes 10 seconds East, 792.91 feet along the Southerly line of Jake Brown Road to a point of curvature; thence

6. Northeasterly, continuing along the southerly line of Jake Brown Road, along a curve to the left, having a radius of 200.00 feet, an arc distance of 210.90 feet, a delta angle of 60 degrees 25 minutes 10 seconds, a chord distance of 201.27 feet and a chord bearing of North 62 degrees 14 minutes 15 seconds East to a ½" steel pin with plastic identification cap set at a point of tangency; thence,

7. North 32 degrees 01 minutes 40 seconds East, 244.08 feet to a point in the Easterly line of the present Jake Brown Road and the old Jake Brown Road, being the terminus of the 6th course in Deed Book 2660, Page 86; thence

8. South 53 degrees 58 minutes 40 seconds East, 396.74 feet along the line of Lot 9 to a point; thence

9. South 44 degrees 50 minutes 00 seconds West, 189.49 feet along the line of Lot 1 in Block 9002 as shown on a plat entitled Final Map Section 3 Patio Greens dated 3/31/82, filed in the Middlesex County Clerk's Office on 4/19/84 as Map No. 4690, File No. 970; thence

10. South 43 degrees 03 minutes 07 seconds West, 849.65 feet to a point, said point being 9.25 feet Easterly of the point of beginning in the Deed Book 3289, Page 68 and 9.25 feet Westerly of the terminus of the 3rd course in Deed Book 3289, Page 68, Tract 2; thence
 
 
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT, AND FINANCING STATEMENT - Exhibit A
DAL 79534929v8


11. North 88 degrees 14 minutes 26 seconds West, 792.62 feet to a point, being the point and place of beginning.

NOTE: FOR INFORMATION ONLY: Being Lot(s) 8, Block(s) 9000; Tax Map of the Township of Old Bridge, County of Middlesex, State of New Jersey.


 
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT, AND FINANCING STATEMENT - Exhibit A 
DAL 79534929v8
 
EXHIBIT 99.1
 
One Jake Brown Road
Old Bridge, NJ 08857
Tel: 732-679-4000
Fax: 732-679-4353
www.blondertongue.com
FOR IMMEDIATE RELEASE:

Blonder Tongue Obtains $8,500,000 Credit Facility From Sterling National Bank

OLD BRIDGE, NJ / January 3, 2017 /   Blonder Tongue Laboratories, Inc. (NYSE MKT:BDR) (the "Company") announced that on December 28, 2016 it consummated an $8,500,000 financing transaction with Sterling National Bank, maturing in December 2019.  The new credit facility consists of a $5,000,000 asset-based revolving line of credit and a $3,500,000 amortizing term loan.  A portion of the proceeds of the new credit facility has been used to repay all amounts outstanding under the Company's existing credit facility, which has been terminated.  That credit facility was scheduled to expire December 31, 2016.

The Sterling revolving loan and term loan facilities are variable interest rate loans, based upon the 30-day LIBOR rate (currently 0.76%), plus a margin of 4.00% with respect to the revolving loan and 4.50% with respect to the term loan.  This pricing represents a 3.99% reduction in our cost of funds per annum, with respect to the revolving loan and a 3.49% reduction in our cost of funds per annum, with respect to the term loan.

The term loan will amortize at the rate of $19,444 per month, maturing (together with the revolving loan facility) on December 28, 2019.  All outstanding indebtedness under the new credit facility is secured by all of the assets of the Company and its subsidiaries, and is guaranteed by Blonder Tongue Far East, LLC, a wholly-owned subsidiary of the Company.

Eric S. Skolnik, Chief Financial Officer commented: "We are very pleased with the terms that Sterling has made available to us under the new facility.  They understand our business and are providing us with increased availability and more flexible funding options compared to our prior lender.  As a result, we expect the Sterling facility to improve our liquidity and provide us with greater working capital to fund current and future operations."

Michael Haddad, President of Sterling's Asset Based Lending Division, commented: "Sterling National Bank is happy to be partnering with Blonder Tongue as they continue to grow and thrive.  We look forward to working with the top notch management team for many years to come"

About Blonder Tongue
Blonder Tongue Laboratories, Inc. together with R. L. Drake Holdings, LLC - its wholly owned subsidiary - offer customers more than 130 years of combined engineering and manufacturing excellence with solid histories of delivering reliable, quality products.  As a leader in the field of cable television communications, the Company provides system operators and integrators serving the cable, broadcast, satellite, IPTV, institutional and professional video markets with comprehensive solutions for the provision of content contribution, distribution and video delivery to homes and businesses.  The Company designs, manufactures, sells and supports an equipment portfolio of standard and high definition digital video solutions, as well as core analog video and high-speed data solutions for distribution over coax, fiber and IP networks.  Additional information on the Company and its products can be found at www.blondertongue.com and www.rldrake.com .


About Sterling National Bank
Sterling Bancorp, of which the principal subsidiary is Sterling National Bank, specializes in the delivery of service and solutions to business owners, their families, and consumers within the communities we serve through teams of dedicated and experienced relationship managers. Sterling National Bank offers a complete line of commercial, business, and consumer banking products and services. The Asset Based Lending Division of Sterling provides creative asset-based financing solutions that help business across the country thrive and grow with our vast range of solutions and in-depth understanding of some of the most challenging industries.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: The information set forth above includes "forward-looking" statements and accordingly, the cautionary statements contained in Blonder Tongue's Annual Report and Form 10-K for the year ended December 31, 2015 (See Item 1: Business, Item 1A: Risk Factors, Item 3: Legal Proceedings and Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations), and other filings with the Securities and Exchange Commission are incorporated herein by reference.  The words "believe", "expect", "anticipate", "project", "target", "intend", "plan", "seek", "estimate", "endeavor", "should", "could", "may" and similar expressions are intended to identify forward-looking statements.  In addition, any statements that refer to projections for our future financial performance, our anticipated growth trends in our business and other characterizations of future events or circumstances are forward-looking statements.  Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof.  Blonder Tongue undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.  Blonder Tongue's actual results may differ from the anticipated results or other expectations expressed in Blonder Tongue's "forward-looking" statements.
Contacts
Eric Skolnik
Chief Financial Officer
eskolnik@blondertongue.com
(732) 679-4000
 
Robert J. Pallé
Chief Executive Officer
bpalle@blondertongue.com
(732) 679-4000