Common use of Indebtedness and Liabilities Clause in Contracts

Indebtedness and Liabilities. Incur, create, assume, become or be liable in any manner with respect to, or permit to exist, any Indebtedness or Liability, other than: (a) Indebtedness to the Lender for Advances, or otherwise; (b) Indebtedness and Liabilities with respect to trade obligations, accounts payable and other normal accruals incurred in the ordinary course of business, or with respect to which any of the Borrowers is contesting in good faith the amount or validity thereof by appropriate proceedings, and then only to the extent that the Borrowers have set aside on their books adequate reserves therefor; (c) Indebtedness under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtedness, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the incurrence of any and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the Lender.

Indebtedness and Liabilities. IncurNone of the Loan Parties shall directly or indirectly create, createincur, assume, guaranty, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other than: except: (a) Indebtedness to the Lender for Advances, or otherwise; Obligations; (b) Indebtedness Capital Leases and Liabilities with respect to trade obligations, accounts payable and other normal accruals incurred purchase money financing for Equipment entered into in the ordinary course of business, business (subject to Section 5.21); (c) trade payables and normal accruals in the ordinary course of business not yet due and payable or with respect to which any of the Borrowers such Loan Party is contesting in good faith the amount or validity thereof by appropriate proceedings, proceedings and then only to the extent that the Borrowers Borrower shall have set aside on their books established adequate reserves therefor; (c) Indebtedness , if appropriate under those Real Property Leases listed on Schedule "3.07" annexed hereto; GAAP; (d) Indebtedness owing under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtednessthe ADEX Note, but only Earn-Out Obligations owing to the T N S Sellers, Subordinated Debt owing under the Acquisition Agreements and to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; providedconstituting Indebtedness, however, that: (i) the Borrowers shall, working capital adjustments owing by Borrower to a seller in connection with the Acquisition or a Potential Target Acquisition; (e) Indebtedness described in Section 4.4(a) hereof (including Indebtedness described on Schedule 4.4) and any extension, refinancing, renewal or replacement thereof if the principal amount thereof does not exceed the principal amount of the Indebtedness so refinanced; (f) up to an aggregate amount of $1,500,000 in unsecured debt owing to sellers of the equity interests of all Potential Targets acquired by Borrower (the “Potential Target Subordinated Debt”), provided that the repayment of any such unsecured debt is subordinated on terms satisfactory to Agent, including a restriction against payment of cash interest, required amortization and mandatory prepayments and provided further that the stated maturity date of any such debt is acceptable to the Agent in its commercially reasonable judgment; (g) Subordinated Debt, in addition to the Subordinated Debt described in the preceding clauses (d) and (f), provided that (A) the terms and conditions upon which such Subordinated Debt is incurred (including without limitation covenants, rate of interest, maturity date and use of proceeds) shall have been reviewed to the reasonable satisfaction of Agent, (B) no Event of Default shall have occurred and be continuing, (C) the holder of such Subordinated Debt shall have executed a Subordination Agreement in form and substance reasonably acceptable to Agent and (D) not less than ten (10) Business Days prior to the incurrence of any and all such IndebtednessSubordinated Debt, Borrower shall have delivered to Agent written notice of the applicable Loan Party’s intent to incur such Subordinated Debt, together with a certificate signed by the chief financial officer of Borrower which shall include a calculation in reasonable detail demonstrating that after giving effect to the incurrence of such Subordinated Debt on a Pro Forma Basis, Borrower would be in compliance with the provisions financial covenant set forth in Section 5.21(D) (after decreasing the numerator of the then applicable ratio by 0.50) as of the end of and for the period of four consecutive fiscal quarters ending with the most recent fiscal quarter for which the Borrower delivered financial statements to Agent pursuant to Section 6.06(c5.1(B); (h) and Section 6.09 hereofIndebtedness in respect of letters of credit or banker’s acceptances to secure the performance of bids, tenders, leases, contracts (other than for the payment of money) or statutory obligations; (i) Indebtedness in favor of Borrower or any Guarantor pursuant to clause (g) of the definition of Permitted Investments; and (iij) other Indebtedness in an aggregate principal amount at any time outstanding not to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the Lenderexceed $100,000.

Indebtedness and Liabilities. IncurDirectly or indirectly create, createincur, assume, guaranty, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other than: except: (a) Indebtedness to the Lender for Advances, or otherwise; Obligations; (b) intercompany Indebtedness owed to Borrower by its Subsidiaries the aggregate outstanding principal amount of which does not exceed at any time the sum of (i) the aggregate amount of such intercompany Indebtedness in existence on the Closing Date and disclosed on Schedule 7.1 and (ii) $6,000,000; provided that such Indebtedness is subordinated in right of payment to the Obligations; (c) Capital Leases and Indebtedness secured by purchase money liens not to exceed $5,000,000 in the aggregate amount outstanding at any time; (d) Indebtedness resulting from a refinance of any of Borrower's Closing Date Mortgaged Property by another financial institution; provided that (i) Borrower grants Agent a second priority Lien in such refinanced Closing Date Mortgaged Property, unless the relevant mortgagee refuses to consent to such Lien of Agent, in which event Agent will not require the grant of such a second Lien, (ii) Borrower immediately applies the proceeds derived from such refinance directly to the Revolving Loan, (iii) Borrower obtains from the refinancing mortgagee an executed mortgagee waiver, in form and substance satisfactory to Agent, whereby mortgagee agrees to allow Agent access rights upon such real property and mortgagee subordinates any Lien it has on any personal property Collateral located on such real property to the Lien of Agent, and (iv) the terms of such refinancing are not less favorable than the amortization of real property currently provided herein as the Real Property Advance Rate and the interest rate provided for in this Agreement; (e) Indebtedness existing on the Closing Date and identified on Schedule 7.1; (f) (i) up to $15,000,000 of additional Subordinated Debt issued to WCAS, it being understood that such additional Subordinated Debt may be secured by a junior Lien on such assets of the Borrower and its Subsidiaries which constitute Collateral for payment of the Obligations, provided such Subordinated Debt and junior Lien is subordinated in a manner and pursuant to documentation satisfactory to Agent and (ii) "payment in kind" interest on Subordinated Debt; (g) Indebtedness of any Person that becomes a Subsidiary after the Closing Date, provided that such Indebtedness exists at the time such Person becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Subsidiary; (h) Indebtedness of any Subsidiary organized under the laws of Japan in an aggregate principal amount at any one time not to exceed $5,000,000; (i) Indebtedness of Borrower's foreign Subsidiaries for borrowed money not in excess at any particular date of the aggregate amount of $20,000,000, which Indebtedness will be used for the working capital and liquidity needs of such Subsidiaries and which Indebtedness may be secured by Liens on assets of such Subsidiaries, in which event Agent will release such Liens as Agent may have in such assets; and (j) extensions and renewals of any such Indebtedness that do not increase the outstanding principal amount thereof. Except as permitted above, Borrower will not, and will not permit any of its Subsidiaries to, incur any Liabilities with respect to except for Indebtedness permitted herein and trade obligations, accounts payable payables and other normal accruals incurred in the ordinary course of business, business not yet due and payable or with respect to which Borrower or any of the Borrowers its Subsidiaries is contesting in good faith the amount or validity thereof by appropriate proceedings, proceedings and then only to the extent that the Borrowers have set aside on their books Borrower or any of its Subsidiaries has established adequate reserves therefor; (c) Indebtedness therefor under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtedness, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the incurrence of any and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the LenderGAAP.

Indebtedness and Liabilities. IncurDirectly or indirectly create, createincur, assume, guaranty, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other than: except: (a) Indebtedness to the Lender for Advances, or otherwise; Obligations; (b) intercompany Indebtedness among Borrowers; provided that such Indebtedness is subordinated in right of payment to the Obligations; (c) Indebtedness (excluding capital leases) not to exceed $150,000 in the aggregate at any time outstanding secured by purchase money Liens; (d) Indebtedness under Capital Leases or loans for the purpose of financing leasehold improvements and equipment at a hospital facility not to exceed $2,500,000 outstanding at any time in the aggregate; and (e) Indebtedness existing on the Closing Date and identified on Schedule 7.1. Except for Indebtedness described permitted in the preceding sentence, Borrowers will not, and will not permit any of their Subsidiaries to, incur any Liabilities with respect to except for (i) Liabilities consisting of trade obligations, accounts payable payables and other normal accruals incurred in the ordinary course of business, or business not yet due and payable or; (ii) Liabilities expensed monthly in the ordinary course of business and required in accordance with GAAP to be reflected on a balance sheet of Borrower; (iii) Liabilities with respect to which Borrower or any of the Borrowers its Subsidiaries is contesting in good faith the amount or validity thereof by appropriate proceedings, proceedings and then only to the extent that the Borrowers have set aside on their books Borrower or any of its Subsidiaries has established adequate reserves therefor; , if appropriate under GAAP; and (civ) Indebtedness under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtednessother Liabilities, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the incurrence of any and all such Indebtedness, Liabilities are required to be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) disclosed to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such other terms and conditions as shall be reasonably acceptable to the Lenderprovisions of this Agreement.

Indebtedness and Liabilities. IncurNo Borrower will, nor will any Borrower permit any other Loan Party to, directly or indirectly create, incur, assume, guaranty, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other than: except: (a) Indebtedness to the Lender for Advances, or otherwise; Obligations; (b) intercompany Indebtedness among Borrowers and their Subsidiaries (other than SDI); PROVIDED that such Indebtedness is subordinated in right of payment to the Obligations; (c) Indebtedness not to exceed $150,000 in the aggregate at any time outstanding secured by purchase money Liens (including for computation purposes outstanding purchase money Indebtedness existing on the Closing Date and identified on Schedule 7.1); (d) Indebtedness in respect of Capital Leases incurred to acquire computer Equipment, up to $150,000 in the aggregate; (e) Indebtedness existing on the Closing Date and identified on Schedule 7.1; and (f) Subordinated Debt issued or incurred by Borrowers so long as (i) at the time any such Subordinated Debt is issued or incurred by any Borrower and after giving effect thereto, no Event of Default shall have occurred and be continuing; (ii) the terms and conditions of such Subordinated Debt, including without limitation the subordination provisions applicable thereto, the payment and maturity terms thereof, and any covenants, representations and warranties, defaults and indemnities applicable thereto, are acceptable to Lender and its counsel, and (iii) Lender shall have given its prior written consent to the issuance or incurrence of such Subordinated Debt, such consent not to be unreasonably withheld or delayed. Except for Indebtedness described permitted in the preceding sentence, Borrowers will not, and will not permit any other Loan Party to, incur any Liabilities with respect to except for trade obligationspayables, accounts payable and other normal accruals incurred in the ordinary course of business, business not yet due and payable or with respect to which any of the Borrowers applicable Borrower or the applicable other Loan Party is contesting in good faith the amount or validity thereof by appropriate proceedings, proceedings and then only to the extent that the Borrowers have set aside on their books such Borrower or such Loan Party has established adequate reserves therefor; (c) Indebtedness , if appropriate under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtedness, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the incurrence of any and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the LenderGAAP.

Indebtedness and Liabilities. IncurDirectly or indirectly create, createincur, assume, guaranty, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liabilityexcept: (i) Indebtedness under this Agreement and the Notes; (ii) Indebtedness (excluding Capital Leases) not to exceed $1,500,000 in the aggregate at any time outstanding; (iii) Indebtedness under Capital Leases (excluding Capital Leases in connection with the New Information System) in existence as of the Closing Date plus an additional $1,000,000 outstanding at any time in the aggregate; provided, other than:however, that amounts of such Indebtedness reduced shall be allowed to be incurred again; (iv) Indebtedness in connection with the New Information System not to exceed $15,000,000 outstanding at any time in the aggregate; (a) Indebtedness of any Loan Party to the Lender for Advances, or otherwise; any other Loan Party; (b) Indebtedness and Liabilities with respect of any Foreign Subsidiary to trade obligations, accounts payable and other normal accruals incurred in the ordinary course of business, or with respect to which any of the Borrowers is contesting in good faith the amount or validity thereof by appropriate proceedings, and then only Loan Party to the extent that the Borrowers have set aside on their books adequate reserves therefor; permitted under subsection 6D(vi); (c) Indebtedness under those Real Property Leases listed on Schedule "3.07" annexed hereto; of any Foreign Subsidiary to any other Foreign Subsidiary; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtedness, but only of any Loan Party to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Dateany Foreign Subsidiary; provided, however, that: that (i1) the Borrowers shall, in connection with the incurrence any inter company Indebtedness of any Loan Party permitted under this subsection 6A(v) shall be subordinated in right of payment to the Obligations under and as defined in the Senior Loan Agreement on terms satisfactory to the Senior Lenders and evidenced by intercompany notes in form and substance satisfactory to the Purchasers, (2) all such Indebtednessintercompany notes shall be endorsed in blank or accompanied by note powers endorsed in blank and pledged and delivered to the Senior Agent, for the benefit of the Agents, Senior Lenders, the Term Loan Administrative Agent and the Term Loan Lenders, (3) at the time any inter company Indebtedness is incurred by any Loan Party pursuant to this subsection 6A(v), and after giving effect thereto, the Loan Parties shall be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereofSolvent; and (ii4) no Default or Event of Default exists or would occur and be continuing after giving effect to any proposed inter company Indebtedness pursuant to this subsection 6A(v): (vi) Indebtedness of Recoton in an amount not to exceed $5,518,399 plus accrued interest evidenced by a promissory note payable to the extent that United States of America or an agency thereof delivered in settlement of obligations of Recoton arising out of the Borrowers shall elect to incur customs investigation discussed in Recoton's Form 8-K for an event which occurred on July 27, 1999; (vii) Indebtedness for money borrowed under the Senior Loan Agreement and the Term Loan Agreement; (other than purchase money Indebtednessviii) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford Indebtedness under the Lender a right of first refusal to provide the financing thereforGerman Facility; provided, that the terms of the Indebtedness permitted under this subsection 6A(viii) can not be amended, increased, replaced or terminated without the prior written consent of the Purchasers; (ix) Indebtedness existing on the Closing Date and conditions identified on Schedule 7.1 to the Senior Loan Agreement; (x) Indebtedness of any the type described in subsection 2.3(C) of the Senior Loan Agreement with respect to the issuance of debt securities of Recoton in a public offering or a private placement and which (1) the Net Securities Proceeds are used to pay down the Senior Debt or the "Obligations" (as such financing which term is defined in the Lender may Term Loan Agreement) as set forth in subsection 2.5 of the Term Loan Agreement or as otherwise required pursuant to this Agreement, (at their sole discretion2) elect to offer shall be on subordinate to the Senior Loans; (3) the terms and conditions which, in the aggregate, shall be no less favorable satisfactory to the Borrowers than those offered by any other financial institutionPurchasers and (4) the documentation shall be satisfactory to the Purchasers; (gxi) Intercompany Investments Indebtedness incurred by STD and its Subsidiaries to the extent supported by Lender Letters of Credit (as defined in the Senior Loan Agreement) and which are represented by instruments amount as of the Closing Date is $12,400,000; (xii) Indebtedness with respect to the obligations of Recoton Italy and Recoton UK referred to in subsection 6B(v) and (vi); (xiii) Indebtedness of Recoton Italy with respect to letters of credit that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreementcash collateralized; and (hxiv) Subordinated Senior Debt and any Permitted Refinancing (as defined in such amounts the Subordination Agreement). Company will not, and upon such terms will not permit any of its Subsidiaries to, incur any Liabilities except for Indebtedness permitted herein and conditions as shall be reasonably acceptable to trade and other payables and expenses arising in the Lenderordinary course of business that are paid in accordance with their prior existing practices.

Indebtedness and Liabilities. IncurDirectly or indirectly create, createincur, assume, guaranty, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other thanexcept: (a) Indebtedness to the Lender for Advances, or otherwiseObligations; (b) Indebtedness and Liabilities with respect (excluding Capital Leases) not to trade obligations, accounts payable and other normal accruals incurred exceed $1,500,000 in the ordinary course of business, or with respect to which aggregate at any of the Borrowers is contesting in good faith the amount or validity thereof by appropriate proceedings, and then only to the extent that the Borrowers have set aside on their books adequate reserves therefortime outstanding; (c) Indebtedness under those Real Property Capital Leases listed on Schedule "3.07" annexed hereto(excluding Capital Leases in connection with the New Information System) in existence as of the Closing Date plus an additional $1,000,000 outstanding at any time in the aggregate; provided, however, that amounts of such Indebtedness reduced shall be allowed to be incurred again; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed heretoin connection with the New Information System not to exceed $15,000,000 outstanding at any time in the aggregate; (ei) Existing Indebtedness, but only Indebtedness of any Loan Party to any other Loan Party; (ii) Indebtedness of any Foreign Subsidiary to any Loan Party to the extent set forth on Schedule "6.01(epermitted under subsection 6.4(f)" annexed hereto; ; (fiii) Purchase money Indebtedness or of any Foreign Subsidiary to any other Foreign Subsidiary; (iv) Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Dateany Loan Party to any Foreign Subsidiary; provided, however, that: that (i1) the Borrowers shall, in connection with the incurrence any intercompany Indebtedness of any Loan Party permitted under this subsection 6.1(e) shall be subordinated in right of payment to the Obligations on terms satisfactory to the Senior Agent and evidenced by intercompany notes in form and substance satisfactory to the Administrative Agent, (2) all such Indebtednessintercompany notes shall be endorsed in blank or accompanied by note powers endorsed in blank and pledged and delivered to the Senior Agent, for the benefit of the Agents, Senior Lenders, Administrative Agent and the Lenders, (3) at the time any intercompany Indebtedness is incurred by any Loan Party pursuant to this subsection 6.1(e), and after giving effect thereto, the Loan Parties shall be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereofSolvent; and (ii4) no Default or Event of Default exists or would occur and be continuing after giving effect to any proposed intercompany Indebtedness pursuant to this subsection 6.1(e). (f) Indebtedness of Recoton in an amount not to exceed $5,518,399 plus accrued interest evidenced by a promissory note payable to the extent that United States of America or an agency thereof delivered in settlement of obligations of Recoton arising out of the Borrowers shall elect to incur customs investigation discussed in Recoton's Form 8-K for an event which occurred on July 27, 1999; (g) the Subordinated Debt; (h) Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford under the Lender a right of first refusal to provide the financing thereforGerman Facility; provided, that the terms of the Indebtedness permitted under this subsection 6.1(h) can not be amended, increased, replaced or terminated without the prior written consent of the Required Lenders; (i) Indebtedness existing on the Closing Date and conditions identified on Schedule 6.1; (j) Indebtedness of any such financing the type described in subsection 2.3(C) of the Senior Loan Agreement with respect to the issuance of debt securities of Recoton in a public offering or a private placement and which (1) the Lender may Net Securities Proceeds are used to pay down the Senior Debt or the Obligations as set forth in subsection 2.5, (at their sole discretion2) elect to offer shall be on subordinate to the Obligations; (3) the terms and conditions which, in the aggregate, shall be no less favorable satisfactory to the Borrowers than those offered by any other financial institutionAdministrative Agent and the Required Lenders and (4) the documentation shall be satisfactory to the Administrative Agent and the Required Lenders; (gk) Intercompany Investments which are represented Indebtedness incurred by instruments that are promptly delivered (with all necessary endorsements thereon) STD and its Subsidiaries to the extent supported by Lender pursuant to Letters of Credit (as defined in the Security Senior Loan Agreement) (which amount as of the Closing Date is $12,400,000); and (hl) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable Indebtedness with respect to the Lenderobligations of Recoton Italy and Recoton UK referred to in subsection 6.2(e) and (f); (m) Indebtedness of Recoton Italy with respect to letters of credit that are cash collateralized; and (n) Senior Debt and any Permitted Refinancing (as defined in the Subordination Agreement). Borrowers will not, and will not permit any of their Subsidiaries to, incur any Liabilities except for Indebtedness permitted herein and trade and other payables and expenses arising in the ordinary course of business that are paid in accordance with the prior existing practices of the Borrowers.

Indebtedness and Liabilities. IncurDirectly or indirectly create, create---------------------------- incur, assume, guaranty, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other than: except: (a) Indebtedness to the Lender for Advances, or otherwise; Obligations; (b) intercompany Indebtedness owed to Borrower by its Subsidiaries the aggregate outstanding principal amount of which does not exceed at any time the sum of (i) the aggregate amount of such intercompany Indebtedness in existence on the Closing Date and disclosed on Schedule 7.1 and ------------ (ii) $6,000,000; provided that such Indebtedness is subordinated in right of -------- payment to the Obligations; (c) Capital Leases and Indebtedness secured by purchase money liens not to exceed $5,000,000 in the aggregate amount outstanding at any time; (d) Indebtedness resulting from a refinance of any of Borrower's Closing Date Mortgaged Property by another financial institution; provided that (i) Borrower grants Agent a second priority Lien in such -------- refinanced Closing Date Mortgaged Property, unless the relevant mortgagee refuses to consent to such Lien of Agent, in which event Agent will not require the grant of such a second Lien, (ii) Borrower immediately applies the proceeds derived from such refinance directly to the Revolving Loan, (iii) Borrower obtains from the refinancing mortgagee an executed mortgagee waiver, in form and substance satisfactory to Agent, whereby mortgagee agrees to allow Agent access rights upon such real property and mortgagee subordinates any Lien it has on any personal property Collateral located on such real property to the Lien of Agent, and (iv) the terms of such refinancing are not less favorable than the amortization of real property currently provided herein as the Real Property Advance Rate and the interest rate provided for in this Agreement; (e) Indebtedness existing on the Closing Date and identified on Schedule 7.1; (f) ------------ (i) up to $15,000,000 of additional Subordinated Debt issued to WCAS, it being understood that such additional Subordinated Debt may be secured by a junior Lien on such assets of the Borrower and its Subsidiaries which constitute Collateral for payment of the Obligations, provided such Subordinated Debt and junior Lien is subordinated in a manner and pursuant to documentation satisfactory to Agent and (ii) "payment in kind" interest on Subordinated Debt; (g) Indebtedness of any Person that becomes a Subsidiary after the Closing Date, provided that such Indebtedness exists at the time such Person becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Subsidiary; (h) Indebtedness of any Subsidiary organized under the laws of Japan in an aggregate principal amount at any one time not to exceed $5,000,000; (i) Indebtedness of Borrower's foreign Subsidiaries for borrowed money not in excess at any particular date of the aggregate amount of $20,000,000, which Indebtedness will be used for the working capital and liquidity needs of such Subsidiaries and which Indebtedness may be secured by Liens on assets of such Subsidiaries, in which event Agent will release such Liens as Agent may have in such assets; and (j) extensions and renewals of any such Indebtedness that do not increase the outstanding principal amount thereof. Except as permitted above, Borrower will not, and will not permit any of its Subsidiaries to, incur any Liabilities with respect to except for Indebtedness permitted herein and trade obligations, accounts payable payables and other normal accruals incurred in the ordinary course of business, business not yet due and payable or with respect to which Borrower or any of the Borrowers its Subsidiaries is contesting in good faith the amount or validity thereof by appropriate proceedings, proceedings and then only to the extent that the Borrowers have set aside on their books Borrower or any of its Subsidiaries has established adequate reserves therefor; (c) Indebtedness therefor under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtedness, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the incurrence of any and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the LenderGAAP.

Indebtedness and Liabilities. IncurDirectly or indirectly create, createincur, assume, guaranty, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other than: except: (a) Indebtedness to the Lender for Advances, or otherwise; Obligations; (b) intercompany Indebtedness among Borrower and Liabilities any of the other Loan Parties, provided that each of the Borrowers agrees that any debt owing to Borrower by any Loan Party, whether now existing or hereafter incurred, shall at all times, including after any bankruptcy proceeding, be subordinate and junior in right of payment, to the Obligations; (c) Indebtedness (excluding Capital Leases) not to exceed $100,000 in the aggregate at any time outstanding, either unsecured or secured by purchase money Liens as permitted by the definition of Permitted Encumbrances; (d) Indebtedness under Capital Leases not to exceed $100,000 outstanding at any time in the aggregate; (e) Indebtedness existing on the Closing Date and identified on Schedule 7.1, and (f) any other Indebtedness which is unsecured and subordinated to Agent and the Lenders pursuant to a subordination agreement acceptable to Agent in its Permitted Discretion; provided, however, no such Indebtedness shall be incurred by the Borrowers unless at the time of incurrence and after giving effect thereto, the Parent and its Subsidiaries are in pro forma compliance with respect to each of the financial covenants set forth on Rider B attached hereto. Borrower will not, and will not permit any of its Subsidiaries to, incur any Indebtedness except for Indebtedness permitted herein and trade obligations, accounts payable payables and other normal accruals incurred in the ordinary course of business, business not yet due and payable or with respect to which Borrower or any of the Borrowers its Subsidiaries is contesting in good faith the amount or validity thereof by appropriate proceedings, proceedings and then only to the extent that the Borrowers have set aside on their books Borrower or any of its Subsidiaries has established adequate reserves therefor; (c) Indebtedness therefor under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtedness, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the incurrence of any and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the LenderGAAP.

Indebtedness and Liabilities. IncurDirectly or indirectly create, createincur, assume, guaranty, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other than: except: (a) Indebtedness to the Lender for Advances, or otherwise; Obligations; (b) Intercompany Indebtedness (i) among Borrowers, (ii) owing by the Subsidiary Guarantors to Borrowers not to exceed $10,000 outstanding at any time in the aggregate or (iii) owing by Holdings to Borrowers and Liabilities with respect incurred by Holdings to trade obligations, accounts payable and other normal accruals permit Holdings to pay expenses incurred in the ordinary course of businessbusiness and to make Restricted Junior Payments permitted under subsection 7.5; provided that, in each case, such Indebtedness shall be unsecured and subordinated in right of payment to the Obligations, and shall not be evidenced by any note or other instrument, unless the same is pledged to Agent and Lenders pursuant to subsection 5.14; (c) Indebtedness not to exceed $1,500,000 outstanding at any time in the aggregate under Capital Leases or secured by purchase money liens; (d) Indebtedness existing on the Closing Date and identified on Schedule 4.4; and (e) Indebtedness not to exceed $500,000 outstanding at any time in the aggregate owing by Borrowers to independent supplemental staffing firms in the ordinary course of business consistent with current practices at the Closing Date to induce such firms to enter into Licensing Agreements or Account Agreements; provided that such Indebtedness is unsecured and subordinated in right of payment to the Obligations. Except for Indebtedness described permitted in the preceding sentence, Holdings and Borrowers will not, and will not permit any of their Subsidiaries to, incur any Liabilities except for trade payables and normal accruals in the ordinary course of business not yet due and payable or with respect to which any Borrower or any of the Borrowers its Subsidiaries is contesting in good faith the amount or validity thereof by appropriate proceedings, proceedings and then only to the extent that the Borrowers have set aside on their books adequate such Borrower or any of its Subsidiaries has established appropriate reserves therefor; (c) Indebtedness under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtedness, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed therefor in connection accordance with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the incurrence of any and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the LenderGAAP.

Indebtedness and Liabilities. IncurDirectly or in-directly ----------------------------- create, createincur, assume, guaranty, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other than: except: (a) Indebtedness to the Lender for Advances, or otherwise; Obliga-tions; (b) Indebtedness of Borrower or any Subsidiary of Borrower incurred or assumed in connection with any Permitted Recourse Acquisition, (c) Indebtedness (including Capital Leases) of Borrower and Liabilities its Subsidiaries (other than FSC), including any such Indebtedness (and Capital Leases) outstanding on the Closing Date, not to exceed $10,000,000 in aggregate principal (or notional principal) amount at any time outstanding secured by purchase money Liens on Equipment or real property acquired after the Closing Date; provided, that in no event shall the Borrower or any of its Subsidiaries incur any such Indebtedness (or Capital Lease) after the Closing Date unless, after giving effect thereto, the Parent Group shall be in Acquisition Covenant Compliance, (d) unsecured Indebtedness of Borrower and its Subsidiaries (other than FSC) not to exceed $250,000 in aggregate principal amount outstanding at any time, (e) Indebtedness incurred by a Purchasing Subsidiary or a Subsidiary thereof in connection with respect to trade obligations, accounts payable a Permitted Non-Recourse Acquisition and other Indebtedness of a Purchasing Subsidiary or a Subsidiary thereof for which no member of Parent Group (other than such Purchasing Subsidiary and its Subsidiary) shall be liable, primarily, secondarily, as guarantor, issuer or otherwise, in any manner, whether contractually or as a matter of law, and (f) Indebtedness existing on the Closing Date and identified on Schedule 7.1(f).1 Except for Indebtedness permitted under the preceding sentence, Borrower will not, and will not permit any of its Subsidiaries other than any Purchasing Subsidiary and a Subsidiary thereof to, incur any Liabilities except for trade payables and normal accruals incurred in the ordinary course of business, business not yet due and payable or with respect to which Borrower or any of the Borrowers its Subsidiaries (other than any Purchasing Subsidiary and a Subsidiary thereof) is contesting in good faith the amount or validity thereof by appropriate proceedings, proceed-ings and then only to the extent that the Borrowers have set aside on their books Borrower or any of its Subsidiaries (other than any Purchasing Subsidiary and a Subsidiary thereof) has established adequate reserves therefor;, if appropriate under GAAP and Borrower shall not suffer or permit any Purchasing Subsidiary or any Subsidiary thereof to incur any Liabilities (other than in respect of income and similar taxes) for which any member of Parent Group (other than any Purchasing Subsidiary and a Subsidiary thereof) shall be liable, primarily, secondarily, as guarantor, issuer or otherwise, in any manner, whether contractually or as a matter of law. 1. This schedule should exclude purchase money indebtedness covered by (c) Indebtedness under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtedness, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the incurrence of any and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the Lenderabove.

Indebtedness and Liabilities. Incur, create, assume, become or be liable in any manner with respect to, or permit to exist, any Indebtedness or Liabilityliability, other than: (a) Indebtedness to the Lender for Advances, or otherwisepursuant to this Agreement; (b) Indebtedness and Xxxxxxxxx Debt pursuant to the Acquisition Agreement; (c) Liabilities with respect to trade obligations, accounts payable payable, operating leases and other normal accruals incurred in the ordinary course of business, or with respect to which any of the Borrowers Borrower or the subject Subsidiary is contesting in good faith the amount or validity thereof by appropriate proceedings, and then only to the extent that the Borrowers have Borrower or the subject Subsidiary has set aside on their its books adequate reserves therefor; (c) Indebtedness under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed existing on the Agreement Date and reflected in the Financial Statements or the footnotes thereto or owed to those Persons, in those amounts and having those maturities as set forth in Schedule "3.05" 8 annexed hereto; (e) Existing IndebtednessCapitalized Leases reflected in the Financial Statements, but only to and Capitalized Leases hereafter entered into by the extent set forth on Schedule "6.01(e)" annexed hereto;Borrower or its Subsidiaries in the ordinary course of the Business Operations and within the limitations of Section 6.09 hereof; and (f) Purchase money Indebtedness or other Indebtedness indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the incurrence Borrower's or its Subsidiaries' acquisition of any and all such Indebtednesscapital assets, be in compliance with within the provisions limitations of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the Lender.

Indebtedness and Liabilities. IncurNo Loan Party shall, nor shall it permit any Subsidiary to, directly or indirectly create, incur, assume, guaranty, or otherwise become or be liable in any manner with respect toremain directly or indirectly liable, on a fixed or permit to existcontingent basis, any Indebtedness or Liability, other than: (a) Indebtedness to the Lender for Advances, or otherwise; (b) Indebtedness and Liabilities with respect to any Indebtedness except: (i) the Indebtedness to Lender; (ii) Indebtedness incurred for Capital Expenditures permitted under Section 6.18(E) hereof; (iii) Indebtedness under the Senior Lien Financing Documents; (iv) Indebtedness which consists of loans permitted by Section 6.16(b) or (c), (v) Indebtedness set forth on Schedule 4.4 and any refinancing, refunding or extension thereof, provided that in connection with any such refinancing, refunding or extension: (x) the aggregate principal amount of such Indebtedness is not increased, (y) the scheduled maturity date of such Indebtedness is not shortened, and (z) the covenants or defaults are not materially more restrictive or more onerous than analogous provisions in the documentation of such Indebtedness as in effect on the date hereof; (vi) Indebtedness consisting of loans by any Foreign Subsidiary of Parent to any Loan Party, so long as such Indebtedness is subordinated to the Obligations on a basis satisfactory to Lender; (vii) trade obligations, accounts payable payables and other normal accruals incurred in the ordinary course of business, business not yet due and payable or with respect to which are being Properly Contested; (viii) Subordinated Debt (including any subordinated shareholder debt) to which Lender has consented and which is subject to a subordination agreement in favor of and acceptable to Lender all in accordance with the requirements of the Borrowers is contesting in good faith the amount or validity thereof definition of Subordinated Debt; (ix) any Indebtedness consisting of guaranty obligations permitted by appropriate proceedingsSection 6.2; (x) unsecured or, and then only to the extent that Senior Lien Lender is the Borrowers have set aside on their books adequate reserves therefor; (c) counterparty, secured Indebtedness of Loan Parties under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtednessany Hedging Agreements, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money any such Hedging Agreements are entered into by Loan Parties to protect against the risks of interest rate fluctuations affecting Indebtedness permitted hereunder or other Indebtedness incurred to protect against the risks of currency or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, commodity fluctuations in connection with the incurrence ordinary business operations of any Loan Parties in the ordinary course of their respective businesses and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereofnot for speculative or investment purposes; and (iixi) to Indebtedness incurred in connection with the extent that the Borrowers shall elect to incur Indebtedness for money borrowed issuance of letters of credit, surety bonds (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereofbonds related to judgments or litigation), they shall afford the Lender performance bonds and other obligations of a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, like nature incurred in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the Lendernormal course of business.

Indebtedness and Liabilities. IncurThe Borrower shall not, and shall not permit any Subsidiary to, incur, create, assume, become or be liable in any manner with respect to, or permit suffer to exist, any Indebtedness or LiabilityIndebtedness, other than: except for (ai) the Obligations, (ii) Indebtedness to existing on the Lender for AdvancesEffective Date and disclosed on EXHIBIT 8.2 and/or Indebtedness underlying Permitted Liens, or otherwise; (biii) Indebtedness secured by purchase money Liens permitted by SUBSECTION 8.1(iv), (iv) Indebtedness permitted by SUBSECTION 8.5, (v) Contingent Retail Store Obligations, and (vi) Indebtedness incurred under the Subordinated Note and the Additional Subordinated Notes. Except for the Indebtedness permitted in the immediately preceding sentence, the Borrower shall not, and shall not permit any Subsidiary to, incur any Liabilities with respect to except for trade obligations, accounts payable obligations and other normal accruals incurred in the ordinary course of businessbusiness not yet due and payable, or with respect to which any of the Borrowers Borrower or such Subsidiary is contesting in good faith the amount or validity thereof by appropriate proceedings, and then only to the extent that the Borrowers have Borrower or such Subsidiary has set aside on their its books adequate reserves therefor; (c) , if appropriate under Generally Accepted Accounting Principles. Except as permitted by SUBSECTION 8.20, the Borrower shall not, and shall not permit any Subsidiary to prepay, defease, purchase, redeem, retire or otherwise acquire any Indebtedness under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtedness, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the incurrence of any and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the LenderObligations.

Indebtedness and Liabilities. IncurNo Note Party will, or will permit any Subsidiary to, directly or indirectly create, incur, assume, guaranty, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other thanexcept: (aA) Indebtedness to the Lender for Advances, or otherwiseObligations; (bB) Indebtedness existing on the Closing Date and Liabilities identified on Schedule 7.1, but not any extensions, renewals or replacements of such Indebtedness except (i) renewals and extensions expressly provided for in the agreements evidencing any such Indebtedness as the same are in effect on the date of this Agreement, and (ii) refinancings and extensions of any such Indebtedness if the terms and conditions thereof, taken as a whole, are not less favorable to the obligor thereon than the Indebtedness being refinanced or extended, and the weighted average life to maturity thereof is greater than or equal to that of the Indebtedness being refinanced or extended; provided, such Indebtedness permitted under the immediately preceding clause (i) or (ii) above shall not (x) include Indebtedness of an obligor that was not an obligor with respect to trade obligationsthe Indebtedness being extended, accounts payable renewed or refinanced, or (y) exceed in a principal amount the Indebtedness being renewed, extended or refinanced (plus an amount equal to any unpaid accrued interest and premiums thereunder and other normal accruals fees and expenses incurred in connection with such refinancing or extension); (C) Indebtedness in the form of guarantees permitted by Section 7.2; (D) Indebtedness consisting of customer deposits received by a Note Party or any Subsidiary in the ordinary course of business; (E) Indebtedness consisting of intercompany loans permitted by Section 7.4; (F) Indebtedness of the Borrower arising under the Sallyport Indebtedness Documents in an aggregate principal amount not to exceed $3,500,000; (G) Indebtedness of the Borrower arising under the Subordinated Debentures in an aggregate principal amount of $15,205,528, less any principal payments of such Indebtedness made on or after the date hereof; (H) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business, or with respect to which any of the Borrowers provided that such Indebtedness is contesting in good faith the amount or validity thereof by appropriate proceedings, and then only to the extent that the Borrowers have set aside on their books adequate reserves therefor; extinguished within ten (c10) Indebtedness under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtedness, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the incurrence of any and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the LenderBusiness Days after its incurrence.

Indebtedness and Liabilities. IncurDirectly or indirectly create, createincur, assume, guarantee, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other thanexcept: (a) Indebtedness to the Lender for Advances, or otherwiseObligations; (b) intercompany Indebtedness (i) outstanding on the Closing Date, and Liabilities with respect (ii) arising from loans made by US Borrower to trade obligations, accounts payable and other normal accruals incurred its Subsidiaries following the Closing Date to fund working capital requirements of such Subsidiaries in the ordinary course of businessbusiness and to fund Permitted Acquisitions; provided, however, that the aggregate outstanding principal amount of intercompany loans from US Borrower to Beacon Canada Holdings and Borrower shall not exceed an amount equal to the outstanding balance of such intercompany loan as of the Closing Date (after giving effect to the Related Transactions on the Closing Date) plus US$3,000,000 or the Equivalent Amount thereof in Canadian Dollars at any time; provided, further, that upon the request of Agent at any time, such Indebtedness shall be evidenced by promissory notes having terms reasonably satisfactory to Agent, the sole originally executed counterparts of which shall be delivered to US Facility Agent and shall be pledged to (i) US Facility Agent, for the benefit of US Facility Agent and US Facility Lenders, as security for the obligations under the US Facility Loan Documents and (ii) Agent, for the benefit of Agent and Lenders, as security for the payee Loan Party’s Obligations; (c) Indebtedness of US Borrower pursuant to the US Facility Loan Documents; (d) in the case of the Loan Parties, other than Borrower and its Subsidiaries, Indebtedness permitted under the US Facility Loan Agreement; (e) Indebtedness not to exceed US$12,000,000, or the Equivalent Amount thereof in Canadian Dollars, in the aggregate for all Loan Parties at any time outstanding secured by purchase money Liens or incurred with respect to Capital Leases; (f) unsecured Indebtedness not to exceed US$15,000,000, or the Equivalent Amount thereof in Canadian Dollars, in the aggregate for all Loan Parties at any time outstanding which is subordinated to the Obligations in a manner satisfactory to Agent and Requisite Lenders; (g) Indebtedness existing on the Closing Date and identified on Schedule 7.1; (h) unsecured Indebtedness of Holdings incurred in connection with any Permitted Acquisition; provided, however, that any such Indebtedness shall (i) have a maturity date no earlier than ninety (90) days after the date set forth in clause (a) of the definition of “Termination Date”, (ii) shall be fully subordinated to the Obligations in a manner satisfactory to Agent and (iii) be otherwise issued pursuant to terms and conditions reasonably satisfactory to Agent; and (i) “earn-out” payment obligations of US Borrower under the Shelter Acquisition Documents. Loan Parties will not, and will not permit the other Loan Parties to, incur any Liabilities except for Indebtedness permitted herein and trade payables and normal accruals in the ordinary course of business not yet due and payable or with respect to which any of the Borrowers Loan Party is contesting in good faith the amount or validity thereof by appropriate proceedings, proceedings and then only to the extent that the Borrowers have set aside on their books such Loan Party has established adequate reserves therefor; (c) Indebtedness therefor under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtedness, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the incurrence of any and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the LenderUS GAAP.

Indebtedness and Liabilities. Incur, create, assume, become ------------------------------------------- or be liable in any manner with respect to, or permit to exist, any Indebtedness or Liability, other than:: ----- ---- (a) Indebtedness to the Lender Lenders for AdvancesMoney Borrowed, or otherwise; (b) Indebtedness and Liabilities with respect to trade obligations, accounts payable and other normal accruals incurred in the ordinary course of business, or with respect to which any of the Borrowers is contesting in good faith the amount or validity thereof by appropriate proceedings, and then only to the extent that the Borrowers have set aside on their books adequate reserves therefor; (c) Indebtedness under those Real Property Leases listed on Schedule "3.073" or Schedule "13" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.053" or Schedule "13" annexed hereto; (e) Existing Indebtedness, but only to the extent set forth on Schedule "6.01(e)1" annexed hereto; (f) Indebtedness incurred or assumed in connection with the purchase of Immaterial Real Properties after the Original Agreement Date; (g) Indebtedness incurred or assumed in connection with Immaterial Leases entered into after the Original Agreement Date; (h) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Original Agreement Date; provided, however, that: (i) the Borrowers shall, in connection -------- ------- with the incurrence of any and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent --- that the Borrowers shall elect to incur Indebtedness for money borrowed Money Borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender Lenders a reasonable right of first refusal (in proportion to the Lenders' respective proportions of the aggregate amount of the Revolving Credit Commitment and the Line of Credit Commitment) to provide the financing therefor; provided, that the terms and conditions of any such -------- financing which the Lender Lenders may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other comparable financial institution; (gi) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender Agent pursuant to the Security Agreement and/or the Subsidiary Pledge Agreement; and (hj) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the Lender.

Indebtedness and Liabilities. IncurNo Loan Party shall, nor shall it permit any Subsidiary to, directly or indirectly create, incur, assume, guaranty, or otherwise become or be liable in any manner with respect toremain directly or indirectly liable, on a fixed or permit to existcontingent basis, any Indebtedness or Liability, other than: (a) Indebtedness to the Lender for Advances, or otherwise; (b) Indebtedness and Liabilities with respect to any Indebtedness except: (i) the Indebtedness to Lender; (ii) (A) Indebtedness incurred for Capital Expenditures permitted under Section 6.18(E) hereof and (B) Indebtedness represented by the promissory note permitted by Section 6.18(A)(i).; (iii) Indebtedness under the Senior Lien Financing Documents; (iv) Indebtedness which consists of loans permitted by Section 6.16(b) or (c), (v) Indebtedness set forth on Schedule 4.4 and any refinancing, refunding or extension thereof, provided that in connection with any such refinancing, refunding or extension: (x) the aggregate principal amount of such Indebtedness is not increased, (y) the scheduled maturity date of such Indebtedness is not shortened, and (z) the covenants or defaults are not materially more restrictive or more onerous than analogous provisions in the documentation of such Indebtedness as in effect on the date hereof; (vi) Indebtedness consisting of loans by any Foreign Subsidiary of Parent to any Loan Party, so long as such Indebtedness is subordinated to the Obligations on a basis satisfactory to Lender; (vii) trade obligations, accounts payable payables and other normal accruals incurred in the ordinary course of business, business not yet due and payable or with respect to which are being Properly Contested; (viii) Subordinated Debt (including any subordinated shareholder debt) to which Lender has consented and which is subject to a subordination agreement in favor of and acceptable to Lender all in accordance with the requirements of the Borrowers is contesting in good faith the amount or validity thereof definition of Subordinated Debt; (ix) any Indebtedness consisting of guaranty obligations permitted by appropriate proceedingsSection 6.2; (x) unsecured or, and then only to the extent that Senior Lien Lender is the Borrowers have set aside on their books adequate reserves therefor; (c) counterparty, secured Indebtedness of Loan Parties under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtednessany Hedging Agreements, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money any such Hedging Agreements are entered into by Loan Parties to protect against the risks of interest rate fluctuations affecting Indebtedness permitted hereunder or other Indebtedness incurred to protect against the risks of currency or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, commodity fluctuations in connection with the incurrence ordinary business operations of any Loan Parties in the ordinary course of their respective businesses and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereofnot for speculative or investment purposes; and (iixi) to Indebtedness incurred in connection with the extent that the Borrowers shall elect to incur Indebtedness for money borrowed issuance of letters of credit, surety bonds (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereofbonds related to judgments or litigation), they shall afford the Lender performance bonds and other obligations of a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, like nature incurred in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the Lendernormal course of business.

Indebtedness and Liabilities. IncurDirectly or indirectly create, createincur, assume, guarantee, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other thanexcept: (a) Indebtedness to the Lender for Advances, or otherwiseObligations; (b) intercompany Indebtedness (i) outstanding on the Closing Date and Liabilities with respect (ii) arising from loans made by US Borrower to trade obligations, accounts payable and other normal accruals incurred its Subsidiaries following the Closing Date to fund working capital requirements of such Subsidiaries in the ordinary course of businessbusiness and to fund Permitted Acquisitions; PROVIDED, HOWEVER, that the aggregate outstanding principal amount of intercompany loans from US Borrower to Beacon Canada Holdings and Borrower shall not exceed an amount equal to the outstanding balance of such intercompany loan as of the Closing Date (after giving effect to the Related Transactions on the Closing Date) plus US$3,000,000 or the Equivalent Amount thereof in Canadian Dollars at any time; PROVIDED, FURTHER, that upon the request of Agent at any time, such Indebtedness shall be evidenced by promissory notes having terms reasonably satisfactory to Agent, the sole originally executed counterparts of which shall be delivered to US Facility Agent and shall be pledged to (i) US Facility Agent, for the benefit of US Facility Agent and US Facility Lenders, as security for the obligations under the US Facility Loan Documents and (ii) Agent, for the benefit of Agent and Lenders, as security for the payee Loan Party's Obligations; (c) unsecured, subordinated Indebtedness of US Borrower in the principal amount of US$16,032,000 (plus deferred interest thereon in accordance with the terms of the Senior Subordinated Notes) pursuant to the Senior Subordinated Loan Documents; (d) [Intentionally Omitted]; (e) unsecured, subordinated Indebtedness of Holdings pursuant to (i) the Investor Subordinated Notes outstanding on the Closing Date in the aggregate principal amount of US$12,165,881, (ii) Investor Subordinated Notes issued after the Closing Date to individuals who hereafter become employees of the Loan Parties and who purchase such Investor Subordinated Notes together with common stock of Holdings (which additional Investor Subordinated Notes shall be in the form of the Investor Subordinated Notes outstanding on the Closing Date) and (iii) Investor Subordinated Notes issued after the Closing Date in connection with Permitted Acquisitions (including Investor Subordinated Notes issued to stockholders of Holdings to provide funds for Permitted Acquisitions) (which additional Investor Subordinated Notes shall be in the form of the Investor Subordinated Notes outstanding on the Closing Date); SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (f) unsecured, subordinated Indebtedness of Holdings in the aggregate principal amount of US$7,000,000 pursuant to the Best Seller Notes; (g) [Intentionally Omitted]; (h) [Intentionally Omitted]; (i) [Intentionally Omitted]; (j) Indebtedness of US Borrower pursuant to the US Facility Loan Documents; (k) in the case of the Loan Parties, other than Borrower and its Subsidiaries, Indebtedness permitted under the US Facility Loan Agreement; (l) unsecured, subordinated Indebtedness evidenced by the Stockholder Notes; (m) Indebtedness not to exceed US$8,000,000, or the Equivalent Amount thereof, in the aggregate for all Loan Parties at any time outstanding secured by purchase money Liens or incurred with respect to Capital Leases; (n) unsecured Indebtedness not to exceed US$500,000, or the Equivalent Amount thereof, in the aggregate for all Loan Parties at any time outstanding which is subordinated to the Obligations in a manner satisfactory to Agent and Requisite Lenders; (o) Indebtedness existing on the Closing Date and identified on SCHEDULE 7.1; and (p) unsecured Indebtedness of Holdings incurred in connection with any Permitted Acquisition in an amount not to exceed ten percent (10%) of the purchase price for such Permitted Acquisition; PROVIDED, HOWEVER, that any such Indebtedness shall (i) have a maturity date no earlier than ninety (90) days after the date set forth in clause (a) of the definition of "Termination Date", (ii) shall be fully subordinated to the Obligations in a manner satisfactory to Agent and (iii) be otherwise issued pursuant to terms and conditions reasonably satisfactory to Agent. Loan Parties will not, and will not permit the other Loan Parties to, incur any Liabilities except for Indebtedness permitted herein and trade payables and normal accruals in the ordinary course of business not yet due and payable or with respect to which any of the Borrowers Loan Party is contesting in good faith the amount or validity thereof by appropriate proceedings, proceedings and then only to the extent that the Borrowers have set aside on their books such Loan Party has established adequate reserves therefor; (c) Indebtedness therefor under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtedness, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the incurrence of any and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the LenderUS GAAP.

Indebtedness and Liabilities. IncurNo Note Party will, or will permit any Subsidiary to, directly or indirectly create, incur, assume, guaranty, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other thanexcept: (aA) Indebtedness to the Lender for Advances, or otherwiseObligations; (bB) Indebtedness existing on the Third A&R Effective Date and Liabilities identified on Schedule 7.1, but not any extensions, renewals or replacements of such Indebtedness except (i) renewals and extensions expressly provided for in the agreements evidencing any such Indebtedness as the same are in effect on the date of this Agreement, and (ii) refinancings and extensions of any such Indebtedness if the terms and conditions thereof, taken as a whole, are not less favorable to the obligor thereon than the Indebtedness being refinanced or extended, and the weighted average life to maturity thereof is greater than or equal to that of the Indebtedness being refinanced or extended; provided, such Indebtedness permitted under the immediately preceding clause (i) or (ii) above shall not (x) include Indebtedness of an obligor that was not an obligor with respect to trade obligationsthe Indebtedness being extended, accounts payable renewed or refinanced, or (y) exceed in a principal amount the Indebtedness being renewed, extended or refinanced (plus an amount equal to any unpaid accrued interest and premiums thereunder and other normal accruals fees and expenses incurred in connection with such refinancing or extension); (C) Indebtedness in the form of guarantees permitted by Section 7.2; (D) Indebtedness consisting of customer deposits received by a Note Party or any Subsidiary in the ordinary course of business; (E) Indebtedness consisting of intercompany loans permitted by Section 7.4; (F) Indebtedness of the Note Parties arising under the SLR Indebtedness Documents in an aggregate principal amount not to exceed $40,000,000; (G) subject to Section 5.8, Indebtedness of the Borrower arising under the Subordinated Debentures in an aggregate principal amount of $15,205,528, less any principal payments of such Indebtedness made on or after the date hereof; (H) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business, or with respect to which any of the Borrowers provided that such Indebtedness is contesting in good faith the amount or validity thereof by appropriate proceedings, and then only to the extent that the Borrowers have set aside on their books adequate reserves thereforextinguished within ten (10) Business Days after its incurrence; (cI) Indebtedness under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Public Offering Indebtedness, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the incurrence of any and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (hJ) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to Indebtedness (other than the LenderSubordinated Debentures).

Indebtedness and Liabilities. Incur, create, assume, become or be liable in any manner with respect to, or permit to exist, any Indebtedness or Liability, other than:OTHER THAN the following (the "Permitted Indebtedness"): (a) Indebtedness to the Lender for AdvancesMoney Borrowed, or otherwise; (b) Indebtedness and Liabilities with respect to trade obligations, accounts payable payable, Operating Leases and other normal accruals incurred in the ordinary course of business, or with respect to which any of the Borrowers Borrower is contesting in good faith the amount or validity thereof by appropriate proceedings, and then only to the extent that the Borrowers have Borrower has set aside on their its books adequate reserves therefor; (c) Indebtedness with respect to Money Borrowed: (i) to the FCC under those Real Property Leases listed the FCC Notes or to the RTFC under the RTFC Loan, in each case only with respect to the principal amount outstanding on Schedule "3.07" annexed heretothe Agreement Date plus accrued interest or (ii) to the Members with respect to the Member Loans (the principal amount of which may be increased so long as all such Members Loans shall remain subordinated); (d) Indebtedness under Existing Operating Leases listed on Schedule incurred for the purpose of paying or financing the purchase price of capital assets (whether by purchase or through a Capitalized Lease) ("3.05" annexed heretoPurchase Money Indebtedness"), to the extent such indebtedness does not exceed, in the aggregate, $5,000,000; (e) Existing Indebtedness, but only Indebtedness for Money Borrowed to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness any other person or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the entity provided that upon incurrence of any and all such Indebtedness, be in compliance with the provisions aggregate amount of Section 6.06(c) and Section 6.09 hereof; and all outstanding Indebtedness of Borrower (ii) to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money excluding Purchase Money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(cshall not exceed seventy percent (70%) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the LenderBorrower's total invested capital.

Indebtedness and Liabilities. Incur(a) Until such time as Term Loan B shall have been paid in full in cash, directly or indirectly create, incur, assume, guaranty, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other than: except: (ai) Indebtedness existing on the Closing Date and identified on Schedule 7.1 and any refinancing or renewal thereof, provided that the principal amount of such Indebtedness is not increased thereby or the terms made more onerous to Borrower, Agent or Lenders, (ii) the Lender for Advances, or otherwise; Obligations and (iii) guarantees expressly permitted by subsection 7.2; and (b) Indebtedness and Liabilities After such time as Term Loan B shall have been paid in full in cash, directly or indirectly create, incur, assume, guaranty, or otherwise become or remain directly or indirectly liable, on a fixed or contingent basis, with respect to any Indebtedness except: (i) the Obligations; (ii) Indebtedness (excluding Capital Leases) secured by purchase money Liens; (iii) Indebtedness under Capital Leases; (iv) Indebtedness existing on the Closing Date and identified on Schedule 7.1 and any refinancing or renewal thereof, provided that the principal amount of such Indebtedness is not increased thereby, or the terms made more onerous to Borrower, Agent or Lenders; and (v) guarantees expressly permitted by subsection 7.2; PROVIDED, HOWEVER, the maximum amount of Indebtedness which may be incurred by any Loan Party in any rolling four fiscal quarters of such Loan Party under the foregoing subsections (b)(ii) and (b)(iii) (excluding items under subsection (b)(iv)) shall not exceed $3,000,000 in the aggregate outstanding at any time for all Loan Parties. Except for Indebtedness permitted in the preceding sentence, no Loan Party will, nor will it permit any of its Subsidiaries to, incur any Liabilities except for trade obligations, accounts payable payables and other normal accruals incurred in the ordinary course of business, business not yet due and payable or with respect to which any Loan Party or any of the Borrowers its Subsidiaries is contesting in good faith the amount or validity thereof by appropriate proceedings, proceedings and then only to the extent that the Borrowers have set aside on their books such Loan Party or any of its Subsidiaries has established adequate reserves therefor; (c) Indebtedness , if appropriate under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtedness, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the incurrence of any and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the LenderGAAP.

Indebtedness and Liabilities. IncurNone of the Loan Parties shall directly or indirectly create, createincur, assume, guaranty, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other than: except: (a) Indebtedness to the Lender for Advances, or otherwise; Obligations; (b) Indebtedness Capital Leases and Liabilities with respect to trade obligations, accounts payable and other normal accruals incurred purchase money financing for Equipment entered into in the ordinary course of business, business (subject to Section 5.21); (c) trade payables and normal accruals in the ordinary course of business not yet due and payable or with respect to which any of the Borrowers such Loan Party is contesting in good faith the amount or validity thereof by appropriate proceedings, proceedings and then only to the extent that the Borrowers Borrower shall have set aside on their books established adequate reserves therefor; (c) Indebtedness , if appropriate under those Real Property Leases listed on Schedule "3.07" annexed hereto; GAAP; (d) Indebtedness owing under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtednessthe AZ Perio Seller Note and, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; providedconstituting Indebtedness, however, that: (i) the Borrowers shall, working capital adjustments owing by Borrower to a seller in connection with the incurrence of any and all such IndebtednessAcquisition, be the AZ Perio Acquisition or a Permitted Acquisition; (e) Indebtedness described in compliance with the provisions of Section 6.06(c4.4(a) hereof (including Indebtedness described on Schedule 4.4) and Section 6.09 hereofany extension, refinancing, renewal or replacement thereof if the principal amount thereof does not exceed the principal amount of the Indebtedness so refinanced; and (iif) up to an aggregate amount of $6,000,000 in unsecured debt owing to sellers of assets or equity interests of all entities acquired by Borrower pursuant to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution Acquisition Agreements or in connection with any permitted Investment contemplated by Section 6.06(c) hereofPermitted Acquisition, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, provided that the terms and conditions repayment of any such financing which the Lender may (at their sole discretion) elect to offer shall be unsecured debt is subordinated on terms satisfactory to Agent, including a restriction against payment of cash interest, required amortization and conditions which, in mandatory prepayments and provided further that the aggregate, shall be no less favorable stated maturity date of any such debt is at least three (3) years or longer or otherwise acceptable to the Borrowers than those offered by any other financial institution; Agent; (g) Intercompany Investments which are represented by instruments that are promptly delivered Indebtedness in respect of letters of credit or banker’s acceptances to secure the performance of bids, tenders, leases, contracts (with all necessary endorsements thereonother than for the payment of money) to the Lender pursuant to the Security Agreementor statutory obligations; and (h) Subordinated Debt Indebtedness in such amounts favor of Borrower or any Guarantor pursuant to clause (g) of the definition of Permitted Investments; and upon such terms and conditions as shall be reasonably acceptable (i) other Indebtedness in an aggregate principal amount at any time outstanding not to the Lenderexceed $100,000.

Indebtedness and Liabilities. IncurNo Note Party will, or will permit any Subsidiary to, directly or indirectly create, incur, assume, guaranty, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other thanexcept: (aA) Indebtedness to the Lender for Advances, or otherwiseObligations; (bB) Indebtedness existing on the Second A&R Effective Date and Liabilities identified on Schedule 7.1, but not any extensions, renewals or replacements of such Indebtedness except (i) renewals and extensions expressly provided for in the agreements evidencing any such Indebtedness as the same are in effect on the date of this Agreement, and (ii) refinancings and extensions of any such Indebtedness if the terms and conditions thereof, taken as a whole, are not less favorable to the obligor thereon than the Indebtedness being refinanced or extended, and the weighted average life to maturity thereof is greater than or equal to that of the Indebtedness being refinanced or extended; provided, such Indebtedness permitted under the immediately preceding clause (i) or (ii) above shall not (x) include Indebtedness of an obligor that was not an obligor with respect to trade obligationsthe Indebtedness being extended, accounts payable renewed or refinanced, or (y) exceed in a principal amount the Indebtedness being renewed, extended or refinanced (plus an amount equal to any unpaid accrued interest and premiums thereunder and other normal accruals fees and expenses incurred in connection with such refinancing or extension); (C) Indebtedness in the form of guarantees permitted by Section 7.2; (D) Indebtedness consisting of customer deposits received by a Note Party or any Subsidiary in the ordinary course of business; (E) Indebtedness consisting of intercompany loans permitted by Section 7.4; (F) Indebtedness of the Borrower arising under the Fast Pay Indebtedness Documents in an aggregate principal amount not to exceed $15,000,000; (G) subject to Section 5.8, Indebtedness of the Borrower arising under the Subordinated Debentures in an aggregate principal amount of $15,205,528, less any principal payments of such Indebtedness made on or after the date hereof; (H) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business, or with respect to which any of the Borrowers provided that such Indebtedness is contesting in good faith the amount or validity thereof by appropriate proceedings, and then only to the extent that the Borrowers have set aside on their books adequate reserves therefor; extinguished within ten (c10) Indebtedness under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtedness, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the incurrence of any and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the LenderBusiness Days after its incurrence.

Indebtedness and Liabilities. IncurDirectly or indirectly create, createincur, assume, guaranty, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other than: except: (a) Indebtedness to the Lender for Advances, or otherwise; Obligations; (b) Intercompany Indebtedness (i) among Borrowers and Liabilities with respect (ii) provided that no Default or Event of Default shall have occurred and be continuing at the time of the incurrence thereof or would result therefrom, Indebtedness owing by a Holding Party to trade obligationsa Borrower and incurred by a Holding Party to permit such Holding Party to make payments in cash then due under and pursuant to the Senior Notes and the Senior PIK Notes, accounts payable and other normal accruals pay expenses incurred in the ordinary course of businessbusiness and to make Restricted Junior Payments permitted under subsection 7.5; provided that, in each case, such Indebtedness shall be unsecured and subordinated in right of payment to the Obligations (and by its execution and delivery hereof, each Holding Party and each Borrower agrees that any such Indebtedness shall be so unsecured and subordinated) and shall not be evidenced by any note or other instrument, unless the same is pledged to Agent and Lenders pursuant to subsection 5.14; (c) Indebtedness (excluding Capital Leases) not to exceed $250,000 in the aggregate at any time outstanding secured by purchase money Liens; (d) Indebtedness under Capital Leases not to exceed $2,500,000 outstanding at any time in the aggregate; (e) Indebtedness existing on the Closing Date and identified on Schedule 4.4; (f) Indebtedness incurred by any Borrower in connection with Permitted Acquisitions permitted under subsection 7.6(B); provided that (1) such Indebtedness (A) shall be unsecured and subordinated in right of payment to the Obligations, (B) shall not exceed $5,000,000 outstanding at any time in the aggregate with respect to any individual Permitted Acquisition and (C) shall be on terms and conditions acceptable to Agent and (2) all such Indebtedness incurred by Borrowers shall not exceed $20,000,000 outstanding in the aggregate at any time; (g) Indebtedness under the Senior Notes; and (h) Indebtedness under the Senior PIK Notes. Except for Indebtedness permitted in the preceding sentence, Holding Parties and Borrowers will not, and will not permit any of their Subsidiaries to, incur any Liabilities except for trade payables and normal accruals in the ordinary course of business not yet due and payable or with respect to which any Borrower or any of the Borrowers its Subsidiaries is contesting in good faith the amount or validity thereof by appropriate proceedings, proceedings and then only to the extent that the Borrowers have set aside on their books such Borrower or any of its Subsidiaries has established adequate reserves therefor; (c) Indebtedness , if appropriate under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtedness, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the incurrence of any and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the LenderGAAP.

Indebtedness and Liabilities. IncurNo Note Party will, or will permit any Subsidiary to, directly or indirectly create, incur, assume, guaranty, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other thanexcept: (aA) Indebtedness to the Lender for Advances, or otherwiseObligations; (bB) Indebtedness existing on the A&R Effective Date and Liabilities identified on Schedule 7.1, but not any extensions, renewals or replacements of such Indebtedness except (i) renewals and extensions expressly provided for in the agreements evidencing any such Indebtedness as the same are in effect on the date of this Agreement, and (ii) refinancings and extensions of any such Indebtedness if the terms and conditions thereof, taken as a whole, are not less favorable to the obligor thereon than the Indebtedness being refinanced or extended, and the weighted average life to maturity thereof is greater than or equal to that of the Indebtedness being refinanced or extended; provided, such Indebtedness permitted under the immediately preceding clause (i) or (ii) above shall not (x) include Indebtedness of an obligor that was not an obligor with respect to trade obligationsthe Indebtedness being extended, accounts payable renewed or refinanced, or (y) exceed in a principal amount the Indebtedness being renewed, extended or refinanced (plus an amount equal to any unpaid accrued interest and premiums thereunder and other normal accruals fees and expenses incurred in connection with such refinancing or extension); (C) Indebtedness in the form of guarantees permitted by Section 7.2; (D) Indebtedness consisting of customer deposits received by a Note Party or any Subsidiary in the ordinary course of business; (E) Indebtedness consisting of intercompany loans permitted by Section 7.4; (F) subject to Section 5.8, Indebtedness of the Borrower arising under the Sallyport Indebtedness Documents in an aggregate principal amount not to exceed $3,500,000; (G) subject to Section 5.8, Indebtedness of the Borrower arising under the Subordinated Debentures in an aggregate principal amount of $15,205,528, less any principal payments of such Indebtedness made on or after the date hereof; (H) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business, or with respect to which any of the Borrowers provided that such Indebtedness is contesting in good faith the amount or validity thereof by appropriate proceedings, and then only to the extent that the Borrowers have set aside on their books adequate reserves therefor; extinguished within ten (c10) Indebtedness under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtedness, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the incurrence of any and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the LenderBusiness Days after its incurrence.

Indebtedness and Liabilities. IncurDirectly or indirectly create, createincur, assume, guaranty, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other than: except: (a) Indebtedness to the Lender for Advances, or otherwise; Obligations; (b) intercompany Indebtedness, among each Borrower and any other Loan Party so long as after giving effect to such intercompany Indebtedness, the Borrower to which the intercompany Indebtedness is owed has the ability to borrow amounts hereunder within its Individual Borrowing Base which are sufficient to enable it to meet its debts as they mature for the foreseeable future; provided that such Indebtedness is subordinated in right of payment to the Obligations; (c) Indebtedness (excluding Capital Leases) not to exceed $50,000 in the aggregate for all Borrowers at any time outstanding secured by purchase money Liens; (d) Indebtedness under Capital Leases not to exceed $500,000 outstanding at any time in the aggregate; and (e) Indebtedness existing on the Closing Date and identified on Schedule 7.1. Except for Indebtedness described permitted in the preceding sentence, each Borrower will not, and will not permit any of its Subsidiaries to, incur any Liabilities with respect to except for trade obligations, accounts payable payables and other normal accruals incurred in the ordinary course of business, business not yet due and payable or with respect to which each Borrower or any of the Borrowers its Subsidiaries is contesting in good faith the amount or validity thereof by appropriate proceedings, proceedings and then only to the extent that the Borrowers have set aside on their books such Borrower or any of its Subsidiaries has established adequate reserves therefor; (c) Indebtedness , if appropriate under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtedness, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the incurrence of any and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the LenderGAAP.

Indebtedness and Liabilities. IncurDirectly or indirectly create, createincur, assume, guaranty, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other thanexcept: (a) Indebtedness to the Lender for Advances, or otherwiseObligations; (b) Indebtedness and Liabilities with respect (excluding Capital Leases) not to trade obligations, accounts payable and other normal accruals incurred exceed $1,500,000 in the ordinary course of business, or with respect to which aggregate at any of the Borrowers is contesting in good faith the amount or validity thereof by appropriate proceedings, and then only to the extent that the Borrowers have set aside on their books adequate reserves therefortime outstanding; (c) Indebtedness under those Real Property Capital Leases listed on Schedule "3.07" annexed hereto(excluding Capital Leases in connection with the New Information System) in existence as of the Closing Date plus an additional $1,000,000 outstanding at any time in the aggregate; provided, however, that amounts of such Indebtedness reduced shall be allowed to be incurred again; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed heretoin connection with the New Information System not to exceed $15,000,000 outstanding at any time in the aggregate; (ei) Existing Indebtedness, but only Indebtedness of any Loan Party to any other Loan Party; (ii) Indebtedness of any Foreign Subsidiary to any Loan Party to the extent set forth on Schedule "6.01(epermitted under subsection 7.4(f)" annexed hereto; ; (fiii) Purchase money Indebtedness or of any Foreign Subsidiary to any other Foreign Subsidiary; (iv) Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Dateany Loan Party to any Foreign Subsidiary; provided, however, that: that (i1) the Borrowers shall, in connection with the incurrence any intercompany Indebtedness of any Loan Party permitted under this subsection 7.1(e) shall be subordinated in right of payment to the Obligations on terms satisfactory to the Administrative Agent and evidenced by intercompany notes in form and substance satisfactory to the Administrative Agent, (2) all such Indebtednessintercompany notes shall be endorsed in blank or accompanied by note powers endorsed in blank and accompanied by note powers endorsed in blank and pledged and delivered to the Administrative Agent, for the benefit of the Benefitted Persons, (3) at the time any intercompany Indebtedness is incurred by any Loan Party pursuant to this subsection 7.1(e), and after giving effect thereto, the Loan Parties shall be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereofSolvent; and (ii4) no Default or Event of Default exists or would occur and be continuing after giving effect to any proposed intercompany Indebtedness pursuant to this subsection 7.1(e). (f) Indebtedness of Recoton in an amount not to exceed $5,518,399 plus accrued interest evidenced by a promissory note payable to the extent that United States of America or an agency thereof delivered in settlement of obligations of Recoton arising out of the Borrowers shall elect to incur customs investigation discussed in Recoton’s Form 8-K for an event which occurred on July 27, 1999; (g) the Subordinated Debt; (h) Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford under the Lender a right of first refusal to provide the financing therefor; German Facility provided, that the terms of the Indebtedness permitted under this subsection 7.1(h) can not be amended, replaced or terminated without the prior written consent of the Requisite Lenders; (i) Indebtedness existing on the Closing Date and conditions identified on Schedule 7.1; (j) Indebtedness of any such financing the type described in subsection 2.3(C) with respect to the issuance of debt securities of Recoton in a public offering or a private placement and which (1) the Lender may Net Securities Proceeds are used to pay down the Obligations as set forth in subsection 2.4(B)(2), (at their sole discretion2) elect to offer shall be on subordinate to the Obligations; (3) the terms and conditions which, in the aggregate, shall be no less favorable satisfactory to the Borrowers than those offered by any other financial institutionAgents and the Requisite Lenders and (4) the documentation shall be satisfactory to the Agents and the Requisite Lenders; (gk) Intercompany Investments which are represented Indebtedness incurred by instruments that are promptly delivered (with all necessary endorsements thereon) STD and its Subsidiaries to the extent supported by Lender pursuant Letters of Credit (which amount as of the Closing Date is $12,400,000); (l) Indebtedness with respect to the Security Agreementobligations of Recoton Italy and Recoton UK referred to in subsection 7.2(e) and (f); and (hm) Subordinated Debt Indebtedness of Recoton Italy with respect to letters of credit that are cash collateralized. (n) Borrowers will not, and will not permit any of their Subsidiaries to, incur any Liabilities except for Indebtedness permitted herein and trade and other payables and expenses arising in such amounts and upon such terms and conditions as shall be reasonably acceptable to the Lenderordinary course of business that are paid in accordance with their prior existing practices.

Indebtedness and Liabilities. IncurDirectly or indirectly create, createincur, assume, guaranty, or otherwise become or be liable in any manner remain directly or indirectly liable, on a fixed or contingent basis, with respect to, or permit to exist, any Indebtedness or Liability, other than: except: (a) Indebtedness to the Lender for Advances, or otherwise; Obligations; (b) intercompany Indebtedness, not to exceed any amounts outstanding on the Closing Date and identified on Schedule 7.1, plus (i) unsecured loans from TAV Brands, Inc. to Borrower from time to time in amounts not in excess of the amounts paid by Borrower to TAV Brands, Inc. in respect of that certain License Agreement dated April 6, 1991, as amended to date and (ii) additional unsecured intercompany Indebtedness not to exceed $5,000,000 outstanding at any time in the aggregate, among Borrower and its Subsidiaries; provided that such Indebtedness is subordinated in right of payment to the Obligations; (c) Indebtedness (excluding capital leases) not to exceed $750,000 in the aggregate at any time outstanding secured by purchase money Liens; (d) Indebtedness under Capital Leases not to exceed $5,000,000 outstanding at any time in the aggregate; (e) Indebtedness existing on the Closing Date and identified on Schedule 7.1 and any amendments, extensions or renewals thereof which do not increase the principal then outstanding thereunder, increase the interest rate or fees thereunder or make the covenants thereunder more restrictive; (f) Indebtedness under the Premium Notes; (g) Indebtedness of up to $2,000,000 secured solely by shares of preferred stock of Michigan Livestock Credit Corporation owned by Borrower, having terms, and evidenced by agreements, satisfactory to Collateral Agent and Administrative Agent in their reasonable judgment; and (h) Indebtedness in respect of surety bonds or letters of credit issued to secure Borrower's obligations under PASA or PPFPA. Except for Indebtedness described permitted in the preceding sentence, Borrower will not, and will not permit any of its Subsidiaries to, incur any Liabilities with respect to except for trade obligations, accounts payable payables and other normal accruals incurred in the ordinary course of business, business not yet due and payable or with respect to which Borrower or any of the Borrowers its Subsidiaries is contesting in good faith the amount or validity thereof by appropriate proceedings, proceedings and then only to the extent that the Borrowers have set aside on their books Borrower or any of its Subsidiaries has established adequate reserves therefor; (c) Indebtedness , if appropriate under those Real Property Leases listed on Schedule "3.07" annexed hereto; (d) Indebtedness under Existing Operating Leases listed on Schedule "3.05" annexed hereto; (e) Existing Indebtedness, but only to the extent set forth on Schedule "6.01(e)" annexed hereto; (f) Purchase money Indebtedness or other Indebtedness incurred or assumed in connection with Investments (including the acquisition of additional assets or businesses) and Capital Expenditures made following the Agreement Date; provided, however, that: (i) the Borrowers shall, in connection with the incurrence of any and all such Indebtedness, be in compliance with the provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent that the Borrowers shall elect to incur Indebtedness for money borrowed (other than purchase money Indebtedness) from any financial institution in connection with any permitted Investment contemplated by Section 6.06(c) hereof, they shall afford the Lender a right of first refusal to provide the financing therefor; provided, that the terms and conditions of any such financing which the Lender may (at their sole discretion) elect to offer shall be on terms and conditions which, in the aggregate, shall be no less favorable to the Borrowers than those offered by any other financial institution; (g) Intercompany Investments which are represented by instruments that are promptly delivered (with all necessary endorsements thereon) to the Lender pursuant to the Security Agreement; and (h) Subordinated Debt in such amounts and upon such terms and conditions as shall be reasonably acceptable to the LenderGAAP.