Ex. 10.1

EXECUTION VERSION

 

SIXTH AMENDMENT AND JOINDER TO CREDIT AGREEMENT

 

SIXTH AMENDMENT AND JOINDER TO CREDIT AGREEMENT (this “Amendment”) dated as of
October 5, 2016, by and among

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, successor by merger to WELLS FARGO
RETAIL FINANCE, LLC (“U.S. Lender”),

 

WELLS FARGO CAPITAL FINANCE CORPORATION CANADA (“Canadian Lender” and together
with the U.S. Lender, the “Lenders” and each a “Lender”),

 

GREAT AMERICAN GROUP WF, LLC, a California limited liability company (“Original
Borrower”),

 

GA Retail, Inc., a California corporation, together with any other affiliate of
Original Borrower party to the Credit Agreement from time to time as a borrower
(such affiliates, together with Original Borrower, each a “U.S. Borrower” and
collectively “U.S. Borrowers”; also sometimes referred to herein as the
“Existing Borrowers”), and

 

GA RETAIL CANADA, ULC, a British Columbia unlimited company (the “Canadian
Borrower” and, together with the Existing Borrowers, the “Borrowers”; the
Borrowers, together with Riley Financial (defined below), Great American
(defined below), and/or any Subsidiary of any of the foregoing which is or which
becomes a party to any Loan Document from time to time, the “Credit Parties”).

 

WHEREAS:

 

A.            U.S. Borrowers and U.S. Lender are party to that certain Second
Amended & Restated Credit Agreement dated as of July 15, 2013 (as amended by
that certain First Amendment to Credit Agreement and Limited Consent and Waiver,
dated May 28, 2014, as further amended by that certain Second Amendment to
Credit Agreement, dated as of August 28, 2014, as further amended by that
certain Third Amendment to Credit Agreement and that certain Joinder to Loan
Documents each dated as of February 5, 2015, as further amended by that certain
Fourth Amendment to Credit Agreement, dated as of February 19, 2015, as further
amended by that certain Fifth Amendment to Credit Agreement, dated as of June
10, 2016, and as may be further amended, restated, supplemented or otherwise
modified, renewed or replaced from time to time, the “Credit Agreement”),
pursuant to which U.S. Lender agreed, subject to the terms and conditions
thereof, to extend credit and make certain other financial accommodations
available to the Existing Borrowers;

 

B.            The U.S. Borrowers have requested that the Canadian Borrower be
added as a Borrower under the Credit Agreement (the “Joinder”), and the Canadian
Borrower has agreed to do so in this Agreement, in connection with which, the
Canadian Lender has also agreed, pursuant to its execution of this Agreement, to
become a party to the Credit Agreement in accordance with the terms hereof;

 

C.            B. Riley Financial, Inc., a Delaware corporation, f/k/a Great
American Group, Inc., a Delaware corporation (“Riley Financial”) and Great
American Group, LLC, a California limited liability company (“Great American”)
are parties to that certain Third Amended and Restated Guaranty dated as of July
15, 2013 (as may be amended, restated, supplemented or otherwise modified,
renewed or replaced from time to time, the “Guaranty”), pursuant to which Riley
Financial and Great American jointly and severally guaranteed to U.S. Lender
payment of (among other things) obligations under the Credit Agreement and other
Loan Documents upon the terms set forth the Guaranty;

 

 

 

 

C.            Credit Parties have requested, in connection with the Joinder,
that Lenders agree to effect certain amendments to the Credit Agreement, all as
more specifically set forth herein, and Lenders are willing to effect such
amendment on the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties signatory hereto agree
as follows:

 

1.           Definitions. Capitalized terms not otherwise defined herein shall
have the respective meanings given such terms in the Credit Agreement.

 

2.           Amendments to Credit Agreement. Effective as of the Effective Date,
the Credit Agreement is hereby amended as follows:

 

(a)The Credit Agreement is hereby amended to delete the stricken text (indicated
textually in the same manner as the following example: stricken text) and to add
the double-underlined text (indicated textually in the same manner as the
following example: double-underlined text) as set forth in the pages of the
Credit Agreement attached hereto as Annex I.

 

(b)The following Schedules, Exhibits and Annexes to the Credit Agreement are
hereby deleted in their entirety and replaced by the corresponding Schedules,
Exhibits and Annexes attached hereto as Annex II:

 

(i)          Annex B (Letters of Credit);

 

(ii)         Exhibit 2.1.1 (Form of Notice of Revolving Credit Advance);

 

(iii)        Exhibit 2.1.2 (Form of Notice of Letter of Credit Request);

 

(iv)        Exhibit 2.1(a)(ii) (Form of Lender’s Offer); and

 

(v)         Schedules A, 2.1, 2.1(a)(i), 2.6, 4.8, 4.17 and 5.2.

 

3.           Borrower Joinder.

 

(a)            The Canadian Borrower hereby:

 

(i)          acknowledges and agrees that it has received and reviewed a copy of
the Credit Agreement, the Notes, the Equity Pledge Agreement, the Security
Agreements, the other Collateral Documents, and each of the other Loan
Documents;

 

(ii)         joins in the execution of, and becomes a party to the Credit
Agreement, the Notes, the Equity Pledge Agreement, and the Security Agreements;
and

 

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(iii)        assumes and agrees to perform all applicable duties and Obligations
of a Borrower and Credit Party under the Credit Agreement, the Notes, the Equity
Pledge Agreement, and the Security Agreements.

 

(b)            Without in any manner limiting the generality of clause (a)
above, the Canadian Borrower hereby covenants and agrees that:

 

(i)          Canadian Borrower shall be bound by all covenants (other than
covenants which specifically relate solely to an earlier date), agreements,
liabilities and acknowledgments of a Borrower under the Credit Agreement, the
Notes, the Equity Pledge Agreement, and the Security Agreements, in each case,
with the same force and effect as if such Canadian Borrower were a signatory
thereto and were expressly named therein; and

 

(ii)         to secure the prompt and complete payment, performance and
observance of all of the Obligations and all renewals, extensions,
restructurings and refinancings thereof, and in its capacity as, jointly and
severally, individually and collectively with the Original Borrower, the
“Grantor” (as defined in the Security Agreement), pursuant to Section 2 of the
Security Agreement, the Canadian Borrower hereby grants, mortgages, pledges and
hypothecates to the U.S. Lender, a Lien upon all of its right, title and
interest in, to and under the Collateral, and hereby authorizes the U.S. Lender
and/or its representatives to file such UCC financing statements as the U.S.
Lender may determine to be appropriate in connection therewith.

 

4.           Amendments to Security Documents and Equity Pledge Agreement.
Effective as of the Effective Date, each of the Security Documents and the
Equity Pledge Agreement is hereby amended by adding the covenant and
corresponding defined terms set forth is Annex III.

 

5.           Representations and Warranties. Borrowers represent and warrant to
Lenders that:

 

(a)          the representations and warranties set forth in the Credit
Agreement and in each of the other Loan Documents are true and correct on and as
of the date hereof, as though made on such date, and as if each reference
therein to “this Agreement” or the “Credit Agreement” or the like includes
reference to this Amendment and the Credit Agreement as amended hereby (except
to the extent that such representations and warranties expressly relate to an
earlier date, in which case they are true and correct as of such earlier date);

 

(b)          the execution, delivery and performance of this Amendment by each
Credit Party (i) are all within such Credit Party’s corporate powers, (ii) are
not in contravention of any Laws or the terms of such Credit Party’s
Organizational Documents, or any indenture, agreement or undertaking to which
such Credit Party is a party or by which such Credit Party or its property is
bound, and (iii) shall not result in the creation or imposition of any lien,
claim, charge or encumbrance upon any of the Collateral, except in favor of U.S.
Lender pursuant to the Credit Agreement and the other Loan Documents as amended
hereby;

 

(c)          this Amendment and each other agreement or instrument to be
executed and delivered by Credit Parties in connection herewith have been duly
authorized, executed and delivered by all necessary action on the part of such
Credit Party and, if necessary, its stockholders, as the case may be, and the
agreements and obligations of each Credit Party contained herein and therein
constitute the legal, valid and binding obligations of such Credit Party,
enforceable against it in accordance with their terms, except as enforceability
is limited by bankruptcy, insolvency, reorganization, receivership, moratorium
or other laws affecting creditor’s rights generally and by general principles of
equity;

 

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(d)          after giving effect to this Amendment, no Default or Event of
Default exists as of the date hereof; and

 

(e)          no action of, or filing with, or consent of any Governmental
Authority, and no approval or consent of any other party (other than, in each
case, actions, filings or consents that have already been taken, made or
obtained) is required to authorize, or is otherwise required in connection with,
the execution, delivery and performance of this Amendment.

 

6.           Conditions Precedent. The amendments set forth in this Amendment
shall not be effective until each of the following conditions precedent are
satisfied in a manner satisfactory to Lenders (the “Effective Date”):

 

(a)           receipt by Lenders of this Amendment, duly authorized and executed
by each Credit Party;

 

(b)           to the extent invoiced, reimbursement or payment of all reasonable
out-of-pocket expenses (including, without limitation, reasonable fees and
expenses of Choate, Hall & Stewart LLP and Norton Rose Fulbright Canada LLP,
counsel to the Lenders) required to be reimbursed or paid by Credit Parties
pursuant to the terms of the Credit Agreement, including, without limitation and
Lender Expenses pursuant to Section 11.4 of the Credit Agreement;

 

(c)           after giving effect to this Amendment, no Default or Event of
Default shall have occurred and be continuing, nor shall any Default or Event of
Default result from the consummation of the transactions contemplated herein;

 

(d)           all action on the part of the Canadian Borrower and the other
Credit Parties necessary for the valid execution, delivery and performance by
the Canadian Borrower of this Amendment and all other documentation,
instruments, and agreements required to be executed in connection herewith shall
have been duly and effectively taken and evidence thereof reasonably
satisfactory to the Lenders shall have been provided to the Lenders;

 

(e)            the Canadian Borrower (and each other Credit Party, to the extent
requested by the Lenders) shall each have delivered the following to the
Lenders, in form and substance reasonably satisfactory to the Lenders:

 

(i)          a Perfection Certificate with respect to the Canadian Borrower;

 

(ii)         a certificate good standing issued by its jurisdiction of
incorporation;

 

(iii)        a certificate of an authorized officer of the due adoption,
continued effectiveness, and setting forth the text, of each corporate
resolution adopted in connection with the assumption of obligations under the
Credit Agreement and the other Loan Documents to which it is a party, including,
pursuant to the Joinder, and attesting to the true signatures of each Person
authorized as a signatory to any of such Loan Documents, together with true and
accurate copies of all Organizational Documents; and

 

 4 

 

 

(iv)        execution and delivery by Canadian Borrower of the Canadian Security
Agreement, as well as all such other documents, agreements and certificates as
the Lenders may reasonably require;

 

(f)           the Lenders, upon their reasonable request, shall have received a
favorable written legal opinion of the Credit Parties' counsel addressed to the
Lenders, covering such matters relating to the Canadian Borrower, the Loan
Documents and/or the transactions contemplated thereby as the Lenders shall
reasonably request;

 

(g)           the Lenders shall have received all documents and instruments
required by law or requested by the Lenders to create or perfect the first
priority Lien with respect to the Canadian Borrower (subject only to Permitted
Encumbrances having priority by operation of applicable Law) intended to be
created under the Loan Documents and all such documents and instruments shall
have been so filed, registered or recorded or other arrangements reasonably
satisfactory to the Lenders;

 

(h)           the Credit Parties shall have executed and delivered to the
Lenders such additional documents, instruments, and agreements as the Lenders
may reasonably request in connection herewith; and

 

(i)            all orders, permissions, consents, approvals, licenses,
authorizations and validations of, and filings, recordings and registrations
with, and exemptions by, any Governmental Authority, or any other Person
required to authorize or otherwise required in connection with the execution,
delivery and performance by each Credit Party of this Amendment and the
transactions contemplated, shall have been obtained and shall be in full force
and effect.

 

7.           Effect on Loan Documents. As amended hereby, the Credit Agreement
and the other Loan Documents shall be and remain in full force and effect in
accordance with their terms and hereby are ratified and confirmed by each Credit
Party in all respects. The execution, delivery, and performance of this
Amendment shall not operate as a waiver of any right, power, or remedy of
Lenders under the Credit Agreement or the other Loan Documents. Each Credit
Party hereby ratifies and confirms in all respects all of its obligations and
any prior grant of a security interest under the Credit Agreement and the other
Loan Documents to which it is a party, including pursuant to the Joinder.

 

8.           Further Assurances. Each Credit Party shall execute and deliver all
agreements, documents and instruments, each in form and substance satisfactory
to Lenders, and take all actions as Lenders may reasonably request from time to
time, to perfect and maintain the perfection and priority of the security
interest in the Collateral held by Lenders and to fully consummate the
transactions contemplated under this Amendment and the Credit Agreement, as
modified hereby.

 

9.           Release. Each Credit Party hereby remises, releases, acquits,
satisfies and forever discharges Lenders, its agents, employees, officers,
directors, predecessors, attorneys and all others acting on behalf of or at the
direction of Lenders, of and from any and all manner of actions, causes of
action, suit, debts, accounts, covenants, contracts, controversies, agreements,
variances, damages, judgments, claims and demands whatsoever, in law or in
equity, which any of such parties ever had, or now has, to the extent arising
from or in connection with any act, omission or state of facts taken or existing
on or prior to the date hereof, against Lenders, its agents, employees,
officers, directors, attorneys and all persons acting on behalf of or at the
direction of Lenders (“Releasees”), for, upon or by reason of any matter, cause
or thing whatsoever through the date hereof. Without limiting the generality of
the foregoing, each Credit Party waives and affirmatively agrees not to allege
or otherwise pursue any defenses, affirmative defenses, counterclaims, claims,
causes of action, setoffs or other rights they have or may have as of the date
hereof, including, but not limited to, the rights to contest any conduct of
Lenders or other Releasees on or prior to the date hereof.

 

 5 

 

 

10.         No Novation; Entire Agreement. This Amendment is not a novation or
discharge of the terms and provisions of the obligations of Credit Parties under
the Credit Agreement and the other Loan Documents. There are no other
understandings, express or implied, among Credit Parties and Lenders regarding
the subject matter hereof or thereof.

 

11.         Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, WITHOUT REGARD
TO CONFLICTS OF LAW PRINCIPLES THEREOF.

 

12.         Counterparts; Electronic Execution. This Amendment may be executed
in any number of counterparts and by different parties and separate
counterparts, each of which when so executed and delivered shall be deemed an
original, and all of which, when taken together, shall constitute one and the
same instrument. Delivery of an executed counterpart of a signature page to this
Amendment by facsimile or other electronic transmission shall be as effective as
delivery of a manually executed counterpart of this Amendment. Any party
delivering an executed counterpart of this Amendment by facsimile or other
electronic transmission also shall deliver a manually executed counterpart of
this Amendment but the failure to deliver a manually executed counterpart shall
not affect the validity, enforceability, and binding effect of this Amendment.

 

13.         Construction. This Amendment and the Credit Agreement shall be
construed collectively and in the event that any term, provision or condition of
any of such documents is inconsistent with or contradictory to any term,
provision or condition of any other such document, the terms, provisions and
conditions of this Amendment shall supersede and control the terms, provisions
and conditions of the Credit Agreement. Upon and after the effectiveness of this
Amendment, each reference in the Credit Agreement to “this Agreement”,
“hereunder”, “herein”, “hereof” or words of like import referring to the Credit
Agreement, and each reference in the other Loan Documents to “the Credit
Agreement”, “thereunder”, “therein”, “thereof” or words of like import referring
to the Credit Agreement, shall mean and be a reference to the Credit Agreement
as modified hereby.

 

[Signature Pages Follow]

 

 6 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
as of the date first above written.

 

  GREAT AMERICAN GROUP WF, LLC, a California limited liability company        
By: /s/ Phillip J. Ahn   Name:  Phillip J. Ahn   Title:  CFO/COO       gA
RETAIL, Inc., a California corporation         By: /s/ Phillip J. Ahn  
Name:  Phillip J. Ahn   Title:  Secretary       GA Retail Canada, ULC, an
unlimited liability company formed under the laws of the Province of British
Columbia         By: /s/ Phillip J. Ahn   Name:  Phillip J. Ahn  
Title:  Director & Secretary

 

[Signature Page to Sixth Amendment to Credit Agreement]

 

 

 

 

  WELLS FARGO BANK, NATIONAL ASSOCIATION         By: /s/ Joseph Burt   Name:
Joseph Burt   Title: Director       WELLS FARGO CAPITAL FINANCE CORPORATION
CANADA         By: /s/David G. Phillips   Name: David G. Phillips   Title:
Senior Vice President Credit Officer, Canada Wells Fargo Capital Finance
Corporation Canada

 

[Signature Page to Sixth Amendment to Credit Agreement]

 

 

 

 

ACKNOWLEDGEMENT AND AGREEMENT

 

Each of the undersigned hereby acknowledges and agrees to the provisions of the
foregoing Amendment applicable to it, including but not limited to the releases
set forth in Section 7.

 

 

B. RILEY FINANCIAL, INC., a Delaware corporation

(f/k/a Great American Group, Inc.)

        By: /s/ Phillip J. Ahn   Name:  Phillip J. Ahn   Title:  CFO/COO      
great american group, llc, a California limited liability company         By:
/s/ Phillip J. Ahn   Name:  Phillip J. Ahn   Title:  CFO/COO

 

[Signature Page to Sixth Amendment to Credit Agreement]

 

 

 

 

Annex I

 

Conformed Credit Agreement

  

 

 

 

[CONFORMED COPY – THROUGH FIFTH Amendment]

SIXTH AMENDMENT]

 

SECOND AMENDED & RESTATED CREDIT AGREEMENT

 

Dated as of July 15, 2013

 

between

 

GREAT AMERICAN GROUP WF, LLC,

 

as a Borrower,

 

certain other Borrowers who may become party hereto

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

as the U.S. Lender

 

NOTE: THIS CONFORMED COPY IS FOR INFORMATIONAL/REFERENCE PURPOSES

ONLY. PLEASE REFER BACK TO EXECUTED CREDIT AGREEMENT AND ANY

AMENDMENTS IN ORDER TO DETERMINE LEGAL RIGHTS OF ANY PERSON.

 

Wells Fargo Capital Finance Corporation Canada

 

as the Canadian Lender

 

 

 

 

TABLE OF CONTENTS

 

SECTION PAGE       1. DEFINITIONS AND CERTAIN RULES OF CONSTRUCTION 2 1.1
Definitions 2 1.2 Certain Matters of Construction 27 2. AMOUNT AND TERMS OF
CREDIT 28 2.1 Advances and Letters of Credit 28 2.2 Use of Proceeds 32 2.3
Maturity of Advances 32 2.4 Interest and Letter of Credit Fees 32 2.5 Fees 35
2.6 Cash Management Systems 36 2.7 Payments 38 2.8 Application and Allocation of
Payments 39 2.9 Loan Account and Accounting 40 2.10 Disbursements & Disbursement
Account 41 2.11 Indemnity 41 2.12 Access 42 2.13 Taxes 42 2.14 Capital
Requirements 44 2.15 Communication with Accountants and Other Professionals 44
2.16 Designation of Original Borrower as Borrowers’ Agent 44 2.17 Joint and
Several Liability of Borrowers 45 2.18 Joinders 47 2.19 Currency Matters 47 3.
CONDITIONS PRECEDENT 48 3.1 Conditions to the Occurrence of the Restatement Date
48 3.2 Conditions to each Inventory, Other Assets Advance and Letter of Credit
49 3.3 Further Conditions to Each Liquidation Borrowing 50 4. REPRESENTATIONS
AND WARRANTIES 51 4.1 Limited Liability Company Existence; Compliance with Law
51 4.2 Executive Offices; FEIN; Organizational Number 52 4.3 Company Power,
Authorization, Enforceable Obligations 52 4.4 Material Adverse Effect 52 4.5
Agreements Entered Into by Borrowers 52 4.6 Ownership of Property; Liens 53 4.7
Operations of Borrower 53 4.8 Ventures, Subsidiaries and Affiliates, and
Indebtedness 53 4.9 Requirements of Law 53 4.10 Margin Regulations 53 4.11 Taxes
54 4.12 ERISA and Canadian Plans 54 4.13 No Litigation 54 4.14 Brokers 54 4.15
Full Disclosure 54 4.16 Environmental Matters 54 4.17 Deposit and Disbursement
Accounts 55

 

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4.18 Government Contracts 55 4.19 Solvency; Fraudulent Transfer 55 4.20
Liquidation Sales Agreements 55 4.21 Patriot Act, Foreign Assets, Etc. 56 4.22
No Events of Default 56 4.23 Use of Proceeds 56 4.24 Investments 56 4.25
Indebtedness 56 4.26 GAG Purchase Agreement 56 5. FINANCIAL STATEMENTS AND
INFORMATION 57 5.1 Reports and Notices 57 5.2 Reports Relating to Liquidation
Sales 57 5.3 Financial Reports and SEC Filings 57 6. AFFIRMATIVE COVENANTS 58
6.1 Maintenance of Existence and Conduct of Business 58 6.2 Payment of
Obligations 58 6.3 Books and Records 59 6.4 Insurance 59 6.5 Compliance with
Laws 59 6.6 Supplemental Disclosure 60 6.7 Intellectual Property 60 6.8
Environmental Matters 60 6.9 Further Assurances 60 6.10 Liquidation Related
Agreements 61 6.11 Investment Proceeds, Etc 61 6.12 Immediate Notice to
Lenderthe Lenders 61 6.13 Solvency 62 6.14 Tax Matters 62 6.15 Borrower’s
Activities 62 6.16 Applications under the CCAA and BIA 63 7. NEGATIVE COVENANTS
63 7.1 Mergers, Subsidiaries, Etc. 63 7.2 Liquidation Related Agreements 63 7.3
Investments, Loans and Advances 63 7.4 Indebtedness 64 7.5 Affiliate
Transactions 64 7.6 Capital Structure and Business 64 7.7 Guaranteed
Indebtedness 64 7.8 Liens 64 7.9 Sale of Membership Interests and Assets 64 7.10
ERISA 65 7.11 Hazardous Materials 65 7.12 Sale-Leasebacks 65 7.13 Cancellation
of Indebtedness 65 7.14 Restricted Payments 65 7.15 Change of Company Name or
Location; Change of Fiscal Year 65 7.16 No Speculative Transactions 65 7.17
Leases 65 7.18 Change of Control 65

 

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7.19 Accounting Methods 65 7.20 Suspension 66 7.21 Benefit Plans 66 7.22
Preferred Stock 66 7.23 Canadian Pension Plans 66 8. TERM 66 8.1 Termination 66
8.2 Survival of Obligations Upon Termination of Financing Arrangements 66 9.
EVENTS OF DEFAULT; RIGHTS AND REMEDIES 66 9.1 Events of Default 66 9.2 Remedies
68 9.3 Remedies Cumulative 69 9.4 Waivers by Borrower 69 10. SUCCESSORS AND
ASSIGNS 69 11. MISCELLANEOUS 70 11.1 Complete Agreement; Modification of
Agreement 70 11.2 Amendments 70 11.3 Releases 70 11.4 Fees and Expenses 70 11.5
Tax and Expenses 70 11.6 No Waiver 71 11.7 Remedies 71 11.8 Severability 71 11.9
Conflict of Terms 71 11.10 Confidentiality 71 11.11 CHOICE OF LAW AND VENUE 71
11.12 Notices 72 11.13 Section Headings 73 11.14 Counterparts; Telefacsimile
Execution 73 11.15 WAIVER OF JURY TRIAL 73 11.16 Press Releases 74 11.17
Reinstatement 74 11.18 Advice of Counsel 74 11.19 No Strict Construction 74
11.20 Effectiveness 74 11.21 Intentionally Deleted 74 11.22 Right of Set-Off 74
11.23 Pledges To Federal Reserve Banks 74 11.24 USA Patriot Act Notice 75 11.25
Canadian Anti-Money Laundering Legislation 75 11.26 No Joint Venture 75 11.27
Judgment Currency 75 11.28 Appointment for Perfection 75 11.29 Loss Sharing 75
11.26 Amendment & Restatement 76 11.31 Appointment of Hypothecary Representative
76

 

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INDEX OF ANNEXES, EXHIBITS AND SCHEDULES

 

Annexes   Annex A Schedule of Documents Annex B Provisions Governing Letters of
Credit     Exhibits   Exhibit 2.1-1 Form of Notice of Revolving Credit Advance
Exhibit 2.1-2 Form of Notice of Letter of Credit Request Exhibit 2.1(a)(i) Form
of Liquidation Loan Proposal Exhibit 2.1(a)(ii) Form of Lender’s Offer Exhibit
2.1(i) Form of Note Exhibit 10.3 Form of Assignment and Acceptance     Schedules
  Schedule A Borrower’s Authorized Representatives Schedule 2.1 Lender’s
Representative Schedule 2.1(a)(i) Due Diligence Requirements for Each Proposed
Revolving Credit Advance Schedule 2.6 Cash Management Banks and Accounts & DDA’s
Schedule 4.8 List of Great American’s Respective Affiliates Schedule 4.17
Deposit and Disbursement Accounts Schedule 5.2 Reporting Requirements for Each
Liquidation Sale

 

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THIS SECOND AMENDED & RESTATED CREDIT AGREEMENT (“Agreement”) is entered into as
of July 15, 2013, by and among GREAT AMERICAN GROUP WF, LLC, a California
limited liability company (“Original Borrower”), any other affiliate or
subsidiary of Original Borrower that becomes a party hereto from time to time
(such affiliates, together with Original Borrower, “Borrower” and collectively
“Borrowers”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, successor by merger to
WELLS FARGO RETAIL FINANCE, LLC (“U.S. Lender”).

 

RECITALS

 

A.           Defined terms used in these Recitals without definition are as
defined in Section 1.1 hereof.

 

B.           Original Borrower is a wholly-owned Subsidiary of Great American
and may conduct Liquidation Sales of certain Retail Inventory and Other Assets
of various Merchants, all of which may be financed in part by the Applicable
Lender, in the Applicable Lender’s discretion, pursuant to this Agreement.

 

C.           Original Borrower conducts such Liquidation Sales pursuant to
certain Liquidation Sales Agreements between a Merchant and Original Borrower or
a Liquidator JV. When a Liquidation Sale is conducted through a Liquidator JV,
Original Borrower participates in such Liquidation Sale pursuant to an Agency
Agreement, with the other members of the Liquidator JV. The terms of the Agency
Agreements set forth the relative rights, obligations, and duties of the various
joint venturers party thereto and establish provisions for the sharing of
payments and other interests among such joint venturers.

 

D.           In conducting the Liquidation Sales, the applicable Liquidator will
be obligated to make certain payments as consideration for the purchase by such
Liquidator of the Retail Inventory or Other Assets covered by the applicable
Liquidation Sales Agreements and/or the right to conduct the going out of
business, liquidation, store closing sales, or other sales contemplated by such
Liquidation Sales Agreements.

 

E.           Original Borrower and U.S. Lender have previously entered into that
certain Credit Agreement, dated as of October 21, 2008, as amended and restated
by that certain First Amended and Restated Credit Agreement dated December 8,
2010 among Original Borrower, U.S. Lender and GA Asset Advisors (the “Existing
Credit Agreement”) pursuant to which U.S. Lender agreed, on an uncommitted
basis, to provide loans and letters of credit to finance a portion of the
payments Original Borrower and GA Asset Advisors were required to make under
certain Liquidation Sales Agreements.

 

F.           Original Borrower and GA Asset Advisors have asked U.S. Lender, and
U.S. Lender has agreed, to amend and restate the Existing Credit Agreement in
its entirety by this Agreement in order to provide for (i) the removal of GA
Asset Advisors from the Existing Credit Agreement, (ii) the removal of the
ability of Borrowers to receive Inventory Advances, Other Asset Advances or
Letters of Credit in connection with the conduct of Liquidation Sales in the
United Kingdom, and (iii) to make certain other amendments, all pursuant to and
on the terms and conditions set forth herein, including Section 11.2630 hereof.

 

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G.           Borrowers acknowledge that: (i) each Lender is entering into this
Agreement on an uncommitted and discretionary basis, with no obligation to fund
any Inventory Advance, Other Assets Advance, or to cause the issuance of any
Letter of Credit; provided, however, that if a Lender does fund an Inventory
Advance, such Lender may commit to fund Total Expense Advances or Sales Tax
Advances in connection therewith; and (ii) the making by a Lender of any
Inventory Advance or Other Assets Advance, or the issuance of any Letter of
Credit, requested hereunder shall not obligate, or represent a commitment or
promise by a Lender, to make any future Revolving Credit Advances or cause the
issuance of any other Letter of Credit.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree that the Existing Credit
Agreement shall be amended and restated in its entirety and shall remain in full
force and effect as set forth herein:

 

DEFINITIONS AND CERTAIN RULES OF CONSTRUCTION

Definitions. For all purposes of this Agreement, capitalized terms used in this
Agreement shall have (unless otherwise provided elsewhere in this Agreement) the
following respective meanings when used herein:

“Accounts” shall mean all of any Borrower’s now owned or hereafter acquired
right, title, and interest with respect to “accounts” (as such term is defined
from time to time in the Code, the PPSA or other Law applicable to a Borrower),
and any and all supporting obligations in respect thereof.

 

“ACH Transactions” shall mean any cash management or related services (including
the Automated Clearing House processing of electronic funds transfers through
the direct Federal Reserve Fedline system) provided by a Lender or its
Affiliates for the account of any Borrower and its Affiliates.

 

“Affiliate” means as applied to any Person, any other Person who, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. For purposes of this definition, “control” means the possession,
directly or indirectly, of the power to direct the management and policies of a
Person, whether through the ownership of Capital Stock, by contract, or
otherwise; provided, however, that, for purposes hereof: (a) any Person which
owns directly or indirectly 10% or more of the securities having ordinary voting
power for the election of directors or other members of the governing body of a
Person or 10% or more of the partnership or other ownership interests of a
Person (other than as a limited partner of such Person) shall be deemed to
control such Person (except for any such Person who is a member of the Great
American Group, in which case the foregoing “10%” threshold shall instead be
“40%” in all cases); (b) each director (or comparable manager) of a Person shall
be deemed to be an Affiliate of such Person; and (c) each partnership or joint
venture in which a Person is a partner or joint venturer shall be deemed to be
an Affiliate of such Person; provided, however, no Person (other than a Credit
Party or a Subsidiary of a Credit Party) who is a party to any Liquidation Sales
Agreement, or Liquidator Joint Venture Agreement (or any similar agreement or
arrangement) shall be deemed to be an “Affiliate” of a Borrower by virtue of
being a party to such agreement or arrangement.

 

“Agency Agreement” shall mean an Agency Agreement, entered into between a
Liquidator and a Merchant in form and substance satisfactory to Lenderthe
Lenders (including without limitation as to compliance with all applicable
Laws), pursuant to which a Liquidator is given the right to conduct a
Liquidation Sale.

 

“Agreement” shall mean this Second Amended and Restated Credit Agreement, dated
as of the date hereof, among Borrowers and the U.S. Lender, including all
annexes, exhibits and schedules, as it may subsequently be amended, restated,
supplemented, modified, replaced, or refinanced.

 

 - 2 - 

 

 

“Aggregate Consideration” shall mean with respect to each Liquidation Sale
conducted by a Borrower (or through a Liquidator JV), the sum of (A) 100% of the
cash consideration payable by a Borrower (including, but not limited to, a
Borrower’s share of the consideration payable by any Liquidator JV under a
Liquidation Sales Agreement) under any Liquidation Sales Agreement (including,
without limitation, any Guaranteed Amount or Purchase Price), plus (B) the full
undrawn amount of any Letter of Credit a Borrower or a Liquidator JV, as
applicable, is required to post under the applicable Liquidation Sales Agreement
to ensure payment of any portion of the Guaranteed Amount or Purchase Price
which has not been paid in cash.

 

“Applicable Lender” means (a) with respect to U.S. Revolving Credit Advances and
U.S. Letters of Credit, the U.S. Lender and (b) with respect to Canadian
Revolving Credit Advances and Canadian Letters of Credit, the Canadian Lender.

 

“Authorized Person” shall mean those Persons listed on Schedule A or any other
individual designated in writing by such Person to act on behalf of a Borrower.

 

“Auto-Extension Letter of Credit” has the meaning set forth in Annex B.

 

"BA Equivalent Rate" means, on any day, the average rate per annum as reported
on the Reuters Screen CDOR Page (or any successor page or such other page or
commercially available service displaying Canadian interbank bid rates for CAD
bankers’ acceptances as the Canadian Lender may designate from time to time, or
if no such substitute service is available, the rate quoted by a Schedule I bank
under the Bank Act (Canada) selected by the Canadian Lender at which such bank
is offering to purchase CAD bankers’ acceptances) as of 10:00 a.m. Eastern
(Toronto) time on the date of commencement of the requested Interest Period, for
a term, and in an amount, comparable to the Interest Period and the amount of
the BA Rate Loan requested by Canadian Borrower in accordance with this
Agreement (and, if any such reported rate is below zero, then the rate
determined pursuant to this definition shall be deemed to be zero). Each
determination of the BA Equivalent Rate shall be made by the Canadian Lender and
shall be conclusive in the absence of manifest error.

 

"BA Rate Loan" means each portion of the Revolving Loans that bears interest at
a rate determined by reference to the BA Equivalent Rate.

 

“Backend L/C” shall mean a Letter of Credit which Liquidator is required to have
issued for the benefit of the Merchant pursuant to a Liquidation Sales Agreement
in order to secure a final payment of the Guaranteed Amount or Purchase Price in
connection with a Liquidation Sale where the Liquidation Sales Agreement does
not require the Liquidator to pay to the Merchant a substantial portion of the
Guaranteed Amount or Purchase Price upon the closing of the transaction.

 

“Backend L/C Cash Collateral” has the meaning set forth in Annex B.

 

“Bank Product Agreements” shall mean those certain cash management service
agreements entered into from time to time by a Credit Party in connection with
any of the Bank Products.

“Bank Product Obligations” means all obligations, liabilities, contingent
reimbursement obligations, fees, and expenses owing by a Credit Party to
Lenderthe Lenders or itstheir Affiliates pursuant to or evidenced by the Bank
Product Agreements and irrespective of whether for the payment of money, whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, and including all such amounts that a Credit Party is
obligated to reimburse to Lenderthe Lenders as a result of a Lender purchasing
participations or executing indemnities or reimbursement obligations with
respect to the Bank Products provided to a Credit Party pursuant to the Bank
Product Agreements.

 

 - 3 - 

 

 

“Bank Products” means any service or facility extended to a Credit Party by a
Lender or any Affiliate of a Lender including: (a) credit cards, (b) credit card
processing services, (c) debit cards, (d) purchase cards, (e) ACH Transactions,
(f) cash management, including controlled disbursement, accounts or services,
(g) Hedge Agreements, or (h) Factored Receivables and other arrangements with
respect to the factoring, sale, put, or other conditional sale or transfer of
any Accounts of a Credit Party or accounts payable of a Credit Party.

 

“Bankruptcy Code” shall mean the United States Bankruptcy Code as in effect from
time to time.

 

“Base LIBO Rate” means the rate per annum, determined by the Applicable Lender
in accordance with its customary procedures, and utilizing such electronic or
other quotation sources as it considers appropriate (rounded upwards, if
necessary, to the next 1/16%), on the basis of the rates at which Dollar
deposits are offered to major banks in the London interbank market on or about
1:00 p.m. (Boston, Massachusetts time) two Business Days prior to the
commencement of the applicable Interest Period, for a term and in amounts
comparable to the Interest Period and amount of the LIBO Rate Loan requested by
a Borrower in accordance with this Agreement, which determination shall be
conclusive in the absence of manifest error.

 

“Base Rate” shall mean, for any day, a rate per annum (rounded upward, if
necessary, to the next 1/100 of 1%) equal to the greatest of (a) the Prime Rate
in effect on such day, (b) the LIBO Rate for a one month Interest Period as in
effect on such day plus 1.00% and (c) the Federal Funds Effective Rate in effect
on such day plus 0.50%. The “Prime Rate” is a rate set by Lender based upon
various factors including Lender’s costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate. Any change
in such rate announced by Lender shall take effect at the opening of business on
the day specified in the public announcement of such change. “Federal Funds
Effective Rate” for any day, is the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average of the quotations for the day for
such transactions received by Lender from three federal funds brokers of
recognized standing selected by it. If Lender shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate for any reason, including the
inability or failure of Lender to obtain sufficient quotations in accordance
with the terms of the definition thereof, the Base Rate shall be determined
without regard to clause (c) of the first sentence of this paragraph until the
circumstances giving rise to such inability no longer exist. Any change in
the"Base Rate" means (a) with respect to Revolving Credit Advances denominated
in Dollars, U.S. Base Rate and (b) with respect to Revolving Credit Advances
denominated in CAD, Canadian Base Rate.

 

Base Rate due to a change in the Prime Rate, the LIBO Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate, LIBO Rate or the Federal Funds Effective Rate, respectively.

 

“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of
ERISA) for which a Borrower or any ERISA Affiliate of a Borrower has been an
“employer” (as defined in Section 3(5) of ERISA) within the past six years.

 

"BIA" means the Bankruptcy and Insolvency Act (Canada) as amended from time to
time (or any successor statute).

 

“Blocked Account” shall have the meaning assigned to it in Section 2.6(e).

 

 - 4 - 

 

 

“Board of Directors” means the board of directors (or comparable managers) of a
Person or any committee thereof duly authorized to act on behalf thereof.

 

“Books” shall mean all of each Borrower’s now owned or hereafter acquired books
and records (including all of its Records indicating, summarizing, or evidencing
its assets (including the Collateral) or liabilities, all of each Borrower’s
Records relating to its business operations or financial condition, and all of
its goods or General Intangibles related to such information).

 

“Borrower” and “Borrowers” shall have the meanings given such terms in the
Preamble hereto and includes, for greater certainty, the Canadian Borrower as of
the Sixth Amendment Effective Date.

 

“Borrower Equity Amount” shall mean, with respect to each Liquidation Sale, the
Aggregate Consideration to be provided for by a Borrower in respect thereto less
the aggregate Liquidation Borrowings to be made by the Applicable Lender in
respect thereto.

 

“Borrower Equity Percentage” shall mean, with respect to each Liquidation Sale,
the percentage ratio of the Borrower Equity Amount to the Aggregate
Consideration in respect thereto.

 

“Borrower Joinder” shall mean a joinder agreement, in form and substance
satisfactory to Lenderthe Lenders, from a wholly-owned Subsidiary of Great
American pursuant to which such Subsidiary joins this Agreement as a Borrower.
For greater certainty, the Sixth Amendment and Joinder to Credit Agreement,
dated the Sixth Amendment Effective Date, shall constitute a Borrower Joinder
with respect to the Canadian Borrower.

 

“Budget” shall mean, with respect to each Liquidation Sale, the budget for such
Liquidation Sale prepared by a Borrower and delivered to the Applicable Lender
with the Liquidation Loan Proposal for such Liquidation Sale, together with any
modifications thereto agreed to in writing by a Borrower and the Applicable
Lender, all in such form and substance as may be reasonably acceptable to the
Applicable Lender.

 

“Burdale” means Burdale Financial Limited.

 

“Business Day” shall mean any day that is not a Saturday, a Sunday or a day on
which banks are required or permitted to be closed in the Commonwealth of
Massachusetts or the State of California; except that, for any Borrower, if a
determination of a Business Day shall relate to a LIBO Rate Loan, the term
“Business Day” also shall exclude any day on which banks are closed for dealings
in Dollar deposits in the London interbank market.

 

“B. Riley” means B. Riley and Co., LLC, a Delaware limited liability company.

 

"CAD" or "C$" means the lawful currency of Canada.

 

"Canadian Anti-Money Laundering & Anti-Terrorism Legislation" means the Criminal
Code, R.S.C. 1985, c. C-46, The Proceeds of Crime (Money Laundering) and
Terrorist Financing Act, S.C. 2000, c. 17 and the United Nations Act, R.S.C.
1985, c.U-2 or any similar Canadian legislation, together with all rules,
regulations and interpretations thereunder or related thereto including the
Regulations Implementing the United Nations Resolutions on the Suppression of
Terrorism and the United Nations Al-Qaida and Taliban Regulations promulgated
under the United Nations Act.

 

 - 5 - 

 

 

“Canadian Base Rate” means, for any day, a rate per annum equal to the greater
of (a) the BA Equivalent Rate existing on such day (which rate shall be
calculated based upon an Interest Period of 1 month), plus 1 percentage point,
and (b) the “prime rate” for CAD commercial loans made in Canada as reported by
Thomson Reuters under Reuters Instrument Code <CAPRIME=> on the “CA Prime Rate
(Domestic Interest Rate) – Composite Display” page (or any successor page or
such other commercially available service or source (including the CAD “prime
rate” announced by a Schedule I bank under the Bank Act (Canada)) as the
Canadian Lender may designate from time to time). Each determination of the
Canadian Base Rate shall be made by the Canadian Lender and shall be conclusive
in the absence of manifest error.

 

"Canadian Benefit Plan" means all material employee benefit plans of any nature
or kind whatsoever that are not Canadian Pension Plans and are maintained or
contributed to by a Credit Party.

 

“Canadian Blocked Person” means any Person that is a “designated person”,
“politically exposed foreign person” or “terrorist group” as described in any
Canadian Economic Sanctions and Export Control Laws.

 

“Canadian Borrower” means GA RETAIL CANADA, ULC, an unlimited liability company
formed under the laws of the Province of British Columbia.

 

“Canadian Economic Sanctions and Export Control Laws” means any Canadian laws,
regulations or orders governing transactions in controlled goods or technologies
or dealings with countries, entities, organizations, or individuals subject to
economic sanctions and similar measures, including the Special Economic Measures
Act (Canada), the United Nations Act (Canada), the Freezing Assets of Corrupt
Foreign Officials Act (Canada), Part II.1 of the Criminal Code, (Canada) and the
Export and Import Permits Act (Canada), and any related regulations.

 

"Canadian Issuing Bank" means WFCFCC.

 

“Canadian Lender” means WFCFCC.

 

"Canadian Letter of Credit" means a letter of credit issued by Canadian Issuing
Bank for the account of a Canadian Borrower in either Dollars or CAD.

 

"Canadian L/C Usage" means, as of any date of determination, the aggregate
undrawn amount of all outstanding Canadian Letters of Credit minus any undrawn
amount of any outstanding Canadian Letters of Credit previously calculated as
Canadian L/C Usage that are subject to Letter of Credit Collateralization on
such date of determination.

 

"Canadian Pension Plans" means each pension plan required to be registered under
Canadian federal or provincial law that is maintained or contributed to by a
Credit Party for its employees or former employees but does not include the
Canada Pension Plan or the Quebec Pension Plan as maintained by the Government
of Canada or the Province of Quebec, respectively.

 

“Canadian Priority Payable Reserves” means reserves established in the good
faith credit discretion of the Applicable Lender for amounts secured by any
Liens, choate or inchoate, which rank or are capable of ranking in priority to
the Lenders’ Liens and/or for amounts which may represent costs relating to the
enforcement of the Lenders’ Liens including, without limitation, in the good
faith credit discretion of the Lenders, any such amounts due and not paid for
wages, vacation pay, amounts due and not paid under any legislation relating to
workers’ compensation or to employment insurance, all amounts deducted or
withheld and not paid and remitted when due under the Income Tax Act (Canada),
amounts currently or past due and not paid for realty, municipal or similar
taxes, any and all solvency deficiencies, unfunded liabilities on wind-up or
wind-up deficiencies in regards to any Canadian Pension Plan which is a defined
benefit plan (to the extent impacting personal or moveable property) and all
amounts currently or past due and not contributed, remitted or paid to any
Canada Pension Plan, the Pension Benefits Act (Ontario) or any similar
legislation.

 

 - 6 - 

 

 

“Canadian Revolving Credit Advance” shall have the meaning assigned to it in
Section 2.1(a).

 

“Canadian Security Agreement” means (a) the Security Agreement, dated as of the
Sixth Amendment Effective Date, between Canadian Borrower and the Applicable
Lender, or (b) any deed of hypothec entered into from time to time between the
Canadian Borrower and Applicable Lender, in all cases, as it may subsequently be
amended, restated, modified, supplemented, or replaced.

 

“Capital Lease” shall mean a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.

 

“Capital Stock” means with respect to any person, any and all shares of capital
stock, any membership, partnership or other ownership interest or any other
class of stock or equity interests, participations or other equivalents in such
Person (however designated, whether voting or non-voting, general or limited) of
such Person’s capital, whether now outstanding or issued after the Closing Date.

 

“Cash Collateralized” has the meaning set forth in Annex B, Section 9.

 

“Cash Management Account” shall have the meaning given such term in
Section 2.6(a).

 

“Cash Management Bank” shall have the meaning given such term in Section 2.6(a).

 

“CCAA” means the Companies' Creditors Arrangement Act (Canada) as amended from
time to time (or any successor statute).

 

“Change of Control” shall mean, at any time:

 

(a)           occupation of a majority of the seats (other than vacant seats) on
the Board of Directors (or other body exercising similar management authority)
of GAG Inc. by Persons who are not Continuing Directors and were neither (i)
nominated by the Permitted Holders nor (ii) appointed by directors so nominated;

 

(b)           any Person or “group” (within the meaning of the Securities and
Exchange Act of 1934, as amended), other than a Permitted Holder, is or becomes
the beneficial owner (within the meaning of Rule 13d-3 or 13d-5 of the
Securities and Exchange Act of 1934, as amended, except that such Person or
group shall be deemed to have “beneficial ownership” of all Capital Stock that
such Person or group has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of (i)
twenty-five percent (25%) or more (on a fully diluted basis) of the total then
outstanding Capital Stock of GAG Inc. entitled to vote for the election of
directors of GAG Inc., and (ii) Capital Stock of GAG Inc. entitled to vote for
the election of directors of GAG Inc. in an amount greater than the number of
shares of such Capital Stock beneficially owned by the Permitted Holders (or
over which the Permitted Holders have voting control);

 

(c)           GAG Inc. fails at any time to own, directly or indirectly, 100% of
the Capital Stock of Great American free and clear of all Liens (other than
Permitted Encumbrances);

 

(d)           (i) Great American fails to own, at any time, directly or
indirectly, 100% of the Capital Stock of any Borrower free and clear of all
Liens (other than Permitted Encumbrances) and/or ceases to manage any Borrower’s
business and operations; provided, however, notwithstanding the foregoing, B.
Riley shall be permitted to own up to 1,000 non-voting preferred shares of the
Capital Stock of Retail; or (ii) Great American fails to own, at any time, 100%
of the Capital Stock of any Borrower entitled to vote with respect to any
matters; and

 

 - 7 - 

 

 

(e)           Andrew Gumaer (i) ceases to be actively engaged in the management
and day-to-day operations and administration of Great American or any Borrower,
(ii) ceases to be a Continuing Director of B. Riley Financial, Inc., f/k/a Great
American Group, Inc., or (iii) ceases to be a Continuing Director of Great
American.

 

“Charges” shall mean all federal, national, state, county, city, municipal,
local, foreign or other governmental Taxes (including Taxes owed to the Pension
Benefit Guaranty Corporation, or any successor thereto, (and the equivalent in
any other jurisdiction of a Borrower) at the time due and payable), levies,
assessments, charges, liens, claims or encumbrances upon or relating to (a) the
Collateral, (b) the Obligations, (c) the employees, payroll, income or gross
receipts of any Borrower, (d) any Borrower’s ownership or use of any properties
or other assets, or (e) any other aspect of any Borrower’s business.

 

“Closing Date” shall mean October 21, 2008.

 

“Closing Fee” shall have the meaning set forth in the Fee Letter.

 

“Code” shall mean the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the Commonwealth of Massachusetts; provided,
that in the event that, by reason of mandatory provisions of law, any or all of
the attachment, perfection or priority of Lender’sthe Lenders’ security interest
in any Collateral is governed by the Uniform Commercial Code as enacted and in
effect in a jurisdiction other than the Commonwealth of Massachusetts, the term
“Code” shall mean the Uniform Commercial Code as enacted and in effect in such
other jurisdiction solely for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions.

 

“Collateral” shall mean all of any Borrower’s right, title, and interest in and
to the property covered by the Security AgreementAgreements, the Foreign
Security Documents, and the other Collateral Documents and any other property,
real or personal, tangible or intangible, now existing or hereafter acquired,
that may at any time be or become subject to a security interest or Lien in
favor of Lenderthe Lenders to secure the Obligations, including all of any
Borrower’s rights under and interest in all Liquidation Sales Agreements,
Liquidator Joint Venture Agreements, and amounts received by or payable to
Borrower under any of the foregoing agreements.

 

“Collateral Assignments” shall mean written instruments of assignment by a
Borrower to the Applicable Lender, in form and substance satisfactory to the
Applicable Lender, of all of such Borrower’s right, title, and interest to any
Liquidator Joint Venture Agreements or Liquidation Sales Agreements.

 

“Collateral Documents” shall mean the Security AgreementAgreements, the Foreign
Security Documents, the Collateral Assignments, and any and all other agreements
entered into by a Credit Party which grants Lenderthe Lenders a Lien upon
property of such Credit Party as security for payment of the Obligations.

 

“Collections” shall mean, with respect to each Liquidation Sale, all cash,
checks, notes, drafts or other similar items of payment relating to or
constituting payments received by or payable to a Credit Party in connection
with or relating to such Liquidation Sale, including, where applicable, payments
received through credit card sales and amounts payable by the applicable
Merchant to a Credit Party with respect to returns, allowances and customer
credits.

 

 - 8 - 

 

 

“Collection Account” shall mean in connection with each Liquidation Sale funded
by a Liquidation Borrowing, an account at the Applicable Lender, or at any other
financial institution satisfactory to the Applicable Lender in its sole
discretion at all times in any jurisdiction outside the United States, in the
name of the Applicable Lender (when permissible under applicable Law) designated
by the Applicable Lender as the “Collection Account” for such Liquidation Sale
and shall include any Master Collection Account.

 

“Continuing Directors” shall mean (a) with respect to Great American (i) any
member of the Board of Directors (or any manager of any comparable body) of
Great American who was or became a member of the Board of Directors (or a
manager of any comparable body) of Great American on the Closing Date, and
(ii) any individual who becomes a member of the Board of Directors (or a manager
of a comparable body) of Great American after the Closing Date if such
individual was appointed or nominated for election to the Board of Directors by
a majority of the members of Great American, who then constituted “Continuing
Directors”, and (b) with respect to GAG Inc., any member of the Board of
Directors of GAG Inc. who was or became a director of GAG Inc. on August 27,
2009, or becomes a member of the Board of Directors of GAG Inc. after August 27,
2009, if such individual was appointed or nominated for election to the Board of
Directors by a majority of the members constituting “Continuing Directors”.

 

“Control Agreement” shall mean an agreement, in form and substance satisfactory
to Lenderthe Lenders, executed and delivered by a Borrower, the Applicable
Lender, and the applicable securities intermediary, depository institution, or
bank, which agreement is sufficient to give Lenderthe Lenders “control” over the
subject Securities Account (as defined in the Code), DDA or Investment Property
(as defined in the Code) as provided in the Code, the PPSA (as applicable) or
other Law applicable to a Borrower.

 

“Credit Party” shall mean Borrower, GAG Inc., Great American, Canadian Borrower,
and/or any Subsidiary of any of the foregoing which is or which becomes a party
to any Loan Document from time to time.

 

“Credit Suisse” shall collectively mean Credit Suisse, Cayman Islands Branch,
and CS Loan Funding LLC, and their respective successors and assigns.

 

“Daily Balance” shall mean, with respect to each day during the term of this
Agreement, the amount of an Obligation owed at the end of such day.

 

“DDA” means any checking or other demand deposit account maintained by a
Borrower.

 

“Debtor Relief Laws” shall mean the Bankruptcy Code and(i) the Bankruptcy Code,
(ii) the BIA, (iii) the CCAA, (iv) the Winding-Up and Restructuring Act
(Canada), (v) the Canada Business Corporations Act (Canada) or the Business
Corporations Act (British Columbia) where such statute is used by a Person to
propose an arrangement in connection with a compromise of such Person's debt
obligations and/or (vi) all other liquidation, conservatorship, bankruptcy,
assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief Laws of the
United States, Canada or other applicable jurisdictions from time to time in
effect and affecting the rights of creditors generally.

 

“Default” shall mean an event, condition, or default that, with the giving of
notice, the passage of time, or both, would be an Event of Default.

 

“Default Rate” shall have the meaning assigned to it in Section 2.4(h).

 

“Disbursement Account” shall have the meaning assigned to it in Section 2.6(g).

 

 - 9 - 

 

 

“Disbursement Account Bank” shall have the meaning assigned to it in
Section 2.6(g).

 

“Dollars” and “$” means the lawful currency of the United States.

 

“Dollar Equivalent” shall mean, on any particular date, with respect to any
amount denominated in Dollars, such amount in Dollars, and with respect to any
amount denominated in currency other than Dollars, the amount (as conclusively
ascertained by the Applicable Lender absent manifest error) of Dollars which
could be purchased by the Applicable Lender (in accordance with its normal
banking practices) in the London foreign currency deposit market with such
amount of such currency at the Exchange Rate on such date.

 

“Effective Advance Rate” means 100% minus the percentage obtained by dividing
the Backend L/C Cash Collateral by the Guaranteed Amount.

 

“Environmental Actions” means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other communication from any Governmental
Authority, or any third party involving violations of Environmental Laws or
releases of Hazardous Materials from (a) any assets, properties, or businesses
of a Borrower or any predecessor in interest, (b) from adjoining properties or
businesses, or (c) from or onto any facilities which received Hazardous
Materials generated by a Borrower or any predecessor in interest.

 

“Environmental Law” means any applicable Law now or hereafter in effect and in
each case as amended, or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment, to
the extent binding on a Borrower, relating to the environment, employee health
and safety, or Hazardous Materials, including, without limitation, CERCLA; RCRA;
the Federal Water Pollution Control Act, 33 USC § 1251 et seq. the Toxic
Substances Control Act, 15 USC, § 2601 et seq. the Clean Air Act, 42 USC § 7401
et seq.; the Safe Drinking Water Act, 42 USC, § 3803 et seq.; the Oil Pollution
Act of 1990, 33 USC. § 2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 USC. § 11001 et seq.; the Hazardous Material
Transportation Act, 49 USC § 1801 et seq.; and the Occupational Safety and
Health Act, 29 USC. §651 et seq. (to the extent it regulates occupational
exposure to Hazardous Materials); any state, provincial, territorial and local
or foreign counterparts or equivalents, in each case as amended from time to
time.

 

“Environmental Liabilities and Costs” means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts, or consultants, and costs of
investigation and feasibility studies), fines, penalties, sanctions, and
interest incurred as a result of any claim or demand by any Governmental
Authority or any third party, and which relate to any Environmental Action.

 

“Environmental Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities and Costs.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974 (or any
successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder, and any successor statute thereto.

 

“ERISA Affiliate” shall mean (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of a Borrower under
IRC Section 414(b), (b) any trade or business subject to ERISA whose employees
are treated as employed by the same employer as the employees of a Borrower
under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA and
Section 412 of the IRC, any organization subject to ERISA that is a member of an
affiliated service group of which a Borrower is a member under IRC Section
414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 of
the IRC, any Person subject to ERISA that is a party to an arrangement with a
Borrower and whose employees are aggregated with the employees of a Borrower
under IRC Section 414(o).

 

 - 10 - 

 

 

“Equity Pledge Agreement” shall mean that certain Second Amended and Restated
Pledge and Security Agreement, between Great American and the U.S. Lender, dated
as of Restatement Date, as hereafter amended, modified, or amended and restated.

 

“Event of Default” shall have the meaning assigned to it in Section 9.1.

 

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

 

“Exchange Rate” means, with respect to any currency other than Dollars, at any
date of determination thereof, the Spot Rate of exchange for the conversion of
such currency into Dollars and with respect to Dollars, at any date of
determination thereof, the Spot Rate of exchange for the conversion of Dollars
into the applicable currency.

 

“Existing Credit Agreement” shall have the meaning given such term in the
Recitals hereto.

 

“Expense L/C” shall mean a letter of credit which a Liquidator is required to
have issued for its account pursuant to a Liquidation Sales Agreement to provide
security solely for the payment of Expenses under such Liquidation Sales
Agreement.

 

“Expenses” shall have, with respect to each Liquidation Sale, the meaning
assigned to such term or other similar terms in the relevant Liquidation Sales
Agreement for such Liquidation Sale; provided, that notwithstanding the terms of
any relevant Liquidation Sales Agreement, no amounts paid or payable to a
Borrower, Great American, or any Affiliate thereto, shall constitute Expenses
for purposes of this Agreement other than reasonable out-of-pocket expenses
actually incurred by such Borrower or Great American in the course of conducting
such Liquidation Sale without any mark up.

 

“Factored Receivables” shall mean any Accounts of any Credit Party which have
been factored, sold, transferred, conditionally sold or assigned by an Account
debtor of such Credit Party to the Applicable Lender or an Affiliate thereof
which is party to a Bank Product Agreement with such Credit Party pursuant to a
factoring arrangement or otherwise.

 

“Fee Letter” shall mean that certain Fee Letter dated as of the Restatement Date
between Borrowers and the U.S. Lender.

 

“Fees” shall mean any and all fees payable to Lenderthe Lenders pursuant to this
Agreement or any of the other Loan Documents, including the Closing Fee, the
Letter of Credit Fees, any Work Fees, and the Success Fees, if any.

 

“Fifth Amendment Effective Date” shall mean June 10, 2016.

 

“Final Accounting” shall mean, with respect to each Liquidation Sale, the final
accounting with respect to amounts received by or payable to a Borrower and
amounts paid by a Borrower in connection with such Liquidation Sale and all
other related transactions, which accounting shall be prepared by a Borrower and
approved by Lenderthe Lenders.

 

“Fiscal” means, when followed by “month” or “quarter”, the relevant fiscal
period based on Great American’s fiscal year and accounting conventions (e.g. a
reference to “April Fiscal 2008” is to the fiscal month of April of Great
American’s 2008 fiscal year). When followed by reference to a specific year, the
fiscal year which encompasses the majority of months in such fiscal year (e.g.
if Great American’s 2008 fiscal year ends in January 2008 reference to that year
would be to Great American’s “Fiscal 2008”).

 

 - 11 - 

 

 

“Foreign Credit Parties” shall mean: (i) GA Asset Advisors to the extent the UK
Credit Agreement is in effect, (ii) any other borrower party or guarantor to the
UK Credit Agreement (if it is then in effect), and (iii) any guarantor of any of
the Obligations formed under the laws of any jurisdiction other than the United
States or Canada.

 

“Foreign Security Documents” shall mean: (i) a fixed and floating debenture in
favor of Lenderthe Lenders over all the assets of the Persons set forth in
clauses (i) through (iii) of the definition of Foreign Credit Parties, (ii) the
pledge of shares in favor of Lenderthe Lenders granted by Great American or GA
Asset Advisors, as applicable, over all its respective shares in the Persons set
forth in clauses (i) through (iii) of the definition of Foreign Credit Parties
and (iii) any other security over the assets of any Foreign Credit Party or any
Affiliate thereof as may reasonably be required by Lenderthe Lenders, as any of
the foregoing may subsequently be amended, restated, modified, supplemented or
replaced.

 

“Fourth Amendment Effective Date” shall mean February 19, 2015.

 

“Funding Losses” shall have the meaning given such term in Section 2.4(j)
hereof.

 

“GA Asset Advisors” means GA Asset Advisors Limited, a limited liability company
organized under the laws of England and Wales.

 

“GA Asset Advisors Guaranty” means the Guaranty of GA Asset Advisors in favor of
the U.S. Lender required to be executed by GA Asset Advisors concurrently with
the execution of the UK Credit Agreement and in form and substance satisfactory
to the U.S. Lender.

 

“GAAP” shall mean generally accepted accounting principles in the United States
of America, as in effect from time to time, consistently applied. At the
Lender’s discretion, GAAP may also include, with respect to any Borrower (other
than Original Borrower) hereunder, “GAAP” in the jurisdiction of formation of
such other Borrower.

 

“GAG Inc.” shall mean Great American Group, Inc., a Delaware corporation.

 

“GAG Purchase Agreement” shall mean that certain Agreement and Plan of
Reorganization, dated as of May 14, 2009, as amended by Amendment No. 1,
Amendment No. 2, and Amendment No. 3 to the Agreement and Plan of
Reorganization, each dated as of May 29, 2009, July 8, 2009 and July 28, 2009,
respectively, by and among Alternative Asset Management Acquisition Corp., a
Delaware corporation, GAG Inc., and AAMAC Merger Sub, Inc., a newly-formed
Delaware corporation and wholly-owned subsidiary of GAG Inc., on the one hand,
and Great American, the holders of Capital Stock of Great American as of July
28, 2009, and the phantom equity holders of Great American, on the other hand.

 

“General Intangibles” shall mean all of any Borrower’s now owned or hereafter
acquired right, title, and interest with respect to “general intangibles” (as
such term is defined from time to time in the Code),) or “intangibles” (as such
term is defined from time to time in the PPSA), as the case may be, and any and
all supporting obligations in respect thereof.

 

“Governmental Authority” shall mean any federal, national, foreign, state,
provincial, territorial, local, or other governmental or administrative body,
instrumentality, department, or agency or any court, tribunal, administrative
hearing body, arbitration panel, commission, or other similar dispute-resolving
panel or body.

 

 - 12 - 

 

 

“Great American” shall mean Great American Group, LLC, a California limited
liability company.

 

“Great American Group” shall mean a collective reference to each Credit Party,
and each of their respective Subsidiaries now in existence or hereafter formed
or acquired, including, but not limited to, the entities listed on Schedule 4.8
hereto.

 

“Great American Guaranty” shall mean the Third Amended and Restated Guaranty of
GAG Inc. and Great American, on a joint and several basis, in favor of the U.S.
Lender dated as of the Restatement Date, and in form and substance satisfactory
to the U.S. Lender.

 

“Guaranteed Amount” shall have, with respect to each Liquidation Sale carried
out pursuant to a Liquidation Sales Agreement, the meaning assigned to such term
or other similar terms in such agreement. It is expressly understood that prior
to the Final Accounting, the Guaranteed Amount shall refer to a Borrower’s good
faith estimate of the Guaranteed Amount to be paid under the Liquidation Sales
Agreement and that such amount shall be adjusted upon completion of the Final
Accounting and that if the actual amount required to be delivered to the
Merchant by a Borrower in respect to the Guaranteed Amount is less than the
Guaranteed Amount as listed in the applicable Liquidation Sales Agreement, such
lesser amount shall constitute the Guaranteed Amount for all purposes hereunder.

 

“Guaranty Percentage” shall have the same meaning as in the applicable
Liquidation Sales Agreement.

 

“Hazardous Material” shall mean (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations as
“hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic
substances,” or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.

 

“Hedge Agreement” shall mean any and all transactions, agreements, or documents
now existing or hereafter entered into between a Credit Party or its
Subsidiaries and Wells Fargo or its Affiliates, which provide for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging a Credit Party’s or any of its Subsidiaries’ exposure
to fluctuations in interest or exchange rates, loan, credit exchange, security
or currency valuations or commodity prices.

 

“Honor Date” has the meaning set forth in Annex B.

 

“Indebtedness” shall mean (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures, notes, or other similar instruments
and all reimbursement or other obligations in respect of letters of credit,
bankers acceptances, interest rate swaps, or other financial products, (c) all
obligations under Capital Leases, (d) all obligations or liabilities of others
secured by a Lien on any asset of a Borrower, irrespective of whether such
obligation or liability is assumed, (e) all obligations for the deferred
purchase price of assets (other than trade debt incurred in the ordinary course
of business and repayable in accordance with customary trade practices), and (f)
any obligation guaranteeing or intended to guarantee (whether directly or
indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any
obligation of any other Person.

 

 - 13 - 

 

 

“Insolvency Officeholder” means any liquidator, trustee in bankruptcy, receiver,
receiver-manager, sequestrator, administrative receiver, administrator or
similar officer.

 

“Insolvency Proceeding” means any step is taken under or in relation to, or an
arrangement or proceeding is commenced by or against any Person under any
provision of any Debtor Relief Law including, without limitation, in relation to
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extensions generally with creditors, or proceedings seeking
reorganization, compromise, arrangement, administration, receivership,
administrative receivership, winding up, dissolution, liquidation or other
similar relief or proceeding or arrangement, or an Insolvency Officeholder is
appointed or threatened to be appointed in respect of any Person’s assets or any
other analogous step or procedure is taken in any jurisdiction.

 

“Interest Period” means, with respect to each LIBONon-Prime Rate Loan, a period
commencing on the date of the making of such LIBONon-Prime Rate Loan and ending
1 month thereafter; provided, however, that (a) if any Interest Period would end
on a day that is not a Business Day, such Interest Period shall be extended
(subject to clauses (c)-(e) below) to the next succeeding Business Day, (b)
interest shall accrue at the applicable rate based upon the LIBONon-Prime Rate
from and including the first day of each Interest Period to, but excluding, the
day on which any Interest Period expires, (c) any Interest Period that would end
on a day that is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day, (d) with
respect to an Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period), the Interest Period shall
end on the last Business Day of the calendar month that is 1 month after the
date on which the Interest Period began, as applicable, and (e) Borrowers may
not elect an Interest Period which will end after the Revolving Credit
Termination Date.

 

“Insolvency Officeholder” means any liquidator, trustee in bankruptcy, receiver,
administrative receiver, administrator or similar officer.

 

“Insolvency Proceeding” means any step is taken under or in relation to, or an
arrangement or proceeding is commenced by or against any Person under any
provision of any Debtor Relief Law including, without limitation, in relation to
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extensions generally with creditors, or proceedings seeking
reorganization, compromise, arrangement, administration, receivership,
administrative receivership, winding up, dissolution, liquidation or other
similar relief or proceeding or arrangement, or an Insolvency Officeholder is
appointed or threatened to be appointed in respect of any Person’s assets or any
other analogous step or procedure is taken in any jurisdiction.

 

“Inventory Advance” shall have the meaning assigned to it in Section 2.1(f)(i).

 

“Inventory Advance Rate” shall mean, with respect to each Liquidation Sale in
respect of Retail Inventory only, the percentage that the Applicable Lender uses
to calculate the amount of the Inventory Advance, or Letter of Credit
Obligations, as the case may be, with respect to such Liquidation Sale, based on
the applicable Guaranty Percentage and Guaranteed Amount or Purchase Price
Percentage and Purchase Price, as determined pursuant to Section 2.1(f). In no
case shall the Inventory Advance Rate for any such Liquidation Sale be (i) lower
than, with respect to Liquidation Sales (or any portion thereof) conducted in
the US and Canada, seventy-seven and one half percent (77.5%) of the Guaranteed
Amount or Purchase Price, and with respect to any other jurisdiction, the rate
set by the Applicable Lender in its discretion, or (ii) higher than ninety-two
and one-half percent (92.5%) of the Guaranteed Amount or Purchase Price.

 

 - 14 - 

 

 

“Inventory Borrowing Base” in respect to any Liquidation Sale shall mean the
product of (i) the Inventory Advance Rate applicable to such Liquidation Sale,
times, (ii) the Guaranteed Amount or Purchase Price as determined pursuant to
the applicable Liquidation Sales Agreement., minus (iii) reserves, including,
without limitation, Canadian Priority Payable Reserves. For purposes of
calculating the Inventory Borrowing Base, except as may otherwise be agreed by
the Applicable Lender in its sole discretion, any Retail Inventory that is
subject to retention of title claims shall not be included in the “Guaranteed
Amount” or “Purchase Price”, notwithstanding anything to the contrary in any
Liquidation Sales Agreement or other agreement.

 

“Investment” shall mean, with respect to any Person, any investment by such
Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide accounts arising in the
ordinary course of business consistent with past practices), purchases or other
acquisitions for consideration of Indebtedness or stock, and any other items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.

 

“Issuer Documents” means with respect to any Letter of Credit, the Notice of
Letter of Credit Request, and any other document, agreement and instrument
entered into by or  between the Applicable Lender and a Borrower in favor of the
Applicable Lender and relating to any such Letter of Credit.

 

“Jones L/C” means that certain Letter of Credit issued under this Agreement on
behalf of GA Retail Canada, ULC for the benefit of 2473304 Ontario Inc. and/or
certain of its Affiliates.

 

“Laws” shall mean, collectively, all international, foreign, federal, state,
provincial, territorial and local statutes, treaties, rules, guidelines,
regulations, ordinances, codes and administrative or judicial precedents or
authorities, including the interpretation or administration thereof by any
Governmental Authority charged with the enforcement, interpretation or
administration thereof, and all applicable administrative orders, directed
duties, requests, licenses, authorizations and permits of, and agreements with,
any Governmental Authority, in each case whether or not having the force of law.

 

“L/C Borrowing” has the meaning set forth in Annex B.

 

“L/C Undertaking” has the meaning set forth in Annex B.

 

“L/C Usage” means, as of any date of determination, the aggregate undrawn amount
of all outstanding Letters of Credit issued by Lender plus 100% of the amount of
outstanding time drafts accepted by an Underlying Issuer as a result of drawings
under Underlying Letters of Credit.

 

“Lender” shall mean Wells Fargo Bank, National Association, successor by merger
to Wells Fargo Retail Finance, LLC.

 

“L/C Usage” means the U.S. L/C Usage and/or the Canadian L/C Usage, as the
context so requires.

 

“Lender” or “Lenders” means the U.S. Lender and the Canadian Lender.

 

 - 15 - 

 

 

“Lender Expenses” means all (a) costs or expenses (including taxes, and
insurance premiums) required to be paid by the Credit Parties under any of the
Loan Documents that are paid or incurred by Lenderthe Lenders, (b) reasonable
fees or charges paid or incurred by Lenderthe Lenders in connection with the
Applicable Lender’s transactions with the Credit Parties, including, reasonable
fees or charges for any due diligence with respect to a proposed Liquidation
Sale (including reasonable and documented attorneys’ fees), photocopying,
notarization, couriers and messengers, telecommunication, public record searches
(including tax lien, litigation, UCC, PPSA, Bank Act searches and including
searches with the patent and trademark office, the copyright office, or the
department of motor vehicles), filing, recording, publication, appraisal
(including periodic Collateral appraisals or business valuations to the extent
of the fees and charges (and up to the amount of any limitation) contained in
this Agreement), real estate surveys, real estate title policies and
endorsements, and environmental audits, (c) reasonable costs and expenses
incurred by Lenderthe Lenders in the disbursement of funds to or for the account
of Borrowers (by wire transfer or otherwise), (d) charges paid or incurred by
Lenderthe Lenders resulting from the dishonor of checks, (e) reasonable costs
and expenses paid or incurred by Lenderthe Lenders to correct any default or
enforce any provision of the Loan Documents, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) reasonable audit fees and
expenses (and other due diligence expenses) of Lenderthe Lenders related to
audit examinations of the Books, (g) reasonable costs and expenses of third
party claims or any other suit paid or incurred by Lenderthe Lenders in
enforcing or defending the Loan Documents or in connection with the transactions
contemplated by the Loan Documents or Lender’sthe Lenders’ relationship with any
Credit Party, (h) Lender’sthe Lenders’ reasonable fees and expenses (including
reasonable and documented attorneys’ fees) incurred in advising, structuring,
drafting, reviewing, administering, or amending the Loan Documents, and
(i) Lender’sthe Lenders’ reasonable fees and expenses (including reasonable and
documented attorneys’ fees) incurred in terminating, enforcing (including
reasonable and documented attorneys’ fees and expenses incurred in connection
with a “workout,” a “restructuring,” or an Insolvency Proceeding concerning a
Borrower or in exercising rights or remedies under the Loan Documents), or
defending the Loan Documents, irrespective of whether suit is brought, or in
taking any Remedial Action concerning the Collateral.

 

“Lender’s Account” shall mean an account of the U.S. Lender at a branch of the
U.S. Lender designated by the U.S. Lender to Original Borrower in writing from
time to time.

 

“Lender’s Offer” shall have the meaning given such term in Section 2.1(f)(ii)
hereof.

 

“Letters of Credit” shall mean commercial or standby letters of credit issued
for the account of a Borrower by Lender or Underlying Issuer for which Lender
has incurred Letter of Credit Obligations.

 

"Letter of Credit" means a U.S. Letter of Credit and/or a Canadian Letter of
Credit, as the context requires.

 

“Letter of Credit Expiration Date” has the meaning set forth in Annex B.

 

“Letter of Credit Fee” shall have the meaning assigned to it in Annex B.

 

“Letter of Credit Obligations” shall mean all outstanding obligations incurred
by the Applicable Lender at the request of a Borrower, including, without
limitation, the L/C Usage, whether direct or indirect, contingent or otherwise,
due or not due, in connection with the issuance of a reimbursement agreement or
guaranty by the Applicable Lender with respect to any Letter of Credit.

 

“Letter of Credit Sublimit” shall mean $100,000,000 minus the aggregate
principal amount of all outstanding loans, advances or other credit extensions
by Burdale pursuant to the UK Credit Agreement (if it is then in effect).

 

“LIBOR Deadline” has the meaning set forth in Section 2.

 

“LIBO Rate” means, for each Interest Period for each LIBO Rate Loan, the rate
per annum determined by the Applicable Lender (rounded upwards, if necessary, to
the next 1/16%) by dividing (a) the Base LIBO Rate for such Interest Period, by
(b) 100% minus the Reserve Percentage. The LIBO Rate shall be adjusted on and as
of the effective day of any change in the Reserve Percentage.

 

 - 16 - 

 

 

“LIBO Rate Loan” means each portion of Revolving Credit Advance that bears
interest at a rate determined by reference to the LIBO Rate.

 

“Lien” shall mean any interest in an asset securing an obligation owed to, or a
claim by, any Person whether such interest shall be based on the common law,
statute, or contract, whether such interest shall be recorded or perfected, and
whether such interest shall be contingent upon the occurrence of some future
event or events or the existence of some future circumstance or circumstances,
including the lien (statutory or other) or security interest arising from a
mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, security agreement, conditional sale or trust receipt, a floating
charge, a fixed charge, or from a lease, consignment, or bailment for security
purposes or from a sale of accounts receivable or chattel paper, or the interest
of a lessor under a Capital Lease or other arrangement pursuant to which any
Person is entitled to any preference or priority with respect to the property or
assets of another Person or the income or profits of such other Person and also
including reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases, and other title exceptions and
encumbrances affecting Real Property each of the foregoing whether consensual or
non-consensual and whether arising by way of agreement, operation of law, legal
process or otherwise.

 

“Liquidation Borrowing” shall mean the Inventory Advance, Other Assets Advance,
Sales Tax Advance, Total Expense Advance, or Letter of Credit Obligations with
respect to a Liquidation Sale, all other Revolving Credit Advances made with
respect to such Liquidation Sale, and all accrued Fees, interest and other
Obligations payable by a Borrower with respect thereto.

 

“Liquidation Loan Proposal” shall have the meaning assigned to it in
Section 2.1(f)(i).

 

“Liquidation Sale” shall mean any going out of business, liquidation or store
closing sale of a particular Merchant conducted by a Liquidator with respect to
(a) the Retail Inventory or (b) any sales or dispositions of Other Assets, in
each case pursuant to a particular Liquidation Sales Agreement.

 

“Liquidation Sales Agreements” shall mean the Agency Agreement, Purchase
Agreement or any other agreement required to conduct a Liquidation Sale entered
into by any Liquidator with respect to a Liquidation Sale, and any and all other
agreements, instruments, documents and certificates entered into in connection
therewith.

 

“Liquidator” shall mean a Borrower or a Liquidator JV, as the context requires.

 

“Liquidator JV” shall mean any joint venture between a Borrower and one or more
other professional Retail Inventory liquidators party to a Liquidator Joint
Venture Agreement.

 

“Liquidator Joint Venture Agreement” shall mean a joint venture agreement, in
form and substance satisfactory to the Applicable Lender, entered into among a
Borrower and one or more other professional liquidators for the sole purpose of
jointly and collectively entering into Liquidation Sales Agreements with any
Merchants and conducting Liquidation Sales pursuant to such Liquidation Sales
Agreements.

 

“Loan Account” has the meaning set forth in Section 2.9.

 

 - 17 - 

 

 

“Loan Documents” shall mean this Agreement, the Notes, the Collateral Documents,
the Great American Guaranty, the GA Asset Advisors Guaranty, (if it is then in
effect) the Equity Pledge Agreement, the Fee Letter, the Perfection Certificate,
the Subordination Agreement, the Solvency Certificate, the Omnibus Ratification,
each Borrower Joinder (if any), and all other agreements, instruments, documents
and certificates identified in the Schedule of Documents executed and delivered
to, or in favor of, the Applicable Lender and including all other pledges,
powers of attorney, consents, assignments, contracts, notices, and all other
written matter whether heretofore, now or hereafter executed by any Credit
Party, or any employee of any Credit Party, and delivered to the Applicable
Lender in connection with this Agreement or the transactions contemplated
hereby. Any reference in this Agreement or any other Loan Document to a Loan
Document shall include all appendices, exhibits or schedules thereto, and all
amendments, restatements, supplements or other modifications thereto, and shall
refer to such Loan Document as the same may be in effect at any and all times
such reference becomes operative.

 

“Margin” shall mean, as of any date of determination, the Margin specified in
the defined term “Margin Pricing Grid” applicable to such Revolving Credit
Advance or other Obligation. The Margin shall adjust in accordance with the
Margin Pricing Grid as provided therein.

 

“Margin Pricing Grid” shall mean,

 

(i)           for Inventory Advances (and Sales Tax and Total Expense Advances
made in connection with any Inventory Advance) in connection with Liquidation
Sales to be conducted in the United States and Canada, the applicable percentage
amount set forth in the following grid that corresponds to the applicable
Inventory Advance Rate applied to such Inventory Advance:

 

If Inventory Advance Rate is:  Then the Margin is:        ≤ 77.5%   2.25%
>77.5%, but ≤ 82.5%   2.75% > 82.5%, but ≤ 87.5%   3.00% > 87.5%, but ≤ 92.5% 
 3.25%

 

(ii)           for all Other Asset Advances (and Sales Tax and Total Expense
Advances made solely in connection with any Other Asset Advance) in connection
with Liquidation Sales to be conducted in the United States and Canada, the
Margin shall be no less than 3.25%.

 

(iii)           for all Revolving Credit Advances in connection with any
Liquidation Sale (or portion thereof) conducted in any jurisdiction other than
the United States or Canada, the Margin shall be as determined by the Applicable
Lender in its sole discretion.

 

“Material Adverse Effect” shall mean a material adverse effect on (a) the
business, assets, operations, financial or other condition of GAG Inc., Great
American, Original Borrower, or any other Borrower (so long as such other
Borrower is conducting a Liquidation Sale or owes Lenderthe Lenders any
Obligations with respect to a Liquidation Sale) or all Credit Parties
collectively, (b) any Borrower’s ability, or the ability of any Liquidator JV,
as applicable, to conduct any Liquidation Sale in accordance with the applicable
Liquidation Sale Agreements, (c) any Borrower’s ability to pay and perform any
of the Obligations in accordance with the terms of this Agreement or to perform
its obligations under any Liquidator Joint Venture Agreement, (d) any Credit
Party’s ability to perform its material obligations under the Loan Documents to
which it is a party, (e) the Collateral or Lender’sthe Lenders’ Liens on the
Collateral or the priority of such Liens, (f) Lender’sthe Lenders’ ability to
enforce the Obligations or realize upon the Collateral, or (g) Lender’sthe
Lenders’ rights and remedies under this Agreement and the other Loan Documents.

 

 - 18 - 

 

 

“Master Collection Account” shall mean an account at the Applicable Lender in
the name of the Applicable Lender designated as the “Master Collection Account”
into which the proceeds of all other Collection Accounts shall be deposited
pursuant to Section 2.6.

 

“Maximum Lawful Rate” shall have the meaning assigned to it in Section 2.4(i).

 

“Merchant” shall mean a Person that, in the ordinary course of its business,
sells Retail Inventory and/or owns or sells Other Assets and, in the case of a
Liquidation Sale conducted outside the US or Canada, “Merchant” shall include
any Affiliate of a Merchant or other entity which owns Retail Inventory or Other
Assets.

 

“Net Profit Margin” shall mean, with respect to each Liquidation Sale, the sum
of (i) the sum of (a) the Proceeds of such Liquidation Sale, plus (b) the cash
proceeds of any unsold Retail Inventory or Other Assets retained or acquired by
a Borrower at the conclusion of such Liquidation Sale, minus (ii) the sum of (a)
the Guaranteed Amount or Purchase Price with respect to such Liquidation Sale,
plus (b) the Recovery Amount, if any, with respect to such Liquidation Sale,
plus (c) actual Expenses incurred by a Borrower with respect to such Liquidation
Sale (including any reimbursement obligations, expenses, fees and commissions
payable in connection with an Expense L/C or any Letter of Credit provided in
respect to unpaid portions of the Guaranteed Amount or Purchase Price), (d)
(without duplication of any amounts counted in clause “c”) interest or Letter of
Credit Fees paid to Lenderthe Lenders with respect to the Liquidation Borrowings
for such Liquidation Sale, each as set forth in the Final Accounting, provided,
however, that, for purposes of calculating the Net Profit Margin, Expenses that
a Borrower pays to itself or an Affiliate (such as compensation of supervisory
personnel) shall be calculated based on actual amounts paid without a mark-up
for profit by itself or such Affiliate.

 

“Non-Extension Notice Date” has the meaning set forth in Annex B.

 

“Non-Prime Rate” means (a) with respect to Revolving Credit Advances in Dollars,
LIBO Rate, and (b) with respect to Revolving Credit Advances in CAD, BA
Equivalent Rate.

 

"Non-Prime Rate Loan" means (a) with respect to Revolving Loans denominated in
Dollars, LIBO Rate Loans, and (b) with respect to Revolving Loans denominated in
CAD, BA Rate Loans.

 

“Notes” shall have the meaning assigned to it in Section 2.1(i).

 

“Notice of Letter of Credit Request” shall have the meaning assigned to it in
Section 2.1(e).

 

“Notice of Revolving Credit Advance” shall have the meaning assigned to it in
Section 2.1(e).

 

“Obligations” shall mean (a) all Revolving Credit Advances, debts, principal,
interest (including any interest that, but for the provisions of any Debtor
Relief Law, would have accrued), contingent reimbursement obligations with
respect to outstanding Letters of Credit, Bank Product Obligations, premiums,
liabilities (including all amounts charged to Borrower’s Loan Account pursuant
hereto), obligations, fees (including, without limitation, the Work Fees, the
Success Fees, and any Letter of Credit Fees), charges, costs, and Lender
Expenses (including in respect of any fees or expenses that, but for the
provisions of the Debtor Relief Law, would have accrued), lease payments,
guaranties, covenants, indemnification obligations arising pursuant to the Loan
Documents (including, without limitation, under Section 2.11) and duties of any
kind and description owing by any Credit Party to the Applicable Lender pursuant
to or evidenced by the Loan Documents to which such Credit Party is a party and
irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and including all interest not paid when due and all Lender Expenses that any
Credit Party is required to pay or reimburse by the Loan Documents to which such
Credit Party is a party, by Law, or otherwise, and (b) all Bank Product
Obligations. Any reference in this Agreement or in the Loan Documents to the
Obligations shall include all amendments, changes, extensions, modifications,
renewals replacements, substitutions, and supplements, thereto and thereof, as
applicable, both prior and subsequent to any Insolvency Proceeding.

 

 - 19 - 

 

 

“Omnibus Ratification” shall mean the Omnibus Ratification of Loan Documents
executed by Original Borrower in favor of the U.S. Lender dated as of the
Restatement Date.

 

“Organizational Documents” shall mean (a) for any corporation, the certificate
and/or articles of incorporation, amalgamation or continuance, the bylaws, the
memorandum of association, any certificate of designation or other instrument
relating to the rights of preferred shareholders or stockholders of such
corporation, any shareholder rights agreement and all applicable resolutions of
the Board of Directors (or any committee thereof) of such corporation, (b) for
any partnership, the partnership agreement and, if applicable, the certificate
of limited partnership, and (c) for any limited liability company, the operating
agreement and articles or bylaws or certificate of formation or organization or
incorporation, as applicable., and (d) any shareholder’s agreement or
declaration relating to such Person. “Organizational Documents” shall also
include, in all cases, all shareholder agreements, voting trusts, and similar
arrangements applicable to any Person’s Capital Stock.

 

“Original Borrower” has the meaning given such term in the Preamble hereto.

 

“Other Assets” shall mean any real property, personal property or other property
of any Merchant or Affiliate thereof, other than Retail Inventory, owned,
leased, or licensed by such Merchant or such Affiliate in the ordinary course of
its business, including, without limitation, such Merchant’s or such Affiliate’s
interest in real property leases, fixtures and equipment (including, without
limitation, Fixtures and Equipment, as such terms are defined in the Code).

 

“Other Assets Advance” shall have the meaning assigned to it in Section
2.1(f)(i).

 

“Other Assets Advance Rate” shall mean, with respect to each Liquidation Sale in
respect of Other Assets only, the percentage that the Applicable Lender uses to
calculate the amount of the Other Assets Advance or Letter of Credit
Obligations, as the case may be, with respect to such Liquidation Sale, as
determined pursuant to Section 2.1(f). In no case shall the Other Assets Advance
Rate for any such Liquidation Sale be higher than eighty-five percent (85.0%).

 

“Other Assets Borrowing Base” shall mean, in respect to each Liquidation Sale,
the product of (i) the Other Assets Advance Rate, times (ii) the consideration
which Borrower has agreed to pay for such Other Assets pursuant to the
applicable Liquidation Sales Agreement. For purposes of calculating the Other
Assets Borrowing Base, except as may otherwise be agreed by the Applicable
Lender in its sole discretion, any Other Assets that are subject to retention of
title claims shall not be included in the value of the consideration referred to
in clause (ii) of the preceding sentence notwithstanding anything to the
contrary in any Liquidation Sales Agreement or other agreement.

 

“Overbid” has the meaning given such term in Section 2.1(fh) hereof.

 

 - 20 - 

 

 

“Parent Working Capital Facility” shall mean a committed secured credit facility
made available by a bank or other financial institution to Great American and/or
any Affiliate or Subsidiary thereof (other than a Borrower), as borrower, for
general working capital purposes and/or any other purpose not specifically
prohibited by this Agreement.

 

“Perfection Certificate” means each perfection certificate submitted by
Borrowersa Borrower to Lenderthe Lenders with respect to Borrowerssuch Borrower,
together with Borrowers’such Borrower’s completed responses to the inquiries set
forth therein, the form and substance of such responses to be satisfactory to
Lenderthe Lenders.

 

“Permitted Encumbrances” shall have the meaning assigned to it in Section 7.8.

 

“Permitted Holders” shall mean Harvey Yellen, Andrew Gumaer and Bryant Riley;
provided, however, that, from and after the Fourth Amendment Effective Date, the
term ‘Permitted Holders’ shall no longer include Harvey Yellen.

 

“Person” shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, unlimited liability companies,
association, corporation, institution, public benefit corporation, entity or
Governmental Authority.

 

"PPSA" shall mean the Personal Property Security Act (Ontario), the Civil Code
of Quebec as in effect in the Province of Quebec or any other Canadian federal,
territorial or provincial statute pertaining to the granting, perfecting,
priority or ranking of security interests, liens, hypothecs on personal
property, and any successor statutes, together with any regulations thereunder,
in each case as in effect from time to time. References to sections of the PPSA
shall be construed to also refer to any successor sections.

 

“Proceeds” shall have, with respect to any Liquidation Sale, the meaning
assigned to such term or other similar terms in the relevant Liquidation Sales
Agreement with respect to such Liquidation Sale and shall also include all
proceeds of Inventory, Other Assets and augmented goods paid or due to Borrower
or Merchant, and in the case of a joint venture, all amounts paid or due to a
Borrower as part of a Liquidator JV.

 

“Purchase Agreement” shall mean a Purchase Agreement or other agreement entered
into by a Borrower (or Liquidator JV) in form and substance acceptable to the
Applicable Lender, pursuant to which a Borrower (or such Liquidator JV) is given
the right to purchase Retail Inventory or Other Assets and to conduct
Liquidation Sales with respect to such Retail Inventory or Other Assets.

 

“Purchase Price” shall have, with respect to each Liquidation Sale carried out
pursuant to Liquidation Sales Agreements, the meaning assigned to such term or
other similar terms in such agreements. It is expressly understood that prior to
the Final Accounting, the Purchase Price shall refer to a Borrower’s good faith
estimate of the Purchase Price to be paid under the Liquidation Sales Agreement
and that such amount shall be adjusted upon completion of the Final Accounting
and that if the actual amount required to be delivered by a Borrower in respect
to the Purchase Price is less than the Purchase Price listed in the applicable
Liquidation Sales Agreement, such lesser amount shall constitute the Purchase
Price for all purposes hereunder.

 

“Purchase Price Percentage” shall have the same meaning as in the applicable
Liquidation Sales Agreement.

 

“Record” shall mean information that is inscribed on a tangible medium or which
is stored in an electronic or other medium and is retrievable in perceivable
form.

 

 - 21 - 

 

 

“Recovery Amount” shall have, with respect to each Liquidation Sale providing
for a contingent additional, non-guaranteed payment to the applicable Merchant
or, in the case of any Liquidation Sales outside the US and Canada, an Affiliate
of the Merchant, based upon the total amount of the Proceeds of such Liquidation
Sale, the meaning assigned to such term or other similar terms in the
Liquidation Sales Agreements for such Liquidation Sale.

 

“Release” shall mean any release, threatened release, spill, emission, leaking,
pumping, pouring, emitting, emptying, escape, injection, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of Hazardous Material in
the indoor or outdoor environment, including the movement of Hazardous Material
through or in the air, soil, surface water, ground water or property.

 

“Relevant Jurisdiction” means, in relation to a Borrower, GAG Inc. or Great
American:

 

(a)its jurisdiction of incorporation;

 

(b)any jurisdiction where any asset subject to or intended to be subject to the
Collateral Documents entered into by it is situated;

 

(c)any jurisdiction where it conducts its business; and

 

(d)the jurisdiction whose laws govern the perfection of any Lien granted by the
Collateral Documents entered into by it.

 

“Remedial Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a
release or threatened release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (d) conduct any other
actions authorized by 42 USC § 9601.

 

“Reserve Percentage” means, on any day, for the Applicable Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as “eurocurrency liabilities”) of the Applicable Lender,
but so long as the Applicable Lender is not required or directed under
applicable regulations to maintain such reserves, the Reserve Percentage shall
be zero.

 

“Restatement Date” shall mean the Business Day on which the conditions precedent
set forth in Section 3.1 have been satisfied, in the U.S. Lender’s sole
discretion, or waived in writing by the U.S. Lender.

 

“Restricted Payment” means (i) any cash dividend or other cash distribution or
payment, direct or indirect, on or on account of any Capital Stock of a Borrower
now or hereafter outstanding; (ii) any dividend or other distribution in respect
of, or redemption, purchase or other acquisition, direct or indirect, of any
Capital Stock of a Borrower now or hereafter outstanding or of any warrants,
options or rights to purchase any such Capital Stock (including, without
limitation, the repurchase of any such stock or membership interest, warrant,
option or right or any refund of the purchase price thereof in connection with
the exercise by the holder thereof of any right of rescission or similar
remedies with respect thereto); (iii) any direct salary, non-salary managerial
fees, fee (consulting, management or other), fringe benefit, allowance or other
expense directly or indirectly paid or payable by a Borrower (as compensation or
otherwise) to any shareholder, member, manager, or Affiliate of a Borrower
(other than to an employee or consultant to a Borrower and to the extent of such
employee’s or consultant’s compensation; provided that the terms of such
compensation are approved by a Borrower’s Board of Directors or comparable
body); and (iv) meeting fees, travel and expense reimbursement and clothing
allowance payable to the managers of a Borrower or any partner, shareholder or
Affiliate thereof.

 

 - 22 - 

 

 

“Restricted Subsidiary” means, as to any Borrower, any direct or indirect
Subsidiary of such Borrower and, as to Great American and GAG Inc., any Borrower
and any other direct or indirect Subsidiary party to or otherwise receiving any
Collections or other Proceeds of any Liquidation Sale.

 

“Retail” means GA Retail, Inc., a California corporation.”

 

“Retail Inventory” shall mean goods that are held by a Merchant or, in the case
of a Liquidation Sale outside the US and Canada, an Affiliate of the Merchant
for sale in the ordinary course of its business and that are suitable for sale
at retail.

 

“Revolving Credit Advance” shall havemeans a U.S. Revolving Credit Advance
and/or Canadian Revolving Credit Advance, as the meaning assigned to it in
Section 2.1(a).context so requires.

 

“Revolving Credit Termination Date” shall mean the earliest of (i) July 15,
2018, and (ii) the date of termination pursuant to Section 9.2 of Lender’sthe
Lenders’ agreement to consider, in its sole discretion and with no obligation,
to make additional Revolving Credit Advances and/or incur Letter of Credit
Obligations or permit existing Revolving Credit Advances to remain outstanding.

 

“Revolving Loan” shall mean, at any time, the sum of (i) the aggregate amount of
Revolving Credit Advances outstanding at such time plus (ii) the aggregate
Letter of Credit Obligations incurred on behalf of any Borrower outstanding at
such time.

 

“Revolving Loan Ceiling” shall mean the amount equal to One Hundred Million
Dollars ($100,000,000) minus the aggregate principal amount of all outstanding
loans, advances or other credit extensions by Burdale pursuant to the UK Credit
Agreement (if it is then in effect).

 

“Sales Tax Advance” shall have the meaning given such term in Section 2.1(g)
hereof.

 

“Sales Tax Receipts” shall mean the portion of Collections received in the
Blocked Accounts on account of sales, VAT, excise and gross receipts Taxes
payable to any taxing authorities having jurisdiction.

 

“Schedule of Documents” shall mean the schedule, including all appendices,
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Loan Documents and the transactions
contemplated thereunder, substantially in the form of Annex A to this Agreement.

 

“SEC” shall mean the United States Securities and Exchange Commission or any
successor thereto.

“Security AgreementAgreements” shall mean, collectively, (a) the Security
Agreement, dated as of the Closing Date, between Original Borrower and Lenderthe
Lenders, as ratified and affirmed by the Omnibus Ratification and as it may
subsequently be amended, restated, modified, supplemented, or replaced, and (b)
the Canadian Security Agreement.

 

“Sixth Amendment Effective Date” means October 5, 2016.

 

“Solvency Certificate” means a certificate signed by an Authorized Person of
Borrowers and Great American, dated as of the Closing Date, demonstrating the
Solvency of Borrowers and Great American.

 

 - 23 - 

 

 

“Solvent” shall mean, with respect to any Person on a particular date, that on
such date (a) the fair value of the property of such Person is greater than the
total amount of liabilities, including contingent liabilities, of such Person;
(b) the present fair salable value of the assets of such Person is not less than
the amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured; (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay as such debts and liabilities mature and is able to pay
its debts as they become due; (d) such Person is not engaged in a business or
transaction, and is not about to engage in a business or transaction, for which
such Person’s property would constitute an unreasonably small capital; (e) no
Insolvency Proceeding has occurred; and (f) no unsatisfied writ of execution is
outstanding; and (g) such Person is not an "insolvent person" within the meaning
given such term under the BIA. The amount of contingent liabilities (such as
litigation, guarantees and pension plan liabilities) at any time shall be
computed as the amount which, in light of all the facts and circumstances
existing at the time, represents the amount which can be reasonably be expected
to become an actual or matured liability.

 

“Spot Rate” means, for a currency, the rate quoted by the Applicable Lender as
the spot rate for the purchase by the Applicable Lender of such currency with
another currency through its principal foreign exchange trading office at
approximately 11:00 a.m. on the date two Business Days prior to the date as of
which the foreign exchange computation is made; provided that the Applicable
Lender may obtain such spot rate from another financial institution designated
by the Applicable Lender if the Applicable Lender does not have as of the date
of determination a spot buying rate for any such currency.

 

“Subordination Agreement” means a subordination agreement between the U.S.
Lender and Burdale, in form and substance satisfactory to the U.S. Lender, the
execution and delivery of which shall be a condition concurrent to the
effectiveness of the UK Credit Agreement.

 

“Subsidiary” shall mean, with respect to any Person, (a) any corporation of
which an aggregate of more than fifty percent (50%) of the outstanding Capital
Stock having ordinary voting power to elect a majority of the board of directors
of such corporation (irrespective of whether, at the time, Capital Stock of any
other class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, or with respect to which any such Person has the
right to vote or designate the vote of fifty percent (50%) or more of such
Capital Stock whether by proxy, agreement, operation of Law or otherwise, and
(b) any partnership or limited liability company in which such Person and/or one
or more Subsidiaries of such Person shall have an interest (whether in the form
of voting or participation in profits or capital contribution) of more than
fifty percent (50%) or of which any such Person is a general partner or may
exercise the powers of a general partner.

 

“Success Fee” shall mean, with respect to each Liquidation Sale, an amount equal
to the product of (i) the Net Profit Margin for such Liquidation Sale,
multiplied by (ii) the Success Fee Percentage for such Liquidation Sale.

 

“Success Fee Percentage” shall mean: (i) with respect to each Liquidation Sale
(or portion thereof) of Retail Inventory conducted in the United States and
Canada, the percentage determined by the applicable Inventory Advance Rate for
any Liquidation Borrowing made in connection with such Liquidation Sale in
accordance with the column titled “Success Fee Percentage” in the grid below;
(ii) with respect to each Liquidation Sale (or portion thereof) of Other Assets
conducted in the United States and Canada, no less than twenty percent (20%);
(iii) with respect to each Liquidation Sale (or portion thereof) in connection
with which a Backend L/C has been issued, the percentage determined by the
applicable Effective Advance Rate for any Liquidation Borrowing made in
connection with such Liquidation Sale in accordance with the column titled
“Success Fee Percentage” in the grid below; and (iv) with respect to any other
Liquidation Sale in any other jurisdiction, the percentage determined by
Lenderthe Lenders in itstheir discretion.

 

 - 24 - 

 

 

Inventory Advance
Rate/Effective Advance Rate  Success Fee Percentage        0%   0% Greater than
0, but ≤ 77.5%   5.0% >77.5%, but ≤ 82.5%   10.0% > 82.5%, but ≤ 87.5%   15.0% >
87.5%   20.0%

 

“Target L/C” means that certain Letter of Credit issued under this Agreement on
behalf of GA Retail Canada, ULC for the benefit of Target Canada Co. and/or
certain of its Affiliates.

 

“Taxes” shall mean taxes, duties, fees, premiums, assessments, levies, tariffs
and any other charges whatsoever imposed, assessed, reassessed or collected by
any Governmental Authority, including all fines, penalties, interest, additions
to tax, installments on account of taxes, or other additional amounts imposed,
assessed or collected by any Governmental Authority in respect thereof,
excluding taxes imposed on or measured by the net income of the Applicable
Lender by the jurisdictions under the laws of which the Applicable Lender is
organized or any political subdivision thereof.

 

“Tax Credit” means a credit against, relief or remission for, or repayment of,
any Tax.

 

“Tax Payment” means either the increase in a payment made by a Borrower to the
Applicable Lender under Section 2.13(a) or a payment under Section 2.13(d).

 

“Tax Returns” shall mean all returns, elections, filings, forms, and any other
documents (whether in electronic, tangible, or any other form whatsoever) made,
prepared or filed, or to be made, prepared or filed in respect of Taxes under
applicable law.

 

“Termination Date” shall mean the date on which all Revolving Loans have been
indefeasibly repaid in full and all other Obligations under this Agreement and
the other Loan Documents have been completely discharged, and all Letter of
Credit Obligations have been cash collateralized, cancelled or backed by
stand-by letters of credit in accordance with Annex B, and Borrower shall not
have any further right to request to borrow any monies under this Agreement.

 

“Third Amendment Effective Date” shall mean February 5, 2015.

 

“Total Expense Advance” shall have the meaning assigned to such term in
Section 2.1(hj).

 

“UK Credit Agreement” means a credit agreement or similar agreement between GA
Asset Advisors and Burdale in form and substance satisfactory to the U.S.
Lender.

 

 - 25 - 

 

 

“Underlying Issuer” shall mean a Person (other than a Lender or a Borrower)
which is the beneficiary of an L/C Undertaking and which has issued a letter of
credit at the request of the Applicable Lender for the benefit of a Borrower.

 

“Underlying Letter of Credit” means a letter of credit that has been issued by
an Underlying Issuer.

 

“Unreimbursed Amount” has the meaning set forth in Annex B.

 

“Unfunded Pension Liability” shall mean, at any time, the aggregate amount, if
any, of the sum of (a) the amount by which the present value of all accrued
benefits under each Title IV Plan exceeds the fair market value of all assets of
such Title IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for each such Title
IV Plan using the actuarial assumptions for funding purposes in effect under
such Title IV Plan, and (b) for a period of five (5) years following a
transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by any
ERISA Affiliate of a Borrower as a result of such transaction.

 

“United States” or “US” shall mean the United States of America.

 

“U.S. Base Rate” shall mean, for any day, a rate per annum (rounded upward, if
necessary, to the next 1/100 of 1%) equal to the greatest of (a) the Prime Rate
in effect on such day, (b) the LIBO Rate for a one month Interest Period as in
effect on such day plus 1.00% and (c) the Federal Funds Effective Rate in effect
on such day plus 0.50%. The “Prime Rate” is a rate set by the Applicable Lender
based upon various factors including the Applicable Lender’s costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate. Any change in such rate announced by the Applicable Lender
shall take effect at the opening of business on the day specified in the public
announcement of such change. “Federal Funds Effective Rate” for any day, is the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day,
the average of the quotations for the day for such transactions received by the
Applicable Lender from three federal funds brokers of recognized standing
selected by it. If the Applicable Lender shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate for any reason, including the
inability or failure of the Applicable Lender to obtain sufficient quotations in
accordance with the terms of the definition thereof, the U.S. Base Rate shall be
determined without regard to clause (c) of the first sentence of this paragraph
until the circumstances giving rise to such inability no longer exist. Any
change in the U.S. Base Rate due to a change in the Prime Rate, the LIBO Rate or
the Federal Funds Effective Rate shall be effective on the effective date of
such change in the Prime Rate, LIBO Rate or the Federal Funds Effective Rate,
respectively.

 

“U.S. Borrower” shall mean a Borrower other than the Canadian Borrower.

 

“U.S. Lender” means WF.

 

“U.S. Letters of Credit” shall mean commercial or standby letters of credit
issued for the account of a U.S. Borrower in Dollars by the Applicable Lender or
Underlying Issuer for which the U.S. Lender has incurred Letter of Credit
Obligations.

 

 - 26 - 

 

 

“U.S. L/C Usage” means, as of any date of determination, the aggregate undrawn
amount of all outstanding Letters of Credit issued by the Applicable Lender plus
100% of the amount of outstanding time drafts accepted by an Underlying Issuer
as a result of drawings under Underlying Letters of Credit.

“U.S. Revolving Credit Advance” shall have the meaning assigned to it in
Section 2.1(a).

 

“WF” means Wells Fargo Bank, National Association, successor by merger to Wells
Fargo Retail Finance, LLC.

 

"WFCFCC" means Wells Fargo Capital Finance Corporation Canada.

 

“Work Fee” shall mean a fee in the amount of $25,000 payable to the Applicable
Lender pursuant to, and upon occurrence of the events described in, Section
2.5(d).

 

Certain Matters of Construction.

 

All accounting terms not specifically defined herein shall be construed in
accordance with GAAP. When used herein, the term “financial statements” shall
include the notes and schedules thereto.

 

All other undefined terms contained in any of the Loan Documents shall, unless
the context indicates otherwise, have the meanings provided for by the Code or
the PPSA, as the context so required, to the extent the same are used or defined
therein. Unless otherwise specified, reference in this Agreement or any of the
Appendices to a Section, subsection or clause refer to such Section, subsection
or clause as contained in this Agreement. The words “herein,” “hereof’ and
“hereunder” and other words of similar import refer to this Agreement as a
whole, including all Annexes, Exhibits and Schedules, as the same may from time
to time be amended, restated, modified or supplemented, and not to any
particular section, subsection or clause contained in this Agreement or any such
Annex, Exhibit or Schedule. All of the Annexes, Schedules and Exhibits attached
to this Agreement shall be deemed incorporated herein by reference.
Notwithstanding the foregoing, and unless the context so requires, (i) any term
defined in this Agreement by reference to the "Code" or the "Uniform Commercial
Code" shall, to the extent defined therein, also have any extended, alternative
or analogous meaning given to such term in the PPSA, other applicable Canadian
personal property security and other laws (including the Personal Property
Security Act of each applicable province of Canada, the Bills of Exchange Act
(Canada) and the Depository Bills and Notes Act (Canada)) in all cases for the
extension, preservation or betterment of the security and rights of the
Collateral, (ii) all references in this Agreement to "Article 8" shall be deemed
to refer also to applicable Canadian securities transfer laws (including the
Securities Transfer Act of each applicable province of Canada), (iii) all
references in this Agreement to applicable U.S. security transfer laws
(including the Exchange Act) shall refer also to applicable Canadian securities
transfer laws (including, the Securities Transfer Act of each applicable
province of Canada (the "STA")), and (iv) all references in this Agreement to a
financing statement, continuation statement, amendment or termination statement
shall be deemed to refer also to the analogous documents used under applicable
United States personal property security laws.

 

Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and the plural, and pronouns
stated in the masculine, feminine or neuter gender shall include the masculine,
feminine and neuter genders. The words “including”, “includes” and “include”
shall be deemed to be followed by the words “without limitation”. References to
Persons shall include their respective successors and assigns (to the extent and
only to the extent permitted by the Loan Documents) or, in the case of
governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include
any amendments of the same and any successor statutes and regulations. Whenever
any provision in any Loan Document refers to the knowledge (or an analogous
phrase) of a Borrower, such words are intended to signify that the officers of
such Borrower have actual knowledge or awareness of a particular fact or
circumstance or that such officers of such Borrower, if they had exercised
reasonable diligence, would have known or been aware of such fact or
circumstance. Any reference in this Agreement or in the other Loan Documents to
any agreement, instrument, or document shall include all alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements, thereto and thereof, as applicable
(subject to any restrictions on such alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements set forth herein). Any requirement of a writing contained herein or
in the other Loan Documents shall be satisfied by the transmission of a Record
and any Record transmitted shall constitute a representation and warranty as to
the accuracy and completeness of the information contained therein.

 

 - 27 - 

 

 

Quebec Interpretation. For purposes of any Collateral located in the Province of
Quebec or charged by any deed of hypothec (or any other Loan Document) and for
all other purposes pursuant to which the interpretation or construction of a
Loan Document may be subject to the laws of the Province of Quebec or a court or
tribunal exercising jurisdiction in the Province of Québec, (q) “personal
property” shall be deemed to include “movable property”, (r) “real property”
shall be deemed to include “immovable property”, (s) “tangible property” shall
be deemed to include “corporeal property”, (t) “intangible property” shall be
deemed to include “incorporeal property”, (u) “security interest” and “mortgage”
shall be deemed to include a “hypothec”, (v) all references to filing,
registering or recording under the Code or the PPSA shall be deemed to include
publication under the Civil Code of Québec, (w) all references to “perfection”
of or “perfected” Liens shall be deemed to include a reference to the
“opposability” of such Liens to third parties, (x) any “right of offset”, “right
of setoff” or similar expression shall be deemed to include a “right of
compensation”, (y) “goods” shall be deemed to include “corporeal movable
property” other than chattel paper, documents of title, instruments, money and
securities, and (z) an “agent” shall be deemed to include a “mandatary”.

 

AMOUNT AND TERMS OF CREDIT

 

Advances and Letters of Credit.

 

Subject to the terms and conditions hereof, U.S. Lender may, in its sole
discretion and with no obligation to do so, from time to time, at U.S. Lender’s
option, until the Revolving Credit Termination Date, (i) make available to the
U.S. Borrowers advances in Dollars (each, a “U.S. Revolving Credit Advance”) to
or for the benefit of a U.S. Borrower as provided for in this Section 2.1, and
(ii) incur Letter of Credit Obligations in Dollars (except as otherwise agreed
by the U.S. Lender or Issuing Bank) in respect of a U.S. Borrower, or, at the
request of a U.S. Borrower, in respect of any other Credit Party or Subsidiary
of a Credit Party, as provided for in Annex B and this Section 2.1.

 

Subject to the terms and conditions hereof, Canadian Lender may, in its sole
discretion and with no obligation to do so, from time to time, at Canadian
Lender’s option, until the Revolving Credit Termination Date, (i) make available
to the Canadian Borrower advances in Dollars or CAD (each, a “Canadian Revolving
Credit Advance”) to or for the benefit of the Canadian Borrower as provided for
in this Section 2.1, and (ii) (B) incur Letter of Credit Obligations in Dollars
or CAD (except as otherwise agreed by Canadian Lender or Canadian Issuing Bank)
in respect of the Canadian Borrower, or, at the request of the Canadian
Borrower, in respect of any other Credit Party or Subsidiary of a Credit Party,
as provided for in Annex B and this Section 2.1.

 

The Applicable Lender will disburse Revolving Credit Advances to each Borrower
by depositing the amount of each such Revolving Credit Advance to the applicable
Borrower’s Disbursement Account pursuant to Section 2.10 hereof. The aggregate
amount outstanding of Revolving Credit Advances and Letter of Credit Obligations
shall not exceed at any one time the Revolving Loan Ceiling.

 

Revolving Credit Advances and Letters of Credit (other than Backend L/Cs) issued
with respect to any Liquidation Sale of Inventory shall not exceed the
applicable Inventory Borrowing Base. Revolving Credit Advances and Letters of
Credit (other than Backend L/Cs) issued with respect to any Liquidation Sales of
Other Assets shall not exceed the applicable Other Assets Borrowing Base.

 

 - 28 - 

 

 

Until the Revolving Credit Termination Date, a Borrower may from time to time
request to borrow, repay and request to reborrow under this Section 2.1.

 

All amounts borrowed pursuant to this Section, together with all other
Obligations, shall be due and payable (or in the case of any Letters of Credit,
shall terminate) on the earlier of the maturity date therefor pursuant to
Section 2.3 or the Revolving Credit Termination Date; provided, however, that
the Applicable Lender or any of its Affiliates may determine, in their sole and
absolute discretion and with no obligation so to do, to extend the termination
or maturity date for any Bank Product Obligations beyond the Revolving Credit
Termination Date subject to Borrowers’ (or their Affiliate’s, as the case may
be) satisfaction of any conditions therefor required by the Applicable Lender or
its Affiliate.

 

A Borrower’s request for Revolving Credit Advances or Letters of Credit shall be
made by irrevocable written notice by an Authorized Person of such Borrower to
the representative of the Applicable Lender identified on Schedule 2.1 at the
address specified thereon. Those notices without limiting the applicable
Borrower’s agreement to deliver a Liquidation Loan Proposal pursuant to Section
2.1(f), must be actually received by the Applicable Lender no later than (1)
1:00 p.m. (Boston, Massachusetts time) three (3) Business Days prior to the
proposed date of any Inventory Advance or Other Asset Advances; (2) 1:00 p.m.
(Boston, Massachusetts time) on the Business Day on which a proposed Sales Tax
or Total Expense Advance is requested; and (3) with respect to Letter of Credit
Obligations, 1:00 p.m. (Boston, Massachusetts time) on the date which is at
least two (2) Business Days prior to the proposed issuance date and subject to
the terms and conditions governing Letters of Credit forth in Annex B attached
hereto. Each such notice (a “Notice of Revolving Credit Advance” or “Notice of
Letter of Credit Request,” as the case may be) must be given in writing (by
telecopy or overnight courier). Any Notice of Revolving Credit Advance or Notice
of Letter of Credit Request must be substantially in the form of Exhibit 2.1-1
or Exhibit 2.1-2, as applicable, and shall include the information required in
such Exhibit and such other information as may be required by the Applicable
Lender. Any Notice of Letter of Credit Request must include the information
described in Annex B and such other information as may be required by the
Applicable Lender. In addition, a Notice of Letter of Credit Request shall be
accompanied by the form of the Letter of Credit (which shall be acceptable to
the Applicable Lender) to be guaranteed. Notwithstanding anything contained
herein to the contrary, Letter of Credit applications by a Borrower and
approvals by the Applicable Lender may be made and transmitted pursuant to
electronic codes and security measures mutually agreed upon and established by
and between Borrowers and the Applicable Lender.

 

Inventory Advances, Other Assets Advances, and Letters of Credit.

 

Subject to Section 6.15, if a Borrower proposes to enter into Liquidation Sales
Agreements with respect to any proposed Liquidation Sale, such Borrower may
propose (or shall propose if required to do so under Section 6.15) that the
Applicable Lender agree to make a Revolving Credit Advance to such Borrower or
incur Letter of Credit Obligations for such Borrower’s account with respect to
the Retail Inventory (Revolving Credit Advances made with respect to Retail
Inventory (in whole or in part) are referred to as “Inventory Advances”) or
Other Assets (Revolving Credit Advances made solely with respect to Other Assets
are referred to herein as “Other Assets Advances”) that are proposed to be sold
through such Liquidation Sale. Each such proposal (a “Liquidation Loan
Proposal”) shall (A) be signed by an Authorized Person, (B) be substantially in
the form of Exhibit 2.1(a)(i) attached hereto and accompanied by all of the
documents and information described on Schedule 2.1(a)(i), together with copies
of any court orders for any Merchant party to an Insolvency Proceeding, (C)
involve a proposed Inventory Advance, Other Asset Advance, or Letter of Credit
in a minimum amount reasonably determined by such Borrower and agreed to by the
Applicable Lender in its sole discretion, and (D) be sent so that it is actually
received by the Applicable Lender no later than 1:00 p.m. (Boston, Massachusetts
time) on the fifth (5th) Business Day prior to the date of the proposed
Inventory Advance, Other Assets Advance, or incurrence of the Letter of Credit
Obligations.

 

 - 29 - 

 

 

Within: (i) three (3) Business Days after the Applicable Lender’s receipt of a
Liquidation Loan Proposal in the US and Canada only and (ii) within five (5)
Business Days after the Applicable Lender’s receipt of a Liquidation Loan
Proposal in any other jurisdiction, the Applicable Lender will notify such
Borrower in writing (such notice, a “Lender’s Offer”), which notice may be
substantially in the form of Exhibit 2.1(a)(ii) or such other form as the
Applicable Lender may elect, whether the Applicable Lender:

 

(A)would be willing to make Revolving Credit Advance or incur Letter of Credit
Obligations on the terms proposed by such Borrower in which case such Borrower
shall be obligated to timely submit a Notice of Revolving Credit Advance or a
Notice of Letter of Credit Request pursuant to Section 2.1(e),

 

(B)is not willing to make any Revolving Credit Advance or incur any Letter of
Credit Obligations with respect to such Liquidation Sale, or

 

(C)would be willing to make a Revolving Credit Advance or incur Letter of Credit
Obligations with respect to the proposed Liquidation Sale, but only at a
specified Inventory Advance Rate or Other Assets Advance Rate that is different
from that proposed by Borrower and/or with such other modifications specified in
such notice.

 

the Applicable Lender shall have sole discretion to decide whether or not to
agree to any Liquidation Loan Proposal or to propose an alternative Inventory
Advance Rate or Other Assets Advance Rate for the proposed Liquidation Sale. The
Applicable Lender shall not have any obligation to make a Revolving Credit
Advance or incur Letter of Credit Obligations unless the Applicable Lender
actually receives, within two (2) Business Days after a Borrower’s receipt of a
notice from the Applicable Lender described in clauses (A) or (C) of the
immediately preceding sentence, written notice from such Borrower of such
Borrower’s intention to request disbursement of such Revolving Credit Advance or
incurrence of such Letter of Credit Obligations on the terms set forth in such
notice from the Applicable Lender; provided, however, that if the Applicable
Lender has agreed to make a Revolving Credit Advance or incur Letter of Credit
Obligations on the terms proposed by a Borrower in the applicable Liquidation
Loan Proposal, such Borrower shall apply for such Revolving Credit Advance or
Letter of Credit on such terms (unless subsequently otherwise agreed by the
Applicable Lender in writing). In the event that, as a result of competitive
bidding or otherwise, a Borrower elects to increase the Guaranteed Amount or
Purchase Price (an “Overbid”) it is willing to pay under a Liquidation Sales
Agreement for which it has provided to the Applicable Lender a Liquidation Loan
Proposal under Section 2.1(f)(i) prior to or after the Applicable Lender’s
sending a notice under Section 2.1(f)(ii), such Borrower shall promptly provide
the Applicable Lender with written notice of such increase, together with a
modified Liquidation Loan Proposal, and the Applicable Lender shall have the
option, in its absolute discretion, to determine whether to fund any portion of
such increase, to reduce the Inventory Advance Rate or Other Assets Advance Rate
in respect to such higher Guaranteed Amount or Purchase Price, or to make a
Revolving Credit Advance or issue a Letter of Credit only in accordance with the
original terms proposed by the Applicable Lender prior to such increase. The
Applicable Lender shall not be required, without its consent, to increase the
aggregate amount of any Revolving Credit Advances or Letters of Credit agreed to
by the Applicable Lender in Lender’s Offer as a consequence of any Overbid.

 

The amount of the Revolving Credit Advance and/or the Letter of Credit
Obligations (other than with respect to any Backend L/C) with respect to each
Liquidation Sale shall: (x) be calculated based upon the applicable Inventory
Advance Rate or Other Assets Advance Rate and the actual Guaranteed Amount or
Purchase Price as determined pursuant to the applicable Liquidation Sales
Agreement (or, if the actual amount required to be delivered to the Merchant by
a Borrower with respect to the Guaranteed Amount or Purchase Price is less than
such Guaranteed Amount or Purchase Price, such lesser amount) and (y) in the
aggregate, not exceed at any time the applicable Inventory Borrowing Base or
Other Assets Borrowing Base, as the case may be. Subject to the terms and
conditions of this Agreement, the Revolving Credit Advance and the applicable
Letter of Credit Obligations may be incurred simultaneously with such advance,
shall be disbursed as a single advance; provided, however, that in the event the
Liquidation Sales Agreements require an initial payment by a Borrower to the
Merchant before the completion of a final inventory count, the Revolving Credit
Advance may be disbursed in two or separate advances with the first portion of
the Revolving Credit Advance being calculated based upon the applicable
Inventory Advance Rate or Other Assets Advance Rate and the amount of such
required initial payment and the second portion, if any, of the Revolving Credit
Advance being determined and made based on the actual Guaranteed Amount or
Purchase Price as determined by the final inventory count and, if necessary, the
amount of such subsequent Revolving Credit Advance being increased in
correspondence with reductions to the related Letter of Credit Obligations.

 

 - 30 - 

 

 

Sales Tax Advances. To the extent that the Applicable Lender has received
Collections with respect to a Liquidation Sale, which Collections include Sales
Tax Receipts, the Applicable Lender shall make, subject to the terms and
conditions hereof (including, without limitation, Section 3.3) Revolving Credit
Advances equal to the amount of such Sales Tax Receipts (each, a “Sales Tax
Advance”), as and when a Borrower is required to pay such amounts to the
applicable Merchant or taxing authority, to enable a Borrower to forward such
amounts to such Merchant or taxing authority in accordance with the terms of the
applicable Liquidation Sales Agreement. A Borrower’s Notice of Revolving Credit
Advance shall include documentation satisfactory to the Applicable Lender
evidencing the amount of such Sales Tax Receipts.

 

Total Expense Advances. With respect to each Liquidation Sale, the Applicable
Lender shall, subject to the terms and conditions hereof (including, without
limitation, Section 3.3), make Revolving Credit Advances to enable a Borrower to
pay Expenses to the Merchant or any third party entitled to receive such payment
in accordance with the terms of the applicable Liquidation Sales Agreement, as
and when a Borrower is required to pay such amounts. With respect to each
Liquidation Sale, the Applicable Lender shall make such Revolving Credit
Advances in an aggregate amount not to exceed the lesser of (i) the actual
Expenses of such Liquidation Sale, and (ii) an amount equal to one hundred and
three percent (103%) of the amount for aggregate Expenses shown on the Budget
for such Liquidation Sale (the “Total Expense Advance”) for an average two (2)
week period; provided, that the Total Expense Advance may exceed one hundred and
three percent (103%) of the amount for aggregate Expenses shown on the Budget
for such Liquidation Sale for an average two (2) week period to the extent that
a Borrower either provides the Applicable Lender with evidence reasonably
satisfactory to the Applicable Lender that such excess was not caused by a
deviation from the plan for such Liquidation Sale as set forth in the documents
and information furnished to the Applicable Lender with the Liquidation Loan
Proposal for such Liquidation Sale, or to the extent that such excess is caused
by a deviation for which the Applicable Lender has given its prior written
consent. A Borrower’s Notice of Revolving Credit Advance shall include
documentation satisfactory to the Applicable Lender evidencing the amount of
Expenses. If specified in the Liquidation Loan Proposal for such Liquidation
Sale, the Applicable Lender will incur Letter of Credit Obligations with respect
to a portion of the anticipated Expenses of such Liquidation Sale; provided,
that in such case the Applicable Lender will not be obligated to make Revolving
Credit Advances with respect to Expenses of such Liquidation Sale unless the
Applicable Lender is satisfied that the aggregate amount of such Revolving
Credit Advances and the amount of such Letter of Credit Obligations that the
Applicable Lender reasonably anticipates may ultimately be drawn upon does not
exceed the Total Expense Advance.

 

Notes. Borrowers shall execute and deliver to the Applicable Lender one or more
notes in the aggregate principal amount of the Revolving Loan Ceiling
substantially in the form of Exhibit 2.1(i) (collectively, the “Notes”). Each
Note shall represent the joint and several obligation of Borrowers to pay the
amount of the applicable outstanding Revolving Credit Advance or Letter of
Credit Obligation, as well as all other Revolving Credit Advances and Letter of
Credit Obligations, together with interest thereon as prescribed in Section 2.4.
Notwithstanding any provision of any of the Notes, the entire unpaid balance of
the Revolving Loan and all of the Notes, and all other non-contingent
Obligations, shall be immediately due and payable in full in immediately
available funds on the Revolving Credit Termination Date.

 

 - 31 - 

 

 

Reliance on Notices. The Applicable Lender shall be entitled to rely upon, and
shall be fully protected in relying upon, any Notice of Revolving Credit
Advance, Notice of Letter of Credit Request, Liquidation Loan Proposal or
similar notice believed by the Applicable Lender to be signed by any Authorized
Person of a Borrower. The Applicable Lender may assume that each Person
executing and delivering such a notice was duly authorized.

 

Use of Proceeds. Borrowers shall use the proceeds of each Liquidation Borrowing
solely for the purpose of making payments with respect to the Guaranteed Amount
or Purchase Price, Expenses, Sales Tax Receipts, or the Recovery Amount, if any,
with respect to the associated Liquidation Sale, as and when Borrowers are
required to pay such amounts in accordance with the terms of the applicable
Liquidation Sales Agreements.

 

Maturity of Advances. With respect to Revolving Credit Advances or Letters of
Credit made or issued in any given Liquidation Sale, each such Revolving Credit
Advance shall be due and payable in full, and each Letter of Credit shall have
an expiry date no later than, the earlier of (i) 180 days after the date of the
first Revolving Credit Advance made or Letter of Credit issued with respect to
such Liquidation Sale, or (ii) twenty one (21) days after the last day of the
sale term as stated in the applicable Liquidation Sale Agreement.

 

Interest and Letter of Credit Fees.

 

U.S. Borrowers may only request Revolving Credit Advances with an interest rate
determined by reference to the LIBO Rate plus the applicable Margin. Canadian
Borrower may only request Revolving Credit Advances with an interest rate
determined by reference to the LIBO Rate (for Dollars) or the BA Equivalent Rate
(for CAD), plus the applicable Margin.

 

Accrued and unpaid interest on Revolving Credit Advances shall be payable (i) on
the first day of each calendar month after the Closing Date; (ii) upon the
occurrence of an Event of Default in consequence of which the Applicable Lender
elects to accelerate the maturity of all or any portion of the Obligations, and
(iii) upon termination of this Agreement pursuant to the terms hereof. At any
time that an Event of Default has occurred and is continuing, the Applicable
Lender shall have the option to convert the interest rate on all outstanding (A)
LIBO Rate Loans to a rate equal to the Base Rate plus the applicable Margin. (in
the case of Dollars) and (B) BA Rate Loans to a rate equal to the Canadian Base
Rate plus the applicable Margin (in the case of CAD). In the event that the
Applicable Lender exercises such right of conversion, Borrowers shall jointly
and severally indemnify, defend, and hold the Applicable Lender and its
Indemnified Persons harmless against any and all Funding Losses resulting from
such conversion in accordance with Section 2.4(j).

 

Borrowers shall pay interest to the Applicable Lender on the Daily Balance of
the aggregate outstanding principal amount of all Revolving Credit Advances at a
per annum rate equal to the sum of (i) the Base Rate or LIBO Rate, as applicable
to such Revolving Credit Advances, plus (ii) the applicable Margin. (in the case
of Dollars), or (ii) the BA Equivalent Rate or Canadian Base Rate, as applicable
to such Revolving Credit Advances (in the case of CAD), in each case plus (iii)
the applicable Margin. All other Obligations shall bear interest at a per annum
rate equal to the Base Rate (in the case of Dollars) or Canadian Base Rate (in
the case of CAD) plus the Margin then applicable to Other Asset Advances.

 

As to each outstanding Letter of Credit, Borrowers shall pay the Applicable
Lender a Letter of Credit Fee (in addition to the charges, commissions, fees,
and costs set forth in Annex B attached hereto) which shall accrue at the
applicable rate set forth in Annex B attached hereto multiplied by the maximum
amount available to be drawn under the applicable Letter of Credit.

 

 - 32 - 

 

 

Letter of Credit Fees and all other Fees (except the Closing Fee which shall be
payable in accordance with the Fee Letter) payable hereunder shall be due and
payable, in arrears, on the first day of each month at any time that Obligations
are outstanding. Each Borrower hereby authorizes the Applicable Lender, from
time to time, without prior notice to any Borrower, to charge interest and fees,
all Lender Expenses (as and when incurred), Fees, and all other payments as and
when due and payable under any Loan Document (including any amounts due and
payable to the Applicable Lender or its Affiliates in respect of Bank Products)
to Borrowers’ Loan Account, which amounts thereafter shall constitute Revolving
Credit Advances hereunder and shall accrue interest at the applicable Base Rate
plus the Margin applicable for Revolving Credit Advances with an Inventory
Advance Rate of 92.5% hereunder. Any interest not paid when due shall be
compounded by being charged to Borrowers’ Loan Account and shall thereafter
constitute Revolving Credit Advances hereunder and shall accrue interest at the
applicable Base Rate plus the Margin applicable for Inventory Advances with an
Inventory Advance Rate of 92.5% hereunder. Each Lender shall provide Borrowers
with copies of invoices it receives in respect to Lender Expenses upon request.

 

If any payment on any Revolving Credit Advances becomes due and payable on a day
other than a Business Day, subject with respect to LIBONon-Prime Rate Loans to
clauses (c)-(e) of the definition of Interest Period, the maturity thereof will
be extended to the next succeeding Business Day and, with respect to payments of
principal, interest thereon shall be payable at the then applicable rate during
such extension.

 

All computations of interest shall be made by the Applicable Lender on the basis
of a three hundred and sixty (360) day year, in each case for the actual number
of days occurring in the period for which such interest is payable. Each
determination by the Applicable Lender of an interest rate hereunder shall be
conclusive, absent manifest error. In the event the Base Rate is changed from
time to time hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.

 

So long as any Event of Default shall have occurred and be continuing, and at
the election of the Applicable Lender after written notice from the Applicable
Lender to Borrowers, the interest rates and the Letter of Credit Fees applicable
to each of the Revolving Credit Advances, Letters of Credit, and other
Obligations shall be increased by two percent (2%) per annum above the rates of
interest or the Letter of Credit Fees otherwise applicable hereunder (“Default
Rate”), and all outstanding Obligations shall bear interest at the Default Rate
applicable to such Obligations. Interest and Letter of Credit Fees at the
Default Rate shall accrue from the initial date of such Event of Default until
that Event of Default is cured or waived and shall be payable upon demand.

 

Notwithstanding anything to the contrary set forth in this Section 2.4, if a
court of competent jurisdiction determines in a final order that the rate of
interest payable hereunder exceeds the highest rate of interest permissible
under Law (usury or otherwise) (the “Maximum Lawful Rate”), then so long as the
Maximum Lawful Rate would be so exceeded, the rate of interest payable hereunder
shall be equal to the Maximum Lawful Rate; provided, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrowers shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by the Applicable
Lender is equal to the total interest which would have been received had the
interest rate payable hereunder been (but for the operation of this paragraph)
the interest rate payable since the Closing Date as otherwise provided in this
Agreement. Thereafter, interest hereunder shall be paid at the rate(s) of
interest and in the manner provided in Sections 2.4(a) through (e) above, unless
and until the rate of interest again exceeds the Maximum Lawful Rate, and at
that time this paragraph shall again apply. In no event shall the total interest
received by the Applicable Lender pursuant to the terms hereof exceed the amount
which the Applicable Lender could lawfully have received had the interest due
hereunder been calculated for the full term hereof at the Maximum Lawful Rate.
If the Maximum Lawful Rate is calculated pursuant to this paragraph, such
interest shall be calculated at a daily rate equal to the Maximum Lawful Rate
divided by the number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 2.4(i), a court of competent
jurisdiction shall finally determine that the Applicable Lender has received
interest hereunder in excess of the Maximum Lawful Rate, the Applicable Lender
shall, to the extent permitted by applicable Law, promptly apply such excess in
the order specified in Section 2.8 and thereafter shall refund any excess to
Borrowers or as a court of competent jurisdiction may otherwise order.

 

 - 33 - 

 

 

In connection with each LIBONon-Prime Rate Loan, Borrowers shall jointly and
severally indemnify, defend, and hold Lenderthe Lenders harmless against any
loss, cost, or expense incurred by Lenderthe Lenders as a result of (a) the
payment of any principal of any LIBONon-Prime Rate Loan other than on the last
day of an Interest Period applicable thereto (including as a result of an Event
of Default), (b) the conversion of any LIBONon-Prime Rate Loan other than on the
last day of the Interest Period applicable thereto, or (c) the failure to
borrow, convert, continue or prepay any LIBONon-Prime Rate Loan on the date
specified in any Notice of Revolving Credit Advance delivered pursuant hereto
(such losses, costs, and expenses, collectively, “Funding Losses”). Funding
Losses shall, with respect to the Applicable Lender, be deemed to equal the
amount reasonably determined by the Applicable Lender to be the excess, if any,
of (i) the amount of interest that would have accrued on the principal amount of
such LIBONon-Prime Rate Loan had such event not occurred, at the LIBONon-Prime
Rate that would have been applicable thereto, for the period from the date of
such event to the last day of the then current Interest Period therefor (or, in
the case of a failure to borrow, convert or continue, for the period that would
have been the Interest Period therefor), minus (ii) the amount of interest that
would accrue on such principal amount for such period at the interest rate which
the Applicable Lender would be offered were it to be offered, at the
commencement of such period, Dollar deposits of a comparable amount and period
in the London interbank market. A certificate of the Applicable Lender delivered
to Borrower setting forth any amount or amounts that the Applicable Lender is
entitled to receive pursuant to this Section shall be conclusive absent manifest
error.

 

A Borrower may prepay LIBONon-Prime Rate Loans at any time; provided, however,
that in the event that LIBONon-Prime Rate Loans are prepaid on any date that is
not the last day of the Interest Period applicable thereto, including as a
result of any automatic prepayment through the required application by the
Applicable Lender of Proceeds in accordance with Section 2.8 or for any other
reason, including early termination of the term of this Agreement or
acceleration of all or any portion of the Obligations pursuant to the terms
hereof, Borrowers shall jointly and severally indemnify, defend, and hold the
Applicable Lender and its Indemnified Persons harmless against any and all
Funding Losses in accordance with Section 2.4(j).

 

The following provisions shall apply to each LIBORNon-Prime Rate Loan:

 

The LIBONon-Prime Rate may be adjusted by the Applicable Lender on a prospective
basis to take into account any additional or increased costs to the Applicable
Lender of maintaining or obtaining any eurodollar deposits or increased costs
due to changes in applicable Law occurring subsequent to the commencement of the
then applicable Interest Period, including changes in tax laws (except changes
of general applicability in corporate income tax laws) and changes in the
reserve requirements imposed by the Board of Governors of the Federal Reserve
System (or any successor), excluding the Reserve Percentage, which additional or
increased costs would increase the cost of funding loans bearing interest at the
LIBONon-Prime Rate. In any such event, the Applicable Lender shall give
Borrowers notice of such a determination and adjustment and, upon its receipt of
such notice from the Applicable Lender, Borrowers may, by notice to the
Applicable Lender (y) require the Applicable Lender to furnish to Borrowers a
statement setting forth the basis for adjusting such LIBONon-Prime Rate and the
method for determining the amount of such adjustment, or (z) repay the
LIBONon-Prime Rate Loans with respect to which such adjustment is made (together
with any amounts due under Section 2.4(j) above).

 

In the event that any change in market conditions or any Law, regulation,
treaty, or directive, or any change therein or in the interpretation of
application thereof, shall at any time after the date hereof, in the reasonable
opinion of the Applicable Lender, make it unlawful or impractical for the
Applicable Lender to fund or maintain LIBONon-Prime Rate Loans or to continue
such funding or maintaining, or to determine or charge interest rates at the
LIBONon-Prime Rate, the Applicable Lender shall give notice of such changed
circumstances to Borrowers and in the case of any LIBONon-Prime Rate Loans that
are outstanding, the date specified in the Applicable Lender’s notice shall be
deemed to be the last day of the Interest Period of such LIBONon-Prime Rate
Loans, and interest upon the LIBONon-Prime Rate Loans shall accrue interest at a
rate equal to the applicable Base Rate plus the applicable Margin.

 

 - 34 - 

 

 

Anything to the contrary contained herein notwithstanding, the Applicable Lender
is not required actually to acquire eurodollar deposits to fund or otherwise
match fund any Obligation as to which interest accrues at the LIBONon-Prime
Rate. The provisions of this clause shall apply as if the Applicable Lender had
match funded any Obligation as to which interest is accruing at the
LIBONon-Prime Rate by acquiring eurodollar deposits for each Interest Period in
the amount of the LIBONon-Prime Rate Loans.

 

Interest Act (Canada). For the purposes of the Interest Act (Canada), the yearly
rate of interest to which any rate calculated on the basis of a period of time
different from the actual number of days in the year (360 days, for example) is
equivalent is the stated rate multiplied by the actual number of days in the
year (365 or 366, as applicable) and divided by the number of days in the
shorter period (360 days, in the example).

 

Fees. Borrowers shall pay to Lenderthe Lenders all Lender Expenses, including,
but not limited to, the following fees and charges, which fees and charges shall
be non-refundable when paid (irrespective of whether this Agreement is
terminated thereafter):

 

Closing Fee. The applicable Borrowers shall pay the U.S. Lender the Closing Fee
in accordance with the Fee Letter.

 

Success Fee. Upon completion of the Final Accounting with respect to any
Liquidation Sale, Borrowers shall pay to Lenderthe Lenders the Success Fee, if
any, with respect to such Liquidation Sale. To the extent that the Applicable
Lender has received and is still holding payments with respect to such
Liquidation Sale after all other Obligations with respect to such Liquidation
Sale have been paid in full, the Applicable Lender may apply the amount of
payments against any Success Fee with respect to such Liquidation Sale.

 

Audit, Appraisal, and Valuation Charges. For the separate account of Lenderthe
Lenders, Borrowers shall pay all audit, appraisal, and valuation fees plus
out-of-pocket expenses, for each audit, appraisal, and valuation of the
Collateral performed by or at the request of the Applicable Lender, or the
actual charges paid or incurred by the Applicable Lender if it elects to employ
the services of one or more third Persons to perform financial audits of any
Borrower, to appraise the Collateral, or any portion thereof, or to assess any
Borrower’s business valuation.

 

Work Fee.           In the event that a Borrower has submitted a Liquidation
Loan Proposal to the Applicable Lender pursuant to Section 2.1(f) and the
Applicable Lender has committed pursuant to Section 2.1(f)(ii) to make a
Revolving Credit Advance or incur Letter of Credit Obligations on the terms set
forth in such Liquidation Loan Proposal (or on other terms proposed by the
Applicable Lender and accepted by such Borrower) and such Borrower (or any
Liquidator JV, as applicable) thereafter enters into a Liquidation Sales
Agreement but such Borrower, Great American or GAG Inc. elects to fund its (or
any of its Affiliates’) obligations (or its pro rata share of the obligations of
any Liquidator JV, as applicable) under such Liquidation Sales Agreement without
such Revolving Credit Advance or Letter of Credit, then, without waiving any
Default or Event of Default which may result (including, without limitation, as
a result of any breach of Section 6.15) from such Borrower’s election or any of
the Applicable Lender’s rights or remedies against such Borrower under the Loan
Documents or applicable Law (all of which the Applicable Lender hereby expressly
reserves), Borrower shall pay the Work Fee to the Applicable Lender, which Work
Fee shall be deemed fully earned and payable upon the occurrence of such events.
A Work Fee constitutes partial consideration for the Applicable Lender’s work in
reviewing the terms of such Liquidation Loan Proposals and shall not relieve a
Borrower of any other obligations hereunder to reimburse the Applicable Lender
for any other Lender Expenses or Fees howsoever arising. The Work Fee shall be
paid no later than the first day of the next calendar month pursuant to Section
2.4(e), after Borrower (or any Liquidator JV) enters into such Liquidation Sales
Agreement and shall be subject to the other terms and conditions of Section
2.4(e).

 

 - 35 - 

 

 

Cash Management Systems.

 

Borrowers shall (i) establish and maintain cash management services of a type
and on terms satisfactory to Lenderthe Lenders at one or more of the banks set
forth on Schedule 2.6 (each a “Cash Management Bank”), and shall request in
writing and otherwise take such reasonable steps to ensure that all amounts owed
to any Borrower by any Person is directly deposited to one of the cash
management accounts at such Cash Management Banks, and (ii) deposit or cause to
be deposited promptly, and in any event no later than the first Business Day
after the date of receipt thereof, all Collections into one of the DDAs set
forth on Schedule 2.6 (a “Cash Management Account”) at one of the Cash
Management Banks or the applicable Collection Account. If, notwithstanding the
provisions of this Section 2.6, any Borrower receives or otherwise has dominion
over or control of any Collections, such Borrower shall hold such Collections in
trust for Lenderthe Lenders and shall not commingle such Collections with any
Person’s other funds or deposit such Collections in any account of any other
Person except as instructed by Lenderthe Lenders.

 

Borrowers shall establish and maintain Control Agreements with Lenderthe Lenders
and each Cash Management Bank set forth on Schedule 2.6 in respect to any Cash
Management Account, any Collection Account and any Disbursement Account and,
upon the request of Lenderthe Lenders at any time, at any other DDA. Each such
Control Agreement shall provide, among other things, that (i) upon notice from
Lenderthe Lenders, the Cash Management Bank will comply with instructions of
Lenderthe Lenders directing the disposition of funds in the applicable Cash
Management Account without further consent by any Borrower, (ii) the Cash
Management Bank has no rights of setoff or recoupment or any other claim against
the applicable Cash Management Account or Collection Account, other than for
payment of its service fees and other charges directly related to the
administration of such Cash Management Account or Collection Account and for
returned checks or other items of payment, and (iii) except as otherwise
permitted under Section 2.6(e) or as otherwise agreed by the Applicable Lender
in its sole discretion, the Cash Management Bank immediately will forward by
daily sweep all amounts in the applicable Cash Management Account or Collection
Account to the applicable Collection Account or Lender’s Account identified by
the Applicable Lender and (iv) no Borrower shall have (A) access to such Cash
Management Account(s) or Collection Account or the contents thereof and (B) the
right to direct the distribution of any funds from such Cash Management
Account(s) or Collection Account. For any Liquidation Sale, or portion thereof,
conducted outside of the United States, or Canada, the Applicable Lender and
Borrowers shall establish a Collection Account to receive the proceeds of such
Liquidation Sale outside the United States or Canada and all funds on deposit in
such Collection Account shall be swept to the Master Collection Account at such
intervals as agreed by the Applicable Lender and Borrowers at the commencement
of the Liquidation Sale.

 

Reserved.

 

Promptly at the request of Lenderthe Lenders, each Borrower shall deliver to
Lenderthe Lenders notification, executed by such Borrower, to each depository
institution at which such Borrower maintains any DDA (other than DDA’s
established for petty cash), in form and substance satisfactory to Lenderthe
Lenders in itstheir sole discretion, of Lender’sthe Lenders’ Liens in such DDA
and, shall instruct such depository institution, upon direction of Lenderthe
Lenders, to remit all amounts deposited from time to time in the DDA to Lender’s
Account or as otherwise directed from time to time by Lenderthe Lenders. Except
as otherwise may be provided with respect to Blocked Accounts pursuant to
Section 2.6(e), no Borrower shall establish any DDA hereafter unless,
contemporaneous with such establishment, such Borrower notifies Lenderthe
Lenders and, if requested by Lenderthe Lenders, delivers to such depository
institution the notification described herein and together with a Control
Agreement. No Borrower shall change such direction or designation without the
prior written consent of Lenderthe Lenders. If no Event of Default has occurred
and is continuing, Lenderthe Lenders shall not direct any such depository
institution referred to in this Section 2.6(d) to remit amounts to Lenderthe
Lenders without taking into consideration other expenditures to be made from
such accounts provided that the provisions of this sentence shall not apply to
Cash Management Accounts, Blocked Accounts, or the Collection Account(s).
Notwithstanding the foregoing, Borrowers shall not be required to provide a cash
management agreement or other control agreement with respect to any DDA in which
a balance of $2,500 (or the equivalent in any other currency) or less is
maintained at all times (provided that the aggregate amount of such balances in
all accounts does not exceed $20,000 and the full balance in such account is
swept into a Collection Account at least twice per week).

 

 - 36 - 

 

 

Notwithstanding anything herein to the contrary, for each Liquidation Sale,
prior to the Applicable Lender making the Revolving Credit Advance or incurring
the Letter of Credit Obligations with respect to such Liquidation Sale, unless
such requirement is waived in writing by the Applicable Lender, Borrowers shall
establish a blocked account in Borrowers’ name (the “Blocked Account”) at a bank
acceptable to Lenderthe Lenders, for the deposit of all Collections and other
amounts that Borrowers are entitled to receive and use with respect to such
Liquidation Sale, and Borrowers shall deposit or cause to be deposited into the
Blocked Account such amounts at least two times per week, or more frequently as
Borrowers may determine is appropriate. In the event that Borrowers have not
established a Blocked Account prior to the date on which the Applicable Lender
is otherwise willing to make a Revolving Credit Advance or incur the Letter of
Credit Obligations with respect to any Liquidation Sale, Borrowers shall cause,
in a manner satisfactory to the Applicable Lender in its sole discretion, all
Collections and other amounts which Borrowers are entitled to receive and use
with respect to such Liquidation Sale to be deposited into the Collection
Account at least two times per week, or more frequently as Borrowers may
determine is appropriate.

 

Prior to the Applicable Lender making the Revolving Credit Advance or incurring
the Letter of Credit Obligations with respect to each Liquidation Sale, the bank
at which the Blocked Account for such Liquidation Sale has been established (if
the Applicable Lender has not waived such requirement as provided in Section
2.6(e)) shall have entered into a Control Agreement with the Applicable Lender
and Borrowers, in form and substance acceptable to the Applicable Lender, which
shall immediately become operative at the bank at which the Blocked Account is
maintained. Such Control Agreement shall provide, among other things, that such
bank executing such agreement has no rights of setoff or recoupment or any other
claim against such Blocked Account, other than for payment of its service fees
and other charges directly related to the administration of such account, and
the bank at which the Blocked Account is located agrees to forward immediately
all amounts in the Blocked Account to the applicable Collection Account and to
commence the process of daily sweeps from the Blocked Account into the
applicable Collection Account. Although, as a result of the collection of
payments in any Collection Account, a credit balance may exist in favor of
Borrowers, under no circumstance shall such credit balance accrue interest in
favor of Borrowers.

 

For each Liquidation Sale, Borrowers shall establish, in their name, a separate
account (each a “Disbursement Account”) at a bank acceptable to the Applicable
Lender in the United States or Canada (the “Disbursement Account Bank”) into
which the Applicable Lender shall deposit proceeds of the Revolving Credit
Advances with respect to such Liquidation Sale, except for those proceeds as to
which the Applicable Lender and Borrowers have agreed upon an alternative method
of funding, for use by Borrowers solely in accordance with the provisions of
Section 2.2. Prior to the Applicable Lender’s making such Revolving Credit
Advance, the bank at which the Disbursement Account for such Liquidation Sale
has been established shall have entered into a Control Agreement with the
Applicable Lender and Borrowers, in form and substance acceptable to the
Applicable Lender, which shall immediately become operative at the bank at which
the Disbursement Account is maintained. Such Control Agreement shall provide,
among other things, that such bank executing such agreement has no rights of
setoff or recoupment or any other claim against such Disbursement Account, other
than for payment of its service fees and other charges directly related to the
administration of such account.

 

 - 37 - 

 

 

The Cash Management Accounts, Collection Accounts, Blocked Account and the
Disbursement Account for each Liquidation Sale shall be cash collateral
accounts, with all cash, checks and other similar items of payment in such
accounts securing payment and performance of the Liquidation Borrowings and all
other Obligations, and in which Borrowers shall be deemed to have granted a Lien
to the Applicable Lender pursuant to the Collateral Documents. Unless Lenderthe
Lenders otherwise agreesagree, Borrowers shall maintain the Blocked Account and
the Disbursement Account with respect to each Liquidation Sale so long as there
is any reasonable expectation that any additional Collections will be received
or Revolving Credit Advances made with respect to such Liquidation Sale.

 

Notwithstanding the foregoing, it is the intent of the parties that at all times
the Applicable Lender shall benefit from a first priority Lien on all funds in
any Cash Management Account, Collection Account, Blocked Account, and
Disbursement Account wherever located. If the Law of any jurisdiction where any
account is domiciled (or the bank at which such account is maintained) requires
additional documents, agreements, and other measures in order to provide such
first priority and perfection, Borrowers shall cooperate with the Applicable
Lender in executing such documents and agreements and taking such other
measures, all to the Applicable Lender’s satisfaction.

 

Payments.

 

Receipt of Payments; Dollars Only. . All payments with respect to any
Obligations of any Credit Party organized under the laws of the United States
shall be made in Dollars and all payments with respect to any Obligations of the
Canadian Borrower shall be made in the currency of the underlying Canadian
Obligation (eg. Dollars or CAD). Any payment made contrary to the requirements
of the preceding sentence shall be subject to the terms of this Section 2.7 and
Section 2.19.  Except as otherwise expressly provided herein, all payments by
Borrowers shall be made to Lender’s Account in Dollars or CAD, as applicable,
and shall be made in immediately available funds, no later than 1:00 p.m.
(Boston, Massachusetts time) on the date specified herein. Any payment received
by the Applicable Lender later than 1:00 p.m. (Boston, Massachusetts time),
shall be deemed to have been received on the following Business Day and any
applicable interest or fee shall continue to accrue until such following
Business Day. Any payment received by the Applicable Lender on account of
Borrowers in a currency other than Dollars or CAD, as applicable, shall not be
deemed to be a payment until the Applicable Lender has converted such currency
into Dollars. or CAD, as applicable. Borrowers shall remain liable for the full
amount of any such payment due to the Applicable Lender if, after conversion
from such other currency into Dollars or CAD, as applicable, a deficiency
remains. Borrowers shall also be liable for any costs, fees, expenses, Taxes, or
other liabilities incurred by the Applicable Lender as a result of receiving
payment in such other currency or converting such currency into Dollars. or CAD,
as applicable. Notwithstanding the foregoing, the Applicable Lender is not
obligated to accept any payment for any Obligations in any currency other than
Dollars. or CAD, as applicable. In the event on occasion the Applicable Lender
agrees to accept payment for any Obligations in a currency other than Dollars,
or CAD, as applicable, the Applicable Lender’s acceptance on such occasion shall
not require or oblige the Applicable Lender to accept payment in other
currencies thereafter.

 

Crediting Payments; Float Charge. The receipt of any payment item by the
Applicable Lender (whether from transfers to the Applicable Lender by the Cash
Management Banks pursuant to the Control Agreements or otherwise) shall not be
considered a payment on account unless such payment item is a wire transfer of
immediately available federal funds made to Lender’s Account or unless and until
such payment item is honored when presented for payment. Should any payment item
not be honored when presented for payment, then Borrowers shall be deemed not to
have made such payment and interest shall be calculated accordingly. Anything to
the contrary contained herein notwithstanding, any payment item shall be deemed
received by the Applicable Lender only if it is received into Lender’s Account
on a Business Day on or before 1:00 p.m. (Boston, Massachusetts time). If any
payment item is received into Lender’s Account on a non-Business Day or after
1:00 p.m. (Boston, Massachusetts time) on a Business Day, it shall be deemed to
have been received by the Applicable Lender as of the opening of business on the
immediately following Business Day. From and after the Closing Date, the
Applicable Lender shall be entitled to charge Borrowers, for the account of the
Applicable Lender one (1) Business Day of ‘clearance’ or ‘float’ at the rate
applicable to the applicable Base Rate plus the applicable Margin applicable for
Inventory Advances with an Inventory Advance Rate of 92.5% hereunder on all
Collections that are received by Borrower (regardless of whether forwarded by
the Cash Management Banks to the Applicable Lender). This across-the-board one
(1) Business Day clearance or float charge on all Collections is acknowledged by
the parties to constitute an integral aspect of the pricing of the financing of
Borrowers; the effect of such clearance or float charge being the equivalent of
charging one (1) Business Day of interest on such Collections.

 

 - 38 - 

 

 

Application and Allocation of Payments.

 

Prior to the date on which the Final Accounting for any Liquidation Sale is
approved by the Applicable Lender, any and all payments at any time or times
received from or on behalf of any Borrower (or from or on behalf of any
Liquidator JV) with respect to such Liquidation Sale (including any Liquidation
Sales where a Borrower or a Liquidator JV, as applicable, provided an Overbid,
whether or not the Applicable Lender financed any portion of such Overbid) shall
be applied, subject to the Final Accounting, in the following order:

 

(i)           first, to repay the outstanding principal of Revolving Credit
Advances (including Total Expense Advances) made by the Applicable Lender to
fund Expenses of the applicable Liquidation Sale;

 

(ii)          second, to pay then due and payable interest with respect to the
applicable Revolving Credit Advances made in connection with such Liquidation
Sale;

 

(iii)         third, to pay then due and payable Letter of Credit Fees with
respect to the applicable Letters of Credit issued in connection with such
Liquidation Sale;

 

(iv)         fourth, to pay all other thenthan due and payable Fees (other than
the Success Fee) and other Obligations incurred by Borrower in connection with
such Liquidation Sale, other than interest or principal with respect to
Revolving Credit Advances and Letter of Credit Fees to the extent set forth in
clauses (i), (ii) and (iii) of this Section 2.8(a);

 

(v)          fifth, to repay the outstanding principal of all Revolving Credit
Advances (other than those referred to in clause (i) of this Section 2.8(a))
made with respect to such Liquidation Sale;

 

(vi)         sixth, to be held by the Applicable Lender as cash collateral for
Letter of Credit Obligations in the manner described in Annex B until all of
such Letter of Credit Obligations with respect to the applicable Liquidation
Sale have been fully cash collateralized to the extent required in Annex B;

 

(vii)       seventh, to fund a reserve held by the Applicable Lender for all
Expenses shown on the Budget that have not been paid or yet incurred with
respect to the applicable Liquidation Sale, to the extent such Expenses have not
been otherwise reserved for under a Letter of Credit;

 

(viii)      eighth, to fund a reserve held by the Applicable Lender for the
Recovery Amount with respect to the applicable Liquidation Sale;

 

(ix)         ninth, to Borrowers, to reimburse Borrowers for duly documented
Expenses paid by Borrowers with respect to the applicable Liquidation Sale that
were not funded with Revolving Credit Advances;

 

(x)          tenth, to deposits to the Disbursement Account, for the benefit of
Borrowers, for payment of up to the Borrower Equity Amount;

 

(xi)         eleventh, to any other unpaid amounts due to the Applicable Lender
in respect to other outstanding Obligations incurred in connection with other
Liquidation Sales that have been completed;

 

 - 39 - 

 

 

(xii)        twelfth, to the Applicable Lender as preliminary payments for the
Success Fee for such Liquidation Sale based on the Net Profit Margin with
respect to such Liquidation Sale;

 

(xiii)       thirteenth, to the extent the UK Credit Agreement is in effect, to
Burdale for any unpaid amounts due to Burdale pursuant to the UK Credit
Agreement in connection with completed Liquidation Sales (but only if at the
completion of a permitted transaction under the UK Credit Agreement there is a
shortfall in the repayment of any amounts due in connection therewith pursuant
to the UK Credit Agreement, which shortfall has not been repaid within two (2)
business days of Borrower’s receipt of written notice from the Applicable Lender
in which such shortfall is identified);

 

(xiv)       fourteenth, ninety percent (90%) of the remaining amount, if any
deposited into the Disbursement Account for the benefit of Borrowers; and

 

(xv)        fifteenth, the remaining ten percent (10%) to be held by the
Applicable Lender pending completion of the Final Accounting.

 

Upon the Final Accounting, any remaining amounts received by the Applicable
Lender with respect to such Liquidation Sale after application in accordance
with the order set forth above, shall be applied in the following order: (i) to
payment of any unpaid portion of the Success Fee, if any, with respect to such
Liquidation Sale; and then (ii) to deposits to the Disbursement Account, for the
benefit of Borrowers.

 

If upon the Final Accounting it is determined that any payments previously
applied in accordance with Section 2.8(a) need to be adjusted to reflect the
actual amounts of all of the items set forth in Section 2.8(a), and that the
amount received by either party is greater than the amount than such party is
ultimately determined to be entitled to receive, then such party shall pay the
amount of such excess to the other party.

 

the Applicable Lender is authorized to, and at its sole election may, charge to
any applicable Loan Account of Borrowers and cause to be paid by Revolving
Credit Advances hereunder all Fees, interest and other amounts owing by any
Borrower under this Agreement or any of the other Loan Documents with respect to
a Liquidation Borrowing, if and to the extent Borrower fails to promptly pay any
such amounts as and when due, even if such charges would cause the aggregate
outstanding Obligations to exceed the Revolving Loan Ceiling. To the extent
permitted by applicable Law, any charges so made shall constitute part of the
Obligations hereunder.

 

To the extent that the Applicable Lender applies any cash payment to a reserve
or cash collateral account maintained by the Applicable Lender pursuant to
Section 2.8(a), the Applicable Lender shall credit interest to any such account
in an amount equal to the actual interest that the Applicable Lender earns on
overnight deposits.

 

Loan Account and Accounting. Each Lender shall maintain an account on its books
in the name of Borrowers (the “Loan Account”) on which Borrowers will be charged
with all Revolving Credit Advances made by the Applicable Lender, to Borrowers
or for a Borrower’s account, the Letters of Credit issued for a Borrower’s
account, and with all other payment Obligations hereunder or under the other
Loan Documents (except for Bank Product Obligations), including, accrued
interest, fees and expenses, and Lender Expenses. All amounts received in
Lender’s Account from any Cash Management Bank shall be applied in accordance
with Section 2.8 and the Loan Account shall be credited accordingly. Each Lender
shall render statements regarding the Loan Account to Borrowers, including
principal, interest, fees, and including an itemization of all charges and
expenses constituting Lender Expenses, and such statements shall be conclusively
presumed to be correct and accurate and constitute an account stated between
Borrowers and the Applicable Lender unless, within 30 days after receipt thereof
by Borrowers, Borrowers shall deliver to the Applicable Lender written objection
thereto describing the error or errors contained in any such statements. Only
those items expressly objected to in such notice shall be deemed to be disputed
by Borrowers.

 

 - 40 - 

 

 

Disbursements & Disbursement Account. The Applicable Lender is authorized to
make the Revolving Credit Advances and is authorized to issue the Letters of
Credit (or to cause Underlying Issuer to issue the Letters of Credit), under
this Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person. Borrowers agree to establish and maintain
the Disbursement Account with the Disbursement Account Bank for the purpose of
receiving the proceeds of the Revolving Credit Advances requested by Borrowers
and made by the Applicable Lender hereunder. So long as no Default or Event of
Default has occurred and is continuing, Borrowers may add or replace the
Disbursement Account Bank or the Disbursement Account on 30 days prior written
notice to the Applicable Lender; provided, however, that (i) such prospective
Disbursement Account Bank shall be satisfactory to the Applicable Lender and the
Applicable Lender shall have consented in writing in advance to the opening of
such Disbursement Account with the prospective Designated Account Bank, and (ii)
prior to the time of the opening of such Disbursement Account, Borrowers, the
Applicable Lender and such prospective Disbursement Account Bank shall have
executed and delivered to the Applicable Lender a Control Agreement with respect
to the Disbursement Account. Unless otherwise agreed by the Applicable Lender
and Borrowers, any Revolving Credit Advance requested by Borrowers and made by
the Applicable Lender, in its sole discretion, shall be made to the Disbursement
Account. The funding of a Revolving Credit Advance by the Applicable Lender into
the applicable Disbursement Account shall constitute the making of such
Revolving Credit Advance hereunder. The Applicable Lender shall not be obligated
to cause the proceeds of any Revolving Credit Advance to be transferred to any
other bank or other account, particularly any such account located outside the
United States or Canada, and shall not be required to convert, or cause the
conversion of, the proceeds of any Revolving Credit Advance into any non-United
States currency.

 

Indemnity.

 

Each Credit Party, jointly and severally, shall pay, indemnify, defend, and hold
Lenderthe Lenders, and each of Lender’sthe Lenders’ officers, directors,
employees, agents, attorneys, and attorneys-in-fact (each, an “Indemnified
Person”) harmless (to the fullest extent permitted by applicable Law) from and
against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable and documented attorneys’ fees and
disbursements and other reasonable and documented costs and expenses actually
incurred in connection therewith (as and when they are incurred and irrespective
of whether suit is brought), at any time asserted against, imposed upon, or
incurred by any of them (a) in connection with or as a result of or related to
the execution, delivery, enforcement, performance, or administration of this
Agreement, any of the other Loan Documents, or the transactions contemplated
hereby or thereby, and (b) with respect to any investigation, litigation, or
proceeding related to this Agreement, any other Loan Document, or the use of the
proceeds of the credit provided hereunder (irrespective of whether any
Indemnified Person is a party thereto), or any act, omission, event, or
circumstance in any manner related thereto (all the foregoing, collectively, the
“Indemnified Liabilities”). The foregoing to the contrary notwithstanding, no
Credit Party shall have any obligation to any Indemnified Person under this
Section 2.11(a) with respect to any Indemnified Liability that a court of
competent jurisdiction finally determines to have resulted from the gross
negligence or willful misconduct of such Indemnified Person. This provision
shall survive the termination of this Agreement and the repayment of the
Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which a Credit
Party was required to indemnify the Indemnified Person receiving such payment,
the Indemnified Person making such payment is entitled to be indemnified and
reimbursed by the Credit Parties with respect thereto. The Credit Parties shall
be subrogated to an Indemnified Person’s rights of recovery to the extent of any
liabilities satisfied by the any Credit Party and such Indemnified Person shall
execute and deliver such instruments and papers as are necessary to assign such
rights and assist in the execution thereof; provided, however, that, and,
notwithstanding the foregoing to the contrary, such subrogation rights of the
Credit Parties may not be exercised until payment in full of all Obligations due
hereunder and the termination of this Agreement and shall be subordinate to the
Obligations due Lenderto the Lenders in all respects. WITHOUT LIMITATION, THE
FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO
INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF
ANY NEGLIGENT ACT (NOT CONSTITUTING GROSS NEGLIGENCE) OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

 

 - 41 - 

 

 

Each Credit Party shall each be liable, jointly and severally, to pay,
indemnify, defend, and hold harmless (to the fullest extent permitted by
applicable Law) from and against any and all Indemnified Liabilities which may
be instituted or asserted against or incurred by any such Indemnified Person as
a result of the engagement of such Credit Party, or any of their respective
employees in, or any of such Person’s causing any Credit Party to engage in, any
fraud, acts in bad faith or intentional breach of the terms of this Agreement,
any Liquidation Sales Agreement, or the conduct of any Liquidation Sale. The
foregoing to the contrary notwithstanding, no Credit Party shall have any
obligation to any Indemnified Person under this Section 2.11(b) with respect to
any Indemnified Liability that a court of competent jurisdiction finally
determines to have resulted from the gross negligence or willful misconduct of
such Indemnified Person. This provision shall survive the termination of this
Agreement and the repayment of the Obligations. WITHOUT LIMITATION, THE
FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO
INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF
ANY NEGLIGENT ACT (NOT CONSTITUTING GROSS NEGLIGENCE) OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

 

Access. Each Credit Party shall, during normal business hours, from time to time
upon one (1) Business Day’s prior notice as frequently as Lenderthe Lenders
reasonably determines to be appropriate: (a) provide Lenderthe Lenders and any
of itstheir officers, employees and agents access to its properties, facilities,
advisors and employees (including officers) and to the Collateral, (b) permit
Lenderthe Lenders, and any of itstheir officers, employees and agents, to
inspect, audit and make extracts from such Credit Parties’ Books and Records,
(c) permit Lenderthe Lenders, and itstheir officers, employees and agents, to
inspect, review, evaluate and make test verifications and counts of the Retail
Inventory and Other Assets with respect to any Liquidation Sale, and (d) cause
each Merchant to provide to Lenderthe Lenders and itstheir officers, employees
and agents the same access to the properties and facilities and Books of such
Merchant that are used in connection with the Liquidation Sale as is provided to
Borrowers by such Merchant under the applicable Liquidation Sales Agreement. If
a Default or Event of Default shall have occurred and be continuing, the Credit
Parties shall provide such access at all times and without advance notice. The
Credit Parties shall make available to Lenderthe Lenders and itstheir counsel,
as quickly as is possible under the circumstances, originals or copies of all
Books and Records which Lenderthe Lenders may request. The Credit Parties shall
deliver any document or instrument necessary for Lenderthe Lenders, as it may
from time to time request, to obtain records from any service bureau or other
Person which maintains records for the Credit Parties, and shall maintain
duplicate records or supporting documentation on media, including computer tapes
and discs owned by the Credit Parties.

 

Taxes.

 

Any and all payments by any Borrower hereunder or under any Note shall be made,
in accordance with this Section 2.13, free and clear of and without deduction
for any and all present or future Taxes, unless a deduction is required by Law.
If Borrower shall be required by Law to deduct any Taxes from or in respect of
any sum payable hereunder or under any Note, (i) the sum payable shall be
increased as much as shall be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.13) the Applicable Lender receives an amount equal to the sum it
would have received had no such deductions been made, (ii) Borrower shall make
such deductions, and (iii) Borrower shall pay the full amount deducted to the
relevant taxing or other authority in accordance with applicable Law. Within
thirty (30) days after the date of any payment of Taxes, Borrower shall furnish
to the Applicable Lender the original or a certified copy of a receipt
evidencing payment thereof.

 

 - 42 - 

 

 

If a Borrower makes a Tax Payment and the Applicable Lender determines that (i)
a Tax Credit is attributable either to an increased payment of which that Tax
Payment forms part or to that Tax Payment and (ii) the Applicable Lender has
obtained, utilized and retained that Tax Credit, the Applicable Lender shall pay
an amount to such Borrower which the Applicable Lender determines will leave it
(after that payment) in the same after-Tax position as it would have been in had
the Tax Payment not been required to be made by such Borrower.

 

If any present or future applicable Law, which expression, as used herein,
includes statutes, rules and regulations thereunder and interpretations thereof
by any competent court or by any governmental or other regulatory body or
official charged with the administration or the interpretation thereof and
requests, directives, instructions and notices at any time or from time to time
hereafter made upon or otherwise issued to the Applicable Lender or the
Underlying Issuer by any central bank or other fiscal, monetary or other
authority (whether or not having the force of law), shall:

 

subject the Applicable Lender or any Underlying Issuer to any tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature with respect to this
Agreement, the other Loan Documents, or any Letters of Credit (other than taxes
based upon or measured by the income or profits of the Applicable Lender or such
Underlying Issuer and except where the imposition of such tax, levy, impost,
duty, charge or fee is attributable to a deduction for or on account of Tax
required by law to be made by Borrowers or is compensated for by
Section 2.13(a), or

 

materially change the basis of taxation (except for changes in taxes based upon
or measured by income or profits of the Applicable Lender or such Underlying
Issuer and except where the change in basis of taxation is attributable to a
deduction for or on account of Tax required by law to be made by Borrowers or is
compensated for by Section 2.13(a) of payments to the Applicable Lender of the
principal of or the interest on any Revolving Credit Advances or any other
amounts payable to the Applicable Lender or the Underlying Issuer under this
Agreement or any of the other Loan Documents, or

 

impose or increase or render applicable (other than to the extent specifically
provided for elsewhere in this Agreement) any special deposit, reserve,
assessment, liquidity, capital adequacy or other similar requirements (whether
or not having the force of law) against assets held by, or deposits in or for
the account of, or loans by, or letters of credit issued by, or commitments of
an office of the Applicable Lender or any Underlying Issuer, or

 

impose on the Applicable Lender or any Underlying Issuer any other conditions or
requirements with respect to this Agreement, the other Loan Documents or any
Letters of Credit, and the result of any of the foregoing is:

 

(i)           to increase the cost to the Applicable Lender or such Underlying
Issuer of making, funding, issuing, renewing, extending or maintaining any of
the Revolving Credit Advances or any Letter of Credit, or

 

(ii)           to reduce the amount of principal, interest, reimbursement
Obligations with respect to Letters of Credit or other amount payable to the
Applicable Lender or such Underlying Issuer hereunder on account of such
Revolving Credit Advances or Letter of Credit, or

 

(iii)           to require the Applicable Lender or such Underlying Issuer to
make any payment or to forego any interest or repayment of any Letter of Credit
Obligations paid by the Applicable Lender or such Underlying Issuer or other sum
payable hereunder, the amount of which is calculated by reference to the gross
amount of any sum receivable or deemed received by the Applicable Lender or such
Underlying Issuer from Borrowers hereunder,

 

 - 43 - 

 

 

then, and in each such case, Borrowers will, upon demand made by the Applicable
Lender or such Underlying Issuer (as the case may be) at any time and from time
to time and as often as the occasion therefor may arise, pay to the Applicable
Lender or such Underlying Issuer such additional amounts as will be sufficient
to compensate the Applicable Lender or such Underlying Issuer for such
additional cost, reduction, payment or foregone interest or Letter of Credit
Obligations or other sum.

 

Subject to Section 2.13(e), Borrowers jointly and severally shall indemnify and,
within ten (10) days of Borrowers’ receipt of the Applicable Lender’s demand
therefor, pay the Applicable Lender for the full amount of Taxes (including any
Taxes imposed by any jurisdiction on amounts payable under this Section 2.13)
paid by the Applicable Lender, and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto, whether or not such
Taxes were correctly or legally asserted.

 

Section 2.13(d) shall not apply to any Tax based upon or measured by the income
or profits of the Applicable Lender or to the extent that any Tax or any
liability arising therefrom is compensated for by an increased payment under
Section 2.13(a).

 

Without prejudice to the survival of any other obligation contained in the Loan
Documents, the obligations of a Borrower under this Section 2.13 shall survive
the termination of the Loan Documents and the payment in full of all
Obligations.

 

Capital Requirements. If, after the date hereof, Lender determinesthe Lenders
determine that (i) the adoption of or change in any Law or guideline regarding
capital requirements for banks or bank holding companies, or any change in the
interpretation or application thereof by any Governmental Authority charged with
the administration thereof, or (ii) compliance by the Applicable Lender or its
parent bank holding company with any guideline, request or directive of any such
entity regarding capital adequacy (whether or not having the force of law), will
have the effect of reducing the return on the Applicable Lender’s or such
holding company’s capital as a consequence of its commitments hereunder to a
level below that which the Applicable Lender or such holding company could have
achieved but for such adoption, change, or compliance (taking into consideration
the Applicable Lender’s or such holding company’s then existing policies with
respect to capital adequacy and assuming the full utilization of such entity’s
capital) by any amount deemed by the Applicable Lender to be material, then the
Applicable Lender may notify Borrowers thereof. Following receipt of such
notice, Borrowers jointly and severally agree to pay Lenderthe Lenders on demand
the amount of such reduction of return of capital as and when such reduction is
determined, payable within 90 days after presentation by the Applicable Lender
of a statement in the amount and setting forth in reasonable detail the
Applicable Lender’s calculation thereof and the assumptions upon which such
calculation was based (which statement shall be deemed true and correct absent
manifest error). In determining such amount, the Applicable Lender may use any
reasonable averaging and attribution methods.

 

Communication with Accountants and Other Professionals. Borrowers authorize the
Applicable Lender to communicate directly with any professionals retained by any
Borrower in connection with any Liquidation Sale, and authorize and shall
instruct each of those professionals to disclose and make available to the
Applicable Lender any and all financial statements and other supporting
financial documents, schedules and information relating to such Liquidation
Sale, except to the extent that such materials are protected by a legally
recognized privilege held by Borrowers and disclosure thereof to the Applicable
Lender cannot be accomplished without causing a waiver by Borrowers of such
privilege.

 

Designation of Original Borrower as Borrowers’ Agent.

 

Each Borrower (other than Original Borrower) hereby irrevocably designates and
appoints Original Borrower as such Borrower’s agent to obtain Revolving Credit
Advances and the issuance of Letters of Credit, the proceeds of which shall be
available to each Borrower for those uses permitted hereunder. Each Borrower
shall be obligated to the Applicable Lender on account of Revolving Credit
Advances, or Letters of Credit so made as if made directly by the Applicable
Lender to that Borrower, notwithstanding the manner by which such Revolving
Credit Advances are recorded on the books and records of Original Borrower and
of any other Borrower.

 

Each Borrower recognizes that credit available to it is in excess of and on
better terms than it otherwise could obtain on and for its own account and that
one of the reasons therefor is its joining in the credit facilities contemplated
herein with all other Borrowers. Consequently, each Borrower hereby assumes and
agrees to fully, faithfully, and punctually discharge all Obligations of all of
Borrowers.

 

 - 44 - 

 

 

Original Borrower may act as a conduit for each Borrower on whose behalf
Original Borrower has requested a Revolving Credit Advance or the issuance of a
Letter of Credit.

 

The proceeds of each Revolving Credit Advance which is requested by Original
Borrower shall be deposited into the Disbursement Account or as otherwise
indicated by Original Borrower and agreed to by the Applicable Lender. Original
Borrower shall cause the transfer of the proceeds thereof to the (those)
Borrower(s) on whose behalf such Revolving Credit Advance was obtained. the
Applicable Lender shall not have any obligation to see to the application of
such proceeds by Original Borrower.

 

Joint and Several Liability of Borrowers.

 

Each Borrower is accepting joint and several liability hereunder and under the
other Loan Documents in consideration of the financial accommodations to be
provided by Lenderthe Lenders under this Agreement, for the mutual benefit,
directly and indirectly, of each Borrower and in consideration of the
undertakings of the other Borrowers to accept joint and several liability for
the Obligations.

 

Each Borrower, jointly and severally, hereby irrevocably and unconditionally
accepts, not merely as a surety but also as a co-debtor, joint and several
liability with the other Borrowers, with respect to the payment and performance
of all of the Obligations (including, without limitation, any Obligations
arising under this Section 2.17), it being the intention of the parties hereto
that all the Obligations shall be the joint and several obligations of each
Person composing Borrowers without preferences or distinction among them.

 

If and to the extent that any Borrower shall fail to make any payment with
respect to any of the Obligations as and when due or to perform any of the
Obligations in accordance with the terms thereof, then in each such event the
other BorrowersBorrower will make such payment with respect to, or perform, such
Obligation.

 

The obligations of each Borrower under the provisions of this Section 2.17
constitute the absolute and unconditional, full recourse obligations of each
Borrower enforceable against each such Borrower to the full extent of its
properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstances whatsoever.

 

Except as otherwise expressly provided in this Agreement, each Borrower hereby
waives notice of acceptance of its joint and several liability, notice of any
Revolving Credit Advances or Letters of Credit issued under or pursuant to this
Agreement, notice of the occurrence of any Default, Event of Default, or of any
demand for any payment under this Agreement, notice of any action at any time
taken or omitted by Lenderthe Lenders under or in respect of any of the
Obligations, any requirement of diligence or to mitigate damages and, generally,
to the extent permitted by applicable Law, all demands, notices and other
formalities of every kind in connection with this Agreement (except as otherwise
provided in this Agreement). Each Borrower hereby assents to, and waives notice
of, any extension or postponement of the time for the payment of any of the
Obligations, the acceptance of any payment of any of the Obligations, the
acceptance of any partial payment thereon, any waiver, consent or other action
or acquiescence by Lenderthe Lenders at any time or times in respect of any
default by any Borrower in the performance or satisfaction of any term,
covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by Lenderthe Lenders in respect of any of the
Obligations, and the taking, addition, substitution or release, in whole or in
part, at any time or times, of any security for any of the Obligations or the
addition, substitution or release, in whole or in part, of any Borrower. Without
limiting the generality of the foregoing, each Borrower assents to any other
action or delay in acting or failure to act on the part of Lenderthe Lenders
with respect to the failure by any of Borrowers to comply with any of its
respective Obligations, including, without limitation, any failure strictly or
diligently to assert any right or to pursue any remedy or to comply fully with
applicable laws or regulations thereunder, which might, but for the provisions
of this Section 2.17 afford grounds for terminating, discharging or relieving
any Borrower, in whole or in part, from any of its obligations under this
Section 2.17, it being the intention of each Borrower that, so long as any of
the Obligations hereunder remain unsatisfied, the obligations of such Borrower
under this Section 2.17 shall not be discharged except by performance and then
only to the extent of such performance. The obligations of each Borrower under
this Section 2.17 shall not be diminished or rendered unenforceable by any
winding up, reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any Borrower or Lenderthe Lenders. The joint and
several liability of Borrowers hereunder shall continue in full force and effect
notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, constitution or place of formation of any of the Persons
composing Borrowers or Lenderthe Lenders.

 

 - 45 - 

 

 

Each Borrower represents and warrants to Lenderthe Lenders that such Borrower is
currently informed of the financial condition of Borrowers and of all other
circumstances which a diligent inquiry would reveal and which bear upon the risk
of nonpayment of the Obligations. Each Borrower further represents and warrants
to Lenderthe Lenders that such Borrower has read and understands the terms and
conditions of the Loan Documents. Each Borrower hereby covenants that such
Borrower will continue to keep informed of Borrowers’ financial condition, the
financial condition of other guarantors, if any, and of all other circumstances
which bear upon the risk of nonpayment or nonperformance of the Obligations.

 

Each Borrower waives all rights and defenses arising out of an election of
remedies by Lenderthe Lenders, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for a guaranteed obligation,
has destroyed Lender’sthe Lenders’ rights of subrogation and reimbursement
against such Borrower by the operation of Section 580(d) of the California Code
of Civil Procedure or otherwise.

 

The provisions of this Section 2.17 are made for the benefit of Lenderthe
Lenders, and its successors and assigns, and may be enforced by Lenderthe
Lenders from time to time against any or all of Borrowers as often as occasion
therefor may arise and without requirement on the part of Lenderthe Lenders,
successor or assign first to marshal any of its claims or to exercise any of its
rights against any of the other Borrowers or to exhaust any remedies available
to it against any of the other Borrowers or to resort to any other source or
means of obtaining payment of any of the Obligations hereunder or to elect any
other remedy. The provisions of this Section 2.17 shall remain in effect until
all of the Obligations shall have been paid in full or otherwise fully
satisfied. If at any time, any payment, or any part thereof, made in respect of
any of the Obligations, is rescinded or must otherwise be restored or returned
by Lenderthe Lenders upon the insolvency, bankruptcy or reorganization of any of
the Persons composing Borrowers, or otherwise, the provisions of this Section
2.17 will forthwith be reinstated in effect, as though such payment had not been
made.

 

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

 

 - 46 - 

 

 

Each Borrower hereby agrees that, after the occurrence and during the
continuance of any Default or Event of Default, the payment of any amounts due
with respect to the indebtedness owing by any Borrower to any other Borrower is
hereby subordinated to the prior payment in full in cash of the Obligations.
Each Borrower hereby agrees that after the occurrence and during the continuance
of any Default or Event of Default, such Borrower will not demand, sue for or
otherwise attempt to collect any indebtedness of any other Borrower owing to
such Borrower until the Obligations shall have been paid in full in cash. If,
notwithstanding the foregoing sentence, such Borrower shall collect, enforce or
receive any amounts in respect of such indebtedness, such amounts shall be
collected, enforced and received by such Borrower as trustee for Lenderthe
Lenders, and such Borrower shall deliver any such amounts to Lenderthe Lenders
for application to the Obligations in accordance with Section 2.8.

 

Joinders. Borrower may request from time to time that any wholly-owned, special
purpose Subsidiary of Great American become a Borrower hereunder pursuant to a
Borrower Joinder for purposes of conducting a Liquidation Sale funded by a
Liquidation Borrowing in any jurisdiction outside of the United States and
Canada. LenderThe Lenders may, in its sole discretion, determine whether to
agree to permit any such Subsidiary to become a co-Borrower hereunder.
Lender’sThe Lenders’ agreement to accept the joinder of any such Subsidiary
shall not waive, diminish, or restrict Lender’sthe Lenders’ discretion hereunder
as to whether to extend any credit to such Subsidiary or any other Borrower. In
the event that Lender electsthe Lenders elect to permit such a Subsidiary to
become a Borrower hereunder, such Subsidiary and each other Credit Party shall
execute a Borrower Joinder and comply with such other conditions precedent
required by Lenderthe Lenders. Such conditions precedent may include, without
limitation, all in form and substance satisfactory to Lenderthe Lenders, legal
opinions, consents and approvals from any Governmental Authorities or other
Persons, security documents granting Lenderthe Lenders a Lien on substantially
all of the assets of such Subsidiary, Organizational Documents, financing
statements, board resolutions, secretary’s certificates, and affirmation of each
Credit Parties’ obligations under each of the Loan Documents to which each of
the foregoing is a party. Upon execution and delivery, and Lender’sthe Lenders’
acceptance, of a Borrower Joinder and satisfaction of the conditions precedent
set forth by Lenderthe Lenders in connection with such Borrower Joinder, as
determined by Lenderthe Lenders in itstheir sole discretion, the Subsidiary
party to such Borrower Joinder shall become a “Borrower” hereunder for all
purposes, including, without limitation, with respect to all representations and
warranties, covenants and agreements contained herein. Borrowers shall be liable
for all of Lender’sthe Lenders’ costs and expenses, including reasonable
attorneys’ fees (including fees of any local counsel retained by the Applicable
Lender) in connection with an actual or proposed Borrower Joinder, even if such
Borrower Joinder is not accepted by Lenderthe Lenders.

 

Currency Matters.

 

Indemnity. DollarsDollars (in the case of U.S. Borrowers) and Dollars and CAD
(in the case of the Canadian Borrower as applicable) are the currency of account
and payment for each and every sum at any time due from Borrowers hereunder. No
payment to the Applicable Lender or an Underlying Issuer (whether under any
judgment or court order or otherwise) on account of any of the Obligations
(including Fees and reimbursements) denominated in a currency other than Dollars
or CAD, as applicable, shall discharge the obligation or liability in respect of
which it was made unless and until the Applicable Lender or Underlying Issuer
shall have received payment in full in the Dollars Equivalent of such obligation
or liability. To the extent that the amount of any such payment shall, on actual
conversion into Dollars or CAD, as applicable, fall short of such obligation or
liability, actual or contingent, the Credit Parties each hereby jointly and
severally agree to indemnify and hold harmless the Applicable Lender and
Underlying Issuer, as the case may be, with respect to the amount of the
shortfall, with such indemnity surviving the termination of this Agreement and
any legal proceeding, judgment or court order pursuant to which the original
payment was made which resulted in the shortfall.

 

 - 47 - 

 

 

Fluctuations. In the event any Letter of Credit or other Obligations are at any
time denominated in a currency other than Dollars, then, not later than 1:00
p.m. (Boston time) on the last Business Day of each month with respect to such
Obligations (the “Calculation Date”), and at such other times as shall be
determined by the Applicable Lender in its sole discretion, the Applicable
Lender shall determine the Dollar Equivalent as of such date of such
Obligations. The Dollar Equivalent so determined shall become effective on the
first Business Day immediately following such determination (a “Reset Date”) and
shall remain effective until the next succeeding Reset Date. The Applicable
Lender shall use its reasonable efforts to provide Borrowers with notice of such
Reset Date and the Dollar Equivalent determined pursuant to the preceding
sentence. Without limitation of any of Borrowers’ other obligations hereunder,
Borrower shall immediately repay any outstanding Obligations if the aggregate
amount of the Obligations exceeds the Revolving Loan Ceiling after any Reset
Date.

 

CONDITIONS PRECEDENT

 

Conditions to the Occurrence of the Restatement Date. The Restatement Date shall
not occur, until the following conditions have been satisfied or provided for in
a manner satisfactory to the U.S. Lender, in the U.S. Lender’s sole discretion,
or waived in writing by the U.S. Lender.

 

This Agreement or counterparts hereof shall have been duly executed by, and
delivered to, Borrowers and the U.S. Lender; and the U.S. Lender shall have
received such documents, instruments, agreements, certificates, and legal
opinions as the U.S. Lender shall request in connection with the transactions
contemplated by this Agreement and the other Loan Documents, including all those
listed in the Schedule of Documents as required to be delivered on or before the
Restatement Date, each in form and substance satisfactory to the U.S. Lender.

 

The representations and warranties contained in this Agreement and the other
Loan Documents shall be true and correct in all material respects.

 

No Default or Event of Default shall have occurred and be continuing, nor shall
either result from the occurrence of the transactions contemplated hereby on the
Restatement Date.

 

No injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the occurrence of the Restatement Date
shall have been issued and remain in force by any Governmental Authority against
any Credit Party, the U.S. Lender, or any of their respective Affiliates.

 

No Material Adverse Effect shall have occurred nor shall result from the
occurrence of the transactions contemplated hereby on the Restatement Date.

 

the U.S. Lender shall have received (i) satisfactory evidence that Borrower, GAG
Inc. and Great American have obtained all required consents and approvals of all
Persons, including all requisite Governmental Authorities, to the execution,
delivery and performance of this Agreement and the other Loan Documents, or (ii)
an officer’s certificate in form and substance satisfactory to the U.S. Lender
affirming either that no such consents or approvals are required or that they
have been duly received, with copies provided to the U.S. Lender.

 

The organization and capital structure of the Great American Group shall be
acceptable to the U.S. Lender in its sole discretion.

 

No action, proceeding, investigation, regulation or legislation shall have been
instituted, threatened or proposed before any court or Governmental Authority to
enjoin, restrain or prohibit, or to obtain damages in respect of, or which is
related to or arises out of, this Agreement or any of the other Loan Documents
or the consummation of the transactions contemplated thereby and which, in the
U.S. Lender’s sole judgment, would make it inadvisable to consummate the
transactions contemplated by this Agreement or any of the other Loan Documents.

 

 - 48 - 

 

 

the U.S. Lender shall have received all necessary credit committee and other
internal approvals required for their execution and delivery of the Loan
Documents and shall have completed preliminary business, legal, and collateral
due diligence, including (i) all requirements related to the Patriot Act,
anti-money laundering rules and regulations, and all other “know your customer”
requirements with respect to each Borrower, GAG Inc., Great American and their
respective Affiliates; and (ii) a preliminary collateral audit and review of
each Borrower’s Books and verification of each Borrower’s representations and
warranties to the U.S. Lender, the results of which shall be satisfactory to the
U.S. Lender. Each Lender may require each Borrower to provide additional
documents to satisfy its “know your customer” requirements following entry into
of this Agreement if the U.S. Lender is required to do so in order to be in
compliance with applicable Law, and each Borrower shall promptly provide such
documents on such request.

 

the U.S. Lender shall have received a preliminary reference check with respect
to GAG Inc.’s, Great American’s, and each Borrower’s senior management, the
results of which are satisfactory to the U.S. Lender in its sole discretion.

 

Borrowers shall have paid all Lender Expenses, including without limitation the
fees and expenses of the U.S. Lender’s legal counsel, incurred in connection
with the transactions evidenced by this Agreement and the Existing Credit
Agreement.

 

All other documents and legal matters in connection with the transactions
contemplated by this Agreement shall have been delivered, executed, or recorded
and shall be in form and substance satisfactory to the U.S. Lender.

 

Conditions to each Inventory, Other Assets Advance and Letter of Credit. The
Applicable Lender shall not make any Revolving Credit Advance or incur any
Letter of Credit Obligations with respect to any Liquidation Sale until the
following conditions have been satisfied or provided for in a manner
satisfactory to the Applicable Lender, in the Applicable Lender’s sole
discretion, or waived in writing by the Applicable Lender:

 

the Applicable Lender shall have received such documents, information and other
materials required to be included with the Liquidation Loan Proposal and such
other documents, information and other materials as the Applicable Lender may
reasonably request or are required hereunder, including executed versions of the
Liquidation Sales Agreements, executed agreements establishing the Blocked
Accounts for such Liquidation Sale, copies of any court orders required for any
Merchant which is a party to any Insolvency Proceeding to enter into a
Liquidation Sales Agreement and to sell its Inventory and, if applicable, Other
Assets in a Liquidation Sale, Collateral Assignments together with notices to
Merchant and any other parties required by the Applicable Lender, all in form
and substance reasonably satisfactory to the Applicable Lender.

 

The inventory taking and verification processes conducted by RGIS or another
inventory taking company acceptable to the Applicable Lender shall have been
completed in a manner reasonably satisfactory to the Applicable Lender;
provided, that, so long as all other conditions precedent are satisfied, a
portion of a Revolving Credit Advance may be made pursuant to Section
2.1(f)(iii) before the final inventory count has been completed.

 

the Applicable Lender shall have received evidence reasonably satisfactory to
the Applicable Lender that licenses (including going out of business sale
licenses, if necessary), consents and acknowledgments have been obtained, and
filings have been made (in each case to the extent applicable), or if such
licenses, consents and acknowledgments have not been obtained or such filings
have not been made, then such licenses, consents and acknowledgments will be
obtained and such filings will be made at or before the time they are required,
from all Persons whose licenses, consents and acknowledgments or with whom
filings may be required, including all requisite Governmental Authorities, with
respect to the terms and to the execution, delivery and performance of the
Liquidation Sales Agreements, and the performance of this Agreement and the
other Loan Documents with respect thereto.

 

 - 49 - 

 

 

the Applicable Lender shall have received evidence satisfactory to it that (i)
all Liens other than Permitted Encumbrances acceptable to the Applicable Lender
with respect to the applicable Liquidation Sale, if any, and other than those of
the Applicable Lender, upon any of the Collateral with respect to such
Liquidation Sale, have been terminated, released, or assigned to a Borrower or
the Applicable Lender, and (ii) in the event there are no Liens on the Retail
Inventory and Other Assets, Borrowers shall have been granted a security
interest in such Retail Inventory and Other Assets to secure the obligations of
the Merchant under the Liquidation Sales Agreements. In either case, all such
Liens held by any Borrower shall have been assigned to the Applicable Lender.

 

the Applicable Lender shall have received evidence satisfactory to it that the
“Merchandise,” as defined in the applicable Liquidation Sales Agreement, is free
of all Liens, other than those of a Borrower or the Applicable Lender or
Permitted Encumbrances acceptable to the Applicable Lender.

 

No action, proceeding, investigation, regulation or legislation shall have been
instituted, threatened or proposed before any Governmental Authority to enjoin,
restrain or prohibit, or to obtain damages in respect of, or which is related to
or arises out of, the Liquidation Sales Agreements or the consummation of the
transactions contemplated thereby and which, in the Applicable Lender’s sole
judgment, would make it inadvisable to consummate the transactions contemplated
thereby or by this Agreement or any of the other Loan Documents.

 

Borrowers shall have deposited the Borrower Equity Amount with respect to such
Liquidation Sale in the Disbursement Account and the Applicable Lender shall
have received evidence satisfactory to it that any required Expense L/C or other
letter of credit required under the applicable Liquidation Sales Agreement in
respect to unpaid installments of the Guaranteed Amount or Purchase Price have
been issued and remains outstanding or arranged to be issued. If the Applicable
Lender is incurring Letter of Credit Obligations with respect to the Guaranteed
Amount or Purchase Price with respect to such Liquidation Sale, the Applicable
Lender shall have received from Borrowers cash collateral or a letter of credit
in form, substance and issued by an issuer satisfactory to the Applicable
Lender, in either case in an amount equal to the Borrower Equity Amount with
respect to such Liquidation Sale.

 

the Applicable Lender shall be satisfied that it shall have received a duly
enforceable and perfected first priority Lien on all property and assets, and
the products and proceeds thereof, of each Borrower, that the Applicable Lender
need not qualify to do business in any jurisdiction in order to exercise any of
its rights and remedies against any Borrower in any such jurisdiction or be
required to obtain any other license, consent, or other approval or incur any
Tax, liability, or expense. Each Lender shall further be satisfied with the
Laws, practice, and procedures of the Governmental Authorities in such
jurisdiction and there shall have not occurred, or be reasonably likely to
occur, any material adverse event or circumstance effecting the political
environment or capital markets in such jurisdiction.

 

With respect to any Liquidation Borrowing financing any portion of a Liquidation
Sale in any jurisdiction other than the United States or Canada, all documents,
certificates, legal opinions, filings, and other instruments required by the
Applicable Lender to be executed and delivered shall have been executed and
delivered, in form and substance satisfactory to the Applicable Lender, and, if
required by the Applicable Lender, a wholly-owned Subsidiary of Great American,
in form and substance satisfactory to the Applicable Lender, shall have been
formed to conduct such Liquidation Sale and shall have become a Borrower
hereunder pursuant to a Borrower Joinder.

 

Further Conditions to Each Liquidation Borrowing. The Applicable Lender shall
not be obligated to fund any Revolving Credit Advance (including any Inventory
Advance or Other Assets Advance) or incur any Letter of Credit Obligations if,
as of the date thereof:

 

any representation or warranty by any Credit Party contained herein or in any of
the other Loan Documents shall be untrue or incorrect in any material respect as
of such date, except to the extent that such representation or warranty
expressly relates to an earlier date and except for changes therein expressly
permitted or expressly contemplated by this Agreement; or

 

 - 50 - 

 

 

any event or circumstance having a Material Adverse Effect shall have occurred
since the date hereof and be continuing; or

 

any Default or Event of Default shall have occurred and be continuing or would
result after giving effect to any Revolving Credit Advance or the incurrence of
any Letter of Credit Obligations; provided that, if the Default or Event of
Default is a payment default, a Default or an Event of Default with respect to
Sections 4.20, 6.10 or 7.2 of this Agreement, a Default or an Event of Default
with respect to the occurrence of an event that has a Material Adverse Effect,
in any case, solely with respect to any particular Liquidation Borrowing, or any
other Default or Event of Default solely with respect to a particular
Liquidation Borrowing (other than a Default or an Event of Default that is the
result of any fraud, acts in bad faith or intentional breach by any Borrower),
the Applicable Lender shall not be obligated to fund any Revolving Credit
Advances or incur any Letter of Credit Obligations only with respect to such
Liquidation Borrowing; or

 

after giving effect to any Revolving Credit Advance or the issuance of any
Letter of Credit, the outstanding principal amount of the Revolving Loan would
exceed the Revolving Loan Ceiling.

 

The request and acceptance by any Borrower of the proceeds of any Revolving
Credit Advance or the incurrence by the Applicable Lender of any Letter of
Credit Obligations, in each case, shall be deemed to constitute, as of the date
of such request or acceptance, (i) a representation and warranty by Borrowers
that the conditions in this Section 3.3 have been satisfied and (ii) a
reaffirmation by Borrowers of the granting and continuance of Lender’sthe
Lenders’ Liens pursuant to the Collateral Documents.

 

REPRESENTATIONS AND WARRANTIES

 

To induce Lenderthe Lenders to make, in its sole discretion and with no
obligation to do so, the Revolving Credit Advances and incur Letter of Credit
Obligations, each Borrower makes the following representations and warranties to
Lenderthe Lenders, each and all of which shall survive the execution and
delivery of this Agreement.

 

Limited Liability Company Existence; Compliance with Law. Borrowers’ exact legal
name is that indicated on the Perfection Certificate and on the signature page
hereof or, as applicable, the signature page to a Borrower Joinder. Original
Borrower is a limited liability company duly organized, in good standing, and
validly existing under the laws of its jurisdiction of formation. The Canadian
Borrower is an unlimited company, duly organized, in good standing, and validly
existing under the laws of its jurisdiction of formation. Each other Borrower
which becomes party hereto pursuant to a Borrower Joinder has the corporate,
company, or partnership form identified in the Borrower Joinder applicable to it
and is duly organized, in good standing, and validly existing under the laws of
its jurisdiction of formation. Each Borrower (a) is duly qualified to conduct
business in each other jurisdiction where its ownership or lease of property or
the conduct of its business requires such qualification; (b) has the requisite
power and authority and the legal right to own, pledge, mortgage or otherwise
encumber and operate its properties, to lease the property it operates under
lease and to conduct its business as now, heretofore and proposed to be
conducted; (c) has all licenses, permits, consents or approvals from or by, and
has made all filings with, and has given all notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct; (d) is in compliance with its Organizational Documents;
and (e) is in compliance with all applicable provisions of Law, except where the
failure to comply, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

 

 - 51 - 

 

 

Executive Offices; FEIN; Organizational Number. The current location of Original
Borrower’s chief executive office and principal place of business is 21860
Burbank Blvd., Suite 300 South, Woodland Hills, CA 91367 and Original Borrower
has not had any other chief executive office or principal place of business.
Original Borrower’s federal employer identification number is 26-3540693 and its
organizational number given to it by its jurisdiction of formation is
200828810099. The location of Canadian Borrower’s chief executive office and
principal place of business as of the Sixth Amendment Effective Date is 21860
Burbank Blvd., Suite 300 South, Woodland Hills, CA 91367, and Canadian Borrower
has not had any other chief executive office or principal place of business.
Canadian Borrower’s organizational number given to it by its jurisdiction of
formation is BC1026199. All information set forth on the Perfection Certificate
pertaining to each Borrower is accurate and complete as of the date hereof; and
there has been no change in any of such information from the date on which the
Perfection Certificate was signed by such Borrower to the Restatement Date.

 

Company Power, Authorization, Enforceable Obligations. The execution, delivery
and performance by each Borrower of the Loan Documents to which it is a party
and the creation of all Liens provided for therein: (a) are within such
Borrower’s corporate (or equivalent company) authority; (b) have been duly
authorized by all necessary or proper company or corporate action; (c) do not
contravene any provision of such Borrower’s Organizational Documents; (d) do not
violate any Law; (e) do not conflict with or result in the breach or termination
of, constitute a default under or accelerate or permit the acceleration of any
performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which such Borrower is a party or by which such
Borrower or any of its property is bound; (f) do not result in the creation or
imposition of any Lien upon any of the property of such Borrower other than
those in favor of Lenderthe Lenders pursuant to the Loan Documents; and (g) do
not require the consent or approval of any Governmental Authority or any other
Person, except those, if any, that have been received and except for recordings
and filings by Lenderthe Lenders in connection with the Liens granted to
Lenderthe Lenders under any of the Loan Documents, all of which will have been
duly obtained, made or complied with prior to the Restatement Date. Each Loan
Document to which a Borrower is a party constitutes a legal, valid and binding
obligation of such Borrower enforceable against it in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally or by
equitable principles relating to its enforceability, and, without prejudice to
the generality of the foregoing, each Collateral Document to which a Borrower is
a party creates the security interests which it purports to create, those
security interests are valid and effective and the security created thereby has
or will have first ranking priority and shall not be subject to any prior
ranking or pari passu ranking security interest. Further, the choice of
governing law of the Loan Documents will be recognized and enforced in each
Borrower’s Relevant Jurisdiction and a judgment obtained in relation to a Loan
Document in the jurisdiction of the governing law of that Loan Document will be
recognized and enforced in each Borrower’s Relevant Jurisdiction.

 

Material Adverse Effect. All financial statements relating to Borrowers, GAG
Inc., and Great American that have been delivered by or on behalf of Borrowers
pursuant to Article 5 hereof have been prepared in accordance with GAAP (except,
in the case of unaudited financial statements, for the lack of footnotes and
being subject to normal year-end audit adjustments) and present fairly in all
material respects Borrowers’, GAG Inc.’s, or Great American’s (as applicable)
financial condition as of the date thereof and results of operations for the
period then ended. No event has occurred, which alone or together with other
events, could reasonably be expected to have a Material Adverse Effect.

 

Agreements Entered Into by Borrowers. (a) No Borrower has entered into any
contract, instrument, or other agreement other than this Agreement, the other
Loan Documents, any Liquidation Sales Agreements, any Liquidator Joint Venture
Agreements, and any other agreement entered into in the ordinary course of
business and necessary to the performance of the foregoing agreements; and (b)
no Borrower is in default and, except as previously disclosed to Lenderthe
Lenders in writing, to Borrower’s knowledge no third party is in default under
any of such agreements.

 

 - 52 - 

 

 

Ownership of Property; Liens. No Borrower owns any property other than (i) the
rights under the agreements described in Section 4.5(a) and (ii) the Retail
Inventory and/or Other Assets purchased pursuant to a Purchase Agreement or an
Agency Agreement under clauses thereof that may permit a Borrower to retain any
unsold Retail Inventory or other property of a Merchant at the conclusion of any
Liquidation Sale, if any. Each applicable Borrower has good and marketable title
to such property, and none of such property is subject to any Liens other than
Permitted Encumbrances. Each Borrower has disclosed in writing to Lenderthe
Lenders any Retail Inventory, Other Assets, or other Collateral that is known by
such Borrower subject to a retention of title claim. In addition, there are no
facts, circumstances or conditions known to any Borrower that may result in any
Liens other than those in favor of Lenderthe Lenders pursuant to the Loan
Documents or Liens in relation to retention of title claims disclosed to
Lenderthe Lenders in writing. Lender’sthe Lenders’ Liens against the Collateral
are validly created, perfected, and first priority Liens, subject only to
Permitted Encumbrances.

 

Operations of Borrower. Each Borrower has no employees and operates its business
solely through services provided by Great American.

 

Ventures, Subsidiaries and Affiliates, and Indebtedness.

 

Other than Credit Parties which may become party hereto after the Restatement
Date pursuant to a Borrower Joinder, no Borrower has any Subsidiaries, is
engaged in any joint venture or partnership with any other Person (other than
pursuant to any Liquidator Joint Venture Agreement) and is not an Affiliate of
any other Person except Great American and their respective Affiliates listed on
Schedule 4.8, and those natural Persons who may be deemed Affiliates by being
managers of the Affiliates listed on Schedule 4.8 (such Persons are not required
to be listed on such Schedule).

 

Great American is a wholly-owned Subsidiary of GAG Inc. Great American is the
sole member of Original Borrower. Each Borrower is a wholly-owned Subsidiary of
Great American; provided, however, notwithstanding the foregoing, B. Riley shall
be permitted to own up to 1,000 non-voting preferred shares of the Capital Stock
of Retail.

 

No Borrower has any outstanding Indebtedness for borrowed money other than as
may be outstanding or permitted under this Agreement from time to time and has
no Liens on its assets other than as may be outstanding or permitted under this
Agreement. Great American Group CS, LLC, Great American and any of their
respective Affiliates, as applicable, has repaid and satisfied all Indebtedness
and other obligations owed by it to Credit Suisse, all loan and security
documents entered into between Great American CS LLC, Great American, and any of
their respective Affiliates with Credit Suisse have terminated and are of no
further force or effect, and all Liens granted by any of the foregoing in favor
of Credit Suisse have been terminated and released.

 

Requirements of Law. No Borrower is an “investment company” or an “affiliated
person” of, or “promoter” or “principal underwriter” for, an “investment
company,” as such terms are defined in the Investment Company Act of 1940 as
amended. No Borrower is subject to regulation under the Federal Power Act, or
any other federal, state, national or local statute that restricts or limits its
ability to incur indebtedness or to perform its obligations hereunder. The
making of Revolving Credit Advances by Lenderthe Lenders to Borrowers, the
incurrence of the Letter of Credit Obligations on behalf of Borrowers, the
application of the proceeds thereof and repayment thereof and the consummation
of the Liquidation Sales will not violate any provision of any such statute or
any rule, regulation or order issued by the Securities and Exchange Commission
or any other Governmental Authority in any jurisdiction to which a Borrower may
be subject. Each Borrower is in compliance with, and shall hereafter comply with
and use its assets in compliance with, all requirements of applicable Law except
where the failure of such compliance will not be reasonably likely to result in
a Material Adverse Effect. No Borrower has received any notice of any violation
of any requirement of Law (other than of a violation which could not be
reasonably likely to result in a Material Adverse Effect).

 

Margin Regulations. No Borrower is engaged, nor will any Borrower engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of “purchasing” or “carrying” any “margin security” as
such terms are defined in Regulation U of the Federal Reserve Board as now and
from time to time hereafter in effect (such securities being referred to herein
as “Margin Stock”). No Borrower owns any Margin Stock, and none of the proceeds
of the Revolving Credit Advances, the Letters of Credit, or other extensions of
credit under this Agreement will be used, directly or indirectly, for the
purpose of purchasing or carrying any Margin Stock, for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or carry
any Margin Stock or for any other purpose which might cause any of the Revolving
Credit Advances, Letters of Credit, or other extensions of credit under this
Agreement to be considered a “purpose credit” within the meaning of Regulation
T, U or X of the Federal Reserve Board. No Borrower will take or permit to be
taken any action which might cause any Loan Document to violate any regulation
of the Federal Reserve Board.

 

 - 53 - 

 

 

Taxes. All tax returns, reports and statements, including information returns,
required by any Governmental Authority to be filed by any Borrower have been
filed with the appropriate Governmental Authority and all Charges have been paid
prior to the date on which any fine, penalty, interest or late charge may be
added thereto for nonpayment thereof (or any such fine, penalty, interest, late
charge or loss has been paid). There are no assessments or threatened
assessments by the IRS or any other applicable Government Authority currently
outstanding. No Borrower has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection-of any Charges. No
Borrower or any of their predecessors is liable for any Charges: (a) under any
agreement (including any tax sharing agreements) or (b) to Borrowers’ knowledge,
as a transferee.

 

ERISA. and Canadian Plans.

 

No Borrower has any employee benefit plans as defined in Section 3(3) of ERISA.
No Borrower or any ERISA Affiliate has taken, or failed to take, any action that
has subjected or would subject any Borrower to any liability with respect to any
employee benefit plan.

 

No Borrower or any of its Subsidiaries maintains, contributes, sponsors,
administers or has liability with respect to any Canadian Pension Plan or
Canadian Benefit Plan.

 

No Litigation. No action, claim, lawsuit, demand, investigation or proceeding is
now pending or, to Borrowers’ knowledge, threatened against any Borrower, before
any Governmental Authority or before any arbitrator or panel of arbitrators
(collectively, “Litigation”) that challenges any Borrower’s right or power to
enter into or perform any of its obligations under the Loan Documents to which
it is a party, or the validity or enforceability of any Loan Document or any
action taken thereunder. There is no Litigation pending or, to Borrowers’
knowledge, threatened that seeks damages or injunctive relief or alleges
criminal misconduct of any Borrower.

 

Brokers. No broker or finder acting on behalf of any Borrower brought about the
obtaining, making or closing of the Revolving Loan, and no Borrower has any
obligation to any Person in respect of any finder’s or brokerage fees in
connection therewith.

 

Full Disclosure. No information contained in this Agreement, any of the other
Loan Documents, any financial statement, or any other reports from time to time
delivered hereunder or any written statement furnished by or on behalf of any
Borrower to Lenderthe Lenders pursuant to the terms of this Agreement contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made.

 

Environmental Matters.

 

(i) No Borrower is involved in operations nor does it know of any facts,
circumstances or conditions, including any Releases of Hazardous Materials, that
are likely to result in any Environmental Liabilities of any Borrower; (ii) no
notice has been received by any Borrower identifying it as a “potentially
responsible party” or requesting information under CERCLA or analogous state
statutes, and to Borrowers’ knowledge, there are no facts, circumstances or
conditions that may result in any Borrower being identified as a “potentially
responsible party” under CERCLA or analogous state statutes; and (iii) Borrowers
have provided to Lenderthe Lenders copies of all existing environmental reports,
reviews and audits and all written information, if any, pertaining to actual or
potential Environmental Liabilities.

 

Each Borrower hereby acknowledges and agrees that the Applicable Lender (i) is
not now, and has not ever been, in control of any of such Borrower’s affairs,
and (ii) does not, other than in connection with the Applicable Lender
exercising certain of its rights under certain of the Loan Documents after an
Event of Default, have the capacity through the provisions of the Loan Documents
or otherwise to influence such Borrower’s conduct with respect to the ownership,
operation or management of its compliance with Environmental Laws or
Environmental Permits.

 

 - 54 - 

 

 

Deposit and Disbursement Accounts. Schedule 4.17 lists all banks and other
financial institutions at which each Borrower maintains deposits and/or other
accounts as of the Restatement Date, including any DDAs and any Disbursement
Accounts, and such Schedule correctly identifies the name, address and telephone
number of each depository, the name in which the account is held, a description
of the purpose of the account, and the complete account number.

 

Government Contracts. None of the Liquidation Sales Agreements or Purchase
Agreements is or will be subject to the Federal Assignment of Claims Act, as
amended (31 U.S.C. Section 3727), the Financial Administration Act (Canada) or
any similar Law of any Governmental Authority.

 

Solvency; Fraudulent Transfer.

 

Both before and after giving effect to (i) the Revolving Credit Advances and
Letter of Credit Obligations to be made or extended on the Restatement Date or
such other date as Revolving Credit Advances or Letter of Credit Obligations
requested hereunder are made or extended, (ii) the disbursement of the proceeds
of such Revolving Credit Advances or Letters of Credit pursuant to the
instructions of any Borrower, (iii) any Liquidation Sale, and (iv) the payment
and accrual of all transaction costs in connection with the foregoing, each
Credit Party is Solvent.

 

No transfer of property is being made by any Credit Party and no obligation is
being incurred by any Credit Party in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of any Credit
Party.

 

No transfer of property is being made by any Credit Party without receiving a
reasonably equivalent value in exchange for such transfer and each Credit
Party’s remaining assets are not unreasonably small in relation to its business.

 

Liquidation Sales Agreements. Borrowers have delivered to Lenderthe Lenders
complete and correct copies of all existing Liquidation Sales Agreements and
Liquidator Joint Venture Agreements (including all schedules, exhibits,
amendments, supplements, modifications, assignments and all other documents
delivered pursuant thereto or in connection therewith). No Borrower nor, to
Borrowers’ knowledge, any other Person party thereto is in default in the
performance or compliance with any provisions thereof. All Liquidation Sales
Agreements and Liquidator Joint Venture Agreements comply with, and all
Liquidation Sales and purchases made pursuant thereto or pursuant to any
Purchase Agreement prior to such time have been consummated in accordance with,
all applicable Laws of all applicable Governmental Authorities. All requisite
approvals by Governmental Authorities having jurisdiction over Borrower (or any
Liquidator JV) and, to Borrowers’ knowledge, Merchants and other Persons
referenced therein, with respect to the transactions contemplated by such
Liquidation Sales Agreements or Liquidator Joint Venture Agreements have been
obtained, and no such approvals impose any conditions to the consummation of the
transactions contemplated by such Liquidation Sales Agreements or Liquidator
Joint Venture Agreements or to the conduct by any Borrower of its business
thereafter. To Borrowers’ knowledge, none of the Merchant’s representations or
warranties in such Liquidation Sales Agreements contain any untrue statement of
a material fact or omit any fact necessary to make the statements therein not
misleading. Each of the representations and warranties given by any Borrower in
such Liquidation Sales Agreements is true and correct in all material respects.
Notwithstanding anything contained in such Liquidation Sales Agreements to the
contrary, such representations and warranties of Borrower are incorporated into
this Agreement by this Section 4.20 and shall, solely for purposes of this
Agreement and the benefit of Lenderthe Lenders, survive the consummation of the
related Liquidation Sale, purchase by a Borrower, or other transactions
contemplated therein.

 

 - 55 - 

 

 

Patriot Act, Foreign Assets, Etc. No Borrower is (nor will it be) a Person with
whom the Applicable Lender is restricted from doing business under regulations
of the Office of Foreign Asset Control (“OFAC”) of the Department of Treasury of
the United States of America (including, those persons named on the OFAC’s
specially designated and Blocked Persons list)), the federal government of
Canada or under any similar statute, executive order (including the September
24, 2001 Executive Order Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten To Commit, or Support, or Terrorism) or other
governmental action; no Borrower is knowingly engaging in and (shall not
knowingly engage in) any dealings or transactions or otherwise associated with
such persons. In addition, each Borrower hereby agrees to provide the Applicable
Lender with any additional information that the Applicable Lender deems
reasonable and necessary from time to time in connection with the transactions
contemplated by this Agreement in order to assure compliance with all applicable
Laws concerning money laundering and similar activities. None of the requesting
or borrowing of any Revolving Credit Advances, the requesting or issuance,
extension or renewal of any Letters of Credit or the use of the proceeds of any
thereof will violate the Trading With the Enemy Act (50 U.S.C. §1 et seq., as
amended) (the “Trading With the Enemy Act”) or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) (the “Foreign Assets Control Regulations”) or any
enabling legislation or executive order relating thereto (which for the
avoidance of doubt shall include, but shall not be limited to (a) Executive
Order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg.
49079 (2001)) (the “Executive Order”) and (b) the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (Public Law 107-56)). Furthermore, none of Borrowers nor
any of their Subsidiaries or other Affiliates (a) is or will become a “blocked
person” as described in the Executive Order, the Trading With the Enemy Act or
the Foreign Assets Control Regulations or (b) engages or will engage in any
dealings or transactions, or be otherwise associated, with any such “blocked
person”. None of the transactions contemplated by the Loan Documents violates
the Canadian Economic Sanctions and Export Control Laws. Furthermore, no Credit
Party nor any Subsidiary thereof is a Canadian Blocked Person and, to the actual
knowledge of each Credit Party, no Credit Party or Subsidiary thereof engages in
any dealings or transactions, or is otherwise associated, with a Canadian
Blocked Person.

 

No Events of Default. As of any date of determination, both before and after
giving effect to the making of any Revolving Credit Advances or the issuance of
any Letters of Credit, there are no Events of Default.

 

Use of Proceeds. The proceeds of any Revolving Credit Advances or any Letter of
Credit are neither intended or anticipated to be used nor have been used in any
way which would cause a breach of Section 2.2 or otherwise result in an Event of
Default.

 

Investments. Other than Investments made by a Borrower in connection with any
Liquidation Sale, no Borrower has any Investments or made any agreements or
other legally binding commitments to invest in any Person.

 

Indebtedness. Other than the Obligations, the Indebtedness permitted in Section
7.4 and any obligations in respect to Liquidation Sale Agreements or Liquidator
Joint Venture Agreements, no Borrower has any Indebtedness.

 

GAG Purchase Agreement. All of GAG Inc.’s, Great American’s, and any of their
respective Affiliates’ obligations, including payment of all fees and other
amounts, under the GAG Purchase Agreement, and any other document or agreement
executed in connection therewith, have been satisfied in full as of the
Restatement Date. There is no default or breach by any Person party to the GAG
Purchase Agreement of any terms, conditions, or provisions of the GAG Purchase
Agreement. The GAG Purchase Agreement has not been amended, waived,
supplemented, terminated, or restated since July 28, 2009.

 

 - 56 - 

 

 

FINANCIAL STATEMENTS AND INFORMATION

 

Reports and Notices. Each Borrower covenants and agrees that, from and after the
Closing Date and until the Termination Date, it shall deliver to the Applicable
Lender (a) concurrently with the delivery of such information to the applicable
Merchant, copies of financial statements, notices, projections and other
financial information at the times and in the manner set forth in the
Liquidation Sales Agreements with such Merchant, (b) promptly after receipt by
such Borrower, copies of any notices, financial statements, or other reports
from any Merchant under or relating to the Liquidation Sales Agreements, (c)
copies of any notices delivered to such Borrower under any Liquidator Joint
Venture Agreement or any other agreement executed in connection therewith, and
(d) copies of any motion filed in connection with any bankruptcy case involving
a Merchant or, if relevant, order of any court hearing such case (including,
without limitation, the court order (if applicable) approving the retention of
such Borrower or a Liquidator JV as the liquidator and the terms of such
retention) concerning the Liquidation Sale and/or any transactions contemplated
under any Liquidation Sale Agreement.

 

Reports Relating to Liquidation Sales. In addition, each Borrower shall provide
to the Applicable Lender the information with respect to each Liquidation Sale
described on Schedule 5.2.

 

Financial Reports and SEC Filings.

 

As soon as available, but in any event within ninety (90) days after the end of
each Fiscal year, Borrowers shall deliver to Lenderthe Lenders, or cause GAG
Inc. to deliver to Lenderthe Lenders, (i) Consolidated and consolidating
financial statements of GAG Inc. and its Subsidiaries for each such Fiscal year,
audited by independent certified public accountants selected by GAG Inc. and
reasonably acceptable to Lenderthe Lenders and certified, without any
qualifications, by such accountants to have been prepared in accordance with
GAAP (such audited financial statements to include a balance sheet, income
statement, and statement of cash flow and, if prepared, such accountants’ letter
to management) together with a certificate of such accountants addressed to
Lenderthe Lenders stating that such accountants do not have knowledge of the
existence of any Default or Event of Default and (ii) the annual 10-K reports
(or any successor form) of GAG Inc. filed with the SEC or any other applicable
Governmental Authority.

 

As soon as practicable, but in any event not later than fifty (50) days after
the end of each of the first three Fiscal quarters of each Fiscal year of GAG
Inc., Borrowers shall deliver to Lenderthe Lenders, or cause GAG Inc. to deliver
to Lenderthe Lenders, (i) copies of the unaudited consolidated balance sheet of
GAG Inc. and its Subsidiaries as at the end of such quarter, and the related
consolidated statement of operations for such quarter and for the portion of GAG
Inc.’s Fiscal year then elapsed, and the related consolidated statement of cash
flow for such quarter and for the portion of GAG Inc.’s Fiscal year then
elapsed, all in reasonable detail and prepared in accordance with GAAP (subject
to year-end adjustments and except for the absence of notes), and (ii) the
quarterly 10-Q (or any successor form) reports of GAG Inc. filed with the SEC.

 

As soon as available, but in any event within 15 days after the end of each
month during each of GAG Inc.’s Fiscal years, Borrowers shall deliver to
Lenderthe Lenders, or cause GAG Inc. to deliver, each of the following (which
may be prepared by GAG Inc. internally):

 

a GAG Inc. prepared Consolidated and individual balance sheet, income statement,
and statement of cash flow covering GAG Inc.’s and its Subsidiaries’ operations
during such period and comparing the same period during the prior year on a
Consolidated, consolidating and individual basis a certificate signed by the
chief financial officer of GAG Inc. to the effect that:

 

the financial statements delivered hereunder have been prepared in accordance
with GAAP (except for the lack of footnotes and being subject to Fiscal year-end
audit adjustments) and fairly present in all material respects the financial
condition of GAG Inc. and its Subsidiaries,

 

the representations and warranties of each Borrower contained in this Agreement
and the other Loan Documents, of GA Asset Advisors in the GA Asset Advisors
Guaranty to the extent the GA Asset Advisors Guaranty is in effect, and of GAG
Inc. and Great American contained in the Great American Guaranty, are true and
correct in all material respects on and as of the date of such certificate, as
though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date), and

 

there does not exist any condition or event that constitutes a Default or Event
of Default (or, to the extent of any non-compliance, describing such
non-compliance as to which he or she may have knowledge and what action
Borrowers have taken, are taking, or propose to take with respect thereto).

 

 - 57 - 

 

 

Promptly after the same become publicly available, Borrowers shall deliver to
Lenderthe Lenders, or cause GAG Inc. to deliver to Lenderthe Lenders, copies of
all periodic and other reports, proxy statements and other materials filed by
GAG Inc. or any of its Subsidiaries with the SEC, or any Governmental Authority
succeeding to any or all of the functions of the SEC, or with any national
securities exchange, as the case may be.

 

Promptly after the sending or filing thereof, Borrowers shall deliver to
Lenderthe Lenders, or cause GAG Inc. to deliver to Lenderthe Lenders, copies of
all quarterly and annual reports and proxy solicitations that GAG Inc. sends to
its public security holders generally, and copies of all reports on form 8-K (or
its equivalent) and registration statements for the public offering (of
securities that GAG Inc. or any of its Subsidiaries files with the SEC or any
national securities exchange.).

 

Copies of reports and financial statements filed by GAG Inc. with the SEC and
required to be delivered to Lenderthe Lenders under this Section 5.3 by
Borrowers shall be deemed to have been delivered on the date on which GAG Inc.
causes such reports, or reports containing such financial statements, to be
posted on the Internet at www.sec.gov or at such other website identified by
Borrowers in a notice to Lenderthe Lenders and that is accessible by Lenderthe
Lenders without charge.

 

Upon Lender’sthe Lenders’ request, Borrowers shall deliver evidence in form and
substance satisfactory to Lenderthe Lenders of their compliance with Section
6.15 hereof.

 

AFFIRMATIVE COVENANTS

 

Each Borrower agrees that from and after the date hereof and until the
Termination Date, Borrowers shall comply with each of the following covenants:

 

Maintenance of Existence and Conduct of Business. Each Borrower shall: (a) do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence as in effect on the Restatement Date or the date
of any Borrower Joinder with respect to any Borrower not party hereto on the
Restatement Date, and its rights and franchises necessary to the proper conduct
of its business; (b) continue to conduct its business solely for the purpose of
conducting Liquidation Sales or consummating purchases under Liquidation Sales
Agreements; (c) at all times maintain, preserve and protect all of its assets
and properties used or useful in the conduct of its business, and keep the same
in good repair, working order and condition in all material respects (taking
into consideration ordinary wear and tear); and (d) transact business only in
its legal name. Each Borrower shall cause any Liquidator JV to comply with the
foregoing from the date of any Liquidation Joint Venture Agreement.

 

Payment of Obligations.

 

Subject to Section 6.2(b), Borrowers shall, or if applicable shall cause any
Liquidator JV to, pay and discharge or cause to be paid and discharged promptly
all Charges and lawful claims for labor, materials, supplies and services or
otherwise, before any thereof shall become past due.

 

Borrowers may in good faith contest, by appropriate proceedings, the validity or
amount of any Charges or claims described in Section 6.2(a); provided, that (a)
at the time of commencement of any such contest no Default or Event of Default
shall have occurred and be continuing, (b) adequate reserves with respect to
such contest are maintained on the books of Borrowers, in accordance with GAAP,
(c) such contest is maintained and prosecuted continuously and with diligence
and operates to suspend collection or enforcement of such Charges or claims or
any Lien in respect thereof, (d) none of the Collateral becomes subject to
forfeiture or loss as a result of such contest, (e) no Lien shall be imposed to
secure payment of such Charges, (f) Borrowers shall promptly pay or discharge
such contested Charges or claims and all additional charges, interest, penalties
and expenses, if any, and shall deliver to Lenderthe Lenders evidence acceptable
to Lenderthe Lenders of such compliance, payment or discharge, if such contest
is terminated or discontinued adversely to Borrowers or the conditions set forth
in this Section 6.2(b) are no longer met, and (g) Lender hasthe Lenders have not
advised Borrowers in writing that Lenderthe Lenders reasonably believesbelieve
that nonpayment or nondischarge thereof could have or result in a Material
Adverse Effect.

 

 - 58 - 

 

 

Books and Records. Borrowers shall keep adequate Books and Records with respect
to their business activities (which includes the business activities of any
Liquidator JV), including, without limitation, Books and Records relating to all
Expenses, in which proper entries, reflecting all financial transactions, are
made in accordance with GAAP. All Expenses shall be documented and available for
inspection by Lenderthe Lenders or itstheir representatives.

 

Insurance.

 

Borrowers shall, at their sole cost and expense, maintain or cause any
Liquidator JV or Merchant to maintain, as the case may be, policies of insurance
required to be maintained (or caused to be maintained) by a Borrower or a
Liquidator JV in any applicable Liquidation Sales Agreement, in form and with
insurers acceptable to Lenderthe Lenders. In the event any Borrower or any
Liquidator JV is to acquire or acquires ownership of any Retail Inventory, Other
Assets, or other Collateral then, prior to acquiring such ownership, Borrowers
shall notify Lenderthe Lenders and shall maintain policies of insurance with
respect thereto satisfactory to Lenderthe Lenders in its discretion prior to the
acquisition thereof by any Borrower. If requested by Lenderthe Lenders,
Borrowers shall cause Lenderthe Lenders to be named as an additional insured,
loss payee, or other similar term under such insurance policies. If Borrowers at
any time or times hereafter shall fail to obtain or maintain, or shall fail to
cause any Liquidator JV to obtain or maintain, any of the policies of insurance
required above or to pay all premiums relating thereto, Lenderthe Lenders may at
any time or times thereafter obtain and maintain such policies of insurance and
pay such premiums and take any other action with respect thereto which Lenderthe
Lenders deems advisable. No Lender shall have noan obligation to obtain
insurance for any Borrower or pay any premiums therefor. In the event a Lender
does obtain such insurance or pay any such premiums, the Applicable Lender shall
not be deemed to have waived any Default or Event of Default arising from any
Borrower’s failure to maintain such insurance or pay any premiums therefor. All
sums so disbursed, including attorneys’ fees, court costs and other charges
related thereto, shall be payable on demand by Borrowers to the Applicable
Lender and shall be additional Obligations hereunder secured by the Collateral
and subject to the Great American Guaranty and, to the extent in effect, GA
Asset Advisors Guaranty.

 

the Applicable Lender reserves the right at any time upon any change in
Borrowers’ risk profile to require additional forms and limits of insurance to,
in the Applicable Lender’s reasonable opinion, adequately protect both the
Applicable Lender’s interests in all or any portion of the Collateral and to
ensure that each Borrower is protected by insurance in amounts and with coverage
customary for its industry or the type of property acquired by Borrowers. If
requested by the Applicable Lender, Borrowers shall deliver to the Applicable
Lender from time to time a report of a reputable insurance broker, reasonably
satisfactory to the Applicable Lender, with respect to their insurance policies.

 

Borrowers shall deliver to Lenderthe Lenders, in form and substance reasonably
satisfactory to Lenderthe Lenders, endorsements to all policies of insurance
naming Lenderthe Lenders as loss payee or additional insured, as appropriate,
for those policies of insurance under which a Borrower or a Liquidator JV is
named as an insured. Borrowers shall promptly notify Lenderthe Lenders of any
loss, damage, or destruction to the Retail Inventory, the Other Assets, or any
other Collateral, whether or not covered by insurance. After deducting from such
proceeds the expenses, if any, incurred by Lenderthe Lenders in the collection
or handling thereof, Lenderthe Lenders shall apply such proceeds to the
reduction of the Obligations in accordance with Section 2.8.

 

Compliance with Laws. Each Borrower shall, and shall cause any Liquidator JV to,
comply with all federal, state, national, local, and foreign laws and
regulations applicable to it, except to the extent that the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

 

 - 59 - 

 

 

Supplemental Disclosure. From time to time as may be requested by Lenderthe
Lenders (which request will not be made more frequently than once each year
absent the occurrence and continuance of a Default or an Event of Default), and
upon any Borrower becoming party hereto pursuant to a Borrower Joinder,
Borrowers shall supplement each Schedule hereto, or any representation herein or
in any other Loan Document, with respect to any matter hereafter arising which,
if existing or occurring at the date of this Agreement, would have been required
to be set forth or described in such Schedule or as an exception to such
representation or which is necessary to correct any information in such Schedule
or representation which has been rendered inaccurate thereby (and, in the case
of any supplements to any Schedule, such Disclosure Schedule shall be
appropriately marked to show the changes made therein); provided that (a) no
such supplement to any such Disclosure Schedule or representation shall be or be
deemed a waiver of any Default or Event of Default resulting from the matters
disclosed therein, except as consented to by Lenderthe Lenders in writing; and
(b) no supplement shall be required as to representations and warranties that
relate solely to the Restatement Date.

 

Intellectual Property. Each Borrower will conduct, and will cause any Liquidator
JV to conduct, its business and affairs without infringement of or interference
with any intellectual property of any other Person. Borrowers shall obtain all
intellectual property rights necessary for the conduct of any Liquidation Sale
or to enable Borrowers to purchase and resell any Retail Inventory, Other
Assets, or other Collateral purchased by any Borrower pursuant to a Liquidation
Sales Agreement.

 

Environmental Matters. Each Borrower shall and shall cause each Person within
its control (including any Liquidator JV) to: (a) conduct its operations and
keep and maintain its property in compliance with all Environmental Laws and
Environmental Permits; (b) implement any and all investigation, remediation,
removal and response actions which are appropriate or necessary to comply with
Environmental Laws and Environmental Permits pertaining to the presence,
generation, treatment, storage, use, disposal, transportation or Release of any
Hazardous Material on, at, in, under, above, to, from or about any of its
property; (c) notify Lenderthe Lenders promptly after such Borrower becomes
aware of any violation of Environmental Laws or Environmental Permits or any
Release on, at, in, under, above, to, from or about any property; and (d)
promptly forward to Lenderthe Lenders a copy of any order, notice, request for
information or any communication or report received by such Borrower in
connection with any such violation or Release or any other matter relating to
any Environmental Laws or Environmental Permits, in each case whether or not the
Environmental Protection Agency or any Governmental Authority has taken or
threatened any action in connection with any such violation, Release or other
matter. No Borrower shall be deemed to have a Merchant “within its control”
solely because of the provisions of any Liquidation Sales Agreement.

 

Further Assurances. Borrowers agree that they shall and shall cause any
Liquidator JV and Merchant to, at Borrowers’ expense and upon request of
Lenderthe Lenders, duly execute and deliver, or cause to be duly executed and
delivered, to Lenderthe Lenders such further instruments and do and cause to be
done such further acts as may be necessary or proper in the reasonable opinion
of Lenderthe Lenders to carry out more effectually the provisions and purposes
of this Agreement or any other Loan Document. Without limiting the foregoing,
Borrowers shall take all actions necessary such that (a) any borrower or
guarantor under the UK Credit Agreement (including but not limited to GA Asset
Advisors) concurrently with its execution of the UK Credit Agreement, and any
other Foreign Credit Party concurrently with becoming a Foreign Credit Party,
shall execute and deliver to Lenderthe Lenders such Foreign Security Documents
together with a guaranty of the Obligations and any other agreements, legal
opinions, documents and instruments as are required by Lenderthe Lenders each in
form and substance satisfactory to Lenderthe Lenders and (b) the Liens granted
to Lenderthe Lenders pursuant to the Collateral Documents will at all times be
fully perfected first priority Liens in and to the Collateral described therein,
subject, as to priority, only to Permitted Encumbrances with respect to the
Collateral. Without limiting the foregoing, none of the Credit Parties shall,
and each of the Credit Parties shall cause their respective Subsidiaries not to,
execute the UK Credit Agreement or any agreements, documents and instruments
related thereto unless the Subordination Agreement is executed by all parties
thereto concurrently therewith.

 

 - 60 - 

 

 

Liquidation Related Agreements.

 

Each Borrower shall comply, and shall cause each Liquidator JV to comply, with
all material terms, provisions and conditions of the Liquidation Sales
Agreements and Liquidator Joint Venture Agreements, and Borrowers shall promptly
notify Lenderthe Lenders of any breach of or noncompliance with any material
terms, provisions, or conditions of any Liquidation Sales Agreement by the
applicable Merchant of which any Borrower has knowledge or of any Liquidator
Joint Venture Agreements by any Person party thereto of which any Borrower has
knowledge.

 

Contemporaneously with any Borrower’s execution and delivery of any Liquidation
Sales Agreement or Liquidator Joint Venture Agreement (or any amendment,
modification, waiver, supplement, or restatement of any of the foregoing),
Borrowers shall deliver to Lenderthe Lenders a complete copy of such Liquidation
Sales Agreement or Liquidator Joint Venture Agreement and a duly executed
Collateral Assignment with respect thereto.

 

Investment Proceeds, Etc. The proceeds of any Investment from any source in any
Borrower and any other funds received by any Borrower other than from ordinary
course business operations (including, without limitation, sales or other
dispositions of any Borrower’s assets other than in the ordinary course of such
Borrower’s business, the proceeds from the issuance of any debt or the
incurrence of any Indebtedness by any Borrower other than Indebtedness permitted
under Section 7.4 hereof, any proceeds from the issuance of membership interests
of any Borrower after the date hereof, tax refunds, damage awards, or insurance
or condemnation proceeds) shall be deposited directly into a Collection Account,
provided, however, that notwithstanding the foregoing, Borrowers may deposit the
Borrower Equity Amount needed for specific Liquidation Sales directly into a
Disbursement Account.

 

Immediate Notice to Lenderthe Lenders. Borrowers shall provide Lenderthe Lenders
with written notice promptly upon the occurrence of any of the following events,
which written notice shall state with reasonable particularity the facts and
circumstances of the event for which such notice is being given:

 

Any change in the Authorized Persons;

 

Any cessation by GAG Inc., Great American or any Borrower of making payments to
its creditors generally as the same become due;

 

Any failure by GAG Inc., Great American or any Borrower to pay rent at any
location, which failure continues for more than three (3) Business Days
following the last day on which such rent was due;

 

Any Material Adverse Effect;

 

The occurrence of any Default or Event of Default or any default or event of
default under the UK Credit Agreement (if it is then in effect) or any documents
related thereto;

 

Any intention on the part of any Borrower, GAG Inc. or Great American to
discharge any Borrower’s, GAG Inc.’s or Great American’s present independent
accountants or any withdrawal or resignation by such independent accountants
from their acting in such capacity;

 

Any litigation which, if determined adversely to any of the Credit Parties,
could reasonably be expected to result in a Material Adverse Effect;

 

Any material default or dispute under any Liquidation Sales Agreement or any
Liquidator Joint Venture Agreement;

 

Any acquisition or formation of any Subsidiary of Borrower or any Liquidation
Joint Venture involving Borrower;

 

The filing or commencement of any action, suit or proceeding by or before any
arbitrator or Governmental Authority against or affecting GAG Inc., any
Borrower, or any other Subsidiary of GAG Inc. or any of their assets that could
reasonably be expected to result in a Material Adverse Effect; and

 

The filing of any motion to convert a chapter 11 proceeding of a Merchant under
the Bankruptcy Code to a proceeding under chapter 7 thereof, application for
relief from an automatic stay by any creditor of a Merchant in any case
involving such Merchant under the Bankruptcy Code, or any other request for
relief under the Bankruptcy Code or any other Debtor Relief Law which, if
granted by the applicable court or other Governmental Authority, could suspend,
terminate, interrupt, or otherwise impede any Liquidation Sale.

 

 - 61 - 

 

 

Solvency. The Credit Parties at all times shall be and remain in compliance with
Section 4.19 hereof.

 

Tax Matters.

 

Each Borrower shall duly and timely file, or cause to be duly and timely filed,
all Tax Returns required to be filed by it in respect of Taxes, and duly and
timely pay, or cause to be duly and timely paid, all Taxes due and payable by it
as required by applicable Law, including all Taxes assessed, reassessed or for
which a demand for payment is made by any Governmental Authority, except when
and so long as the validity of any such Taxes is being contested in good faith
by it or any other Person on its behalf through appropriate proceedings and
adequate provisions for such Taxes have been made in its financial statements in
accordance with GAAP.

 

Subject to Section 2.13, each Borrower shall duly and timely withhold, or cause
to be duly and timely withheld, all material Taxes required to be withheld by it
in accordance with applicable Law from any amount paid, or credited, or deemed
to be paid or credited by it to or for the account of any Person (including any
employees, officers or any non-resident Person), and shall duly and timely
remit, or cause to be duly and timely remitted, to the appropriate Governmental
Authority such Taxes required by applicable Law to be remitted by it.

 

Each Borrower shall not fail to pay any Taxes or other amounts which would
result in a Lien (other than a Permitted Encumbrance) on any Collateral.

 

Each Borrower shall, upon written request, furnish to Lenderthe Lenders evidence
satisfactory to Lenderthe Lenders that such Borrower has paid such Taxes in each
jurisdiction in which Borrower is required to pay such Taxes.

 

Borrower’s Activities.

 

No Borrower shall engage in any activity except for:

 

conducting Liquidation Sales that are at least partially funded with Liquidation
Borrowings from the Applicable Lender and other activities reasonably incidental
thereto; or

 

becoming a member of a Liquidator JV for the purpose of conducting Liquidation
Sales that are at least partially funded with Liquidation Borrowings from the
Applicable Lender and other activities reasonably incidental thereto.

 

No Borrower shall, nor shall GAG Inc. or Great American cause or permit any
Borrower to, enter into any Liquidation Sales Agreement or Liquidator Joint
Venture Agreements, unless such Borrower’s obligations thereunder are at least
partially financed by Liquidation Borrowings from the Applicable Lender (and no
other Indebtedness of a Borrower).

 

Until the Revolving Credit Termination Date, the Credit Parties agree that no
Credit Party nor any of their Affiliates shall conduct any going out of
business, liquidation or store closing sales with respect to any Retail
Inventory or Other Assets of a Merchant which if conducted by a Borrower (or any
Liquidator JV of which a Borrower is a joint venturer) would be a Liquidation
Sale or enter into any agreement with any Person that, if entered into by a
Borrower, would be a Liquidation Sales Agreement or Liquidator Joint Venture
Agreement, unless:

 

the “Guaranteed Amount” or “Purchase Price” (as such terms are defined in the
applicable agency or purchase agreement) is less than $7,500,000 and not funded
from the proceeds of any Indebtedness incurred by any Credit Party except,
directly or indirectly (as in the form of an advance from GAG Inc. or Great
American to any of its Subsidiaries other than a Borrower), from the proceeds of
the Parent Working Capital Facility; or

 

GAG Inc., Great American or any of their respective Subsidiaries (other than a
Borrower), funds its obligations with respect to the “Guaranteed Amount” or
“Purchase Price” (as such terms are defined in the applicable agency or purchase
agreement) out of GAG Inc.’s, Great American’s or such Subsidiary’s cash
resources without the use of any Indebtedness (including any Indebtedness
derived from the Parent Working Capital Facility); or

 

 - 62 - 

 

 

a Borrower has presented the Applicable Lender with a Liquidation Loan Proposal
for such proposed Liquidation Sale, and the Applicable Lender has determined
that it will not provide Revolving Credit Advances, Letters of Credit, or has
offered alternate terms therefor which such Borrower has rejected, all in a
manner consistent with the requirements of Section 2.1(f).

 

Nothing contained in this Section 6.15 or elsewhere in this Agreement shall
prevent GAG Inc., Great American or any other Affiliate or Subsidiary thereof
(other than a Borrower) from engaging in any activities related to the
liquidation of any real property, personal property or other property of a
Person other than a Merchant or an Affiliate thereof that in the ordinary course
of its business sells Retail Inventory, including the conducting of a
liquidation sale of such real property, personal property or other property and
issuing any guarantees in connection therewith.

 

Applications under the CCAA and BIA. Each Borrower and each of its Subsidiaries
acknowledges that its business and financial relationships with the Lenders is
unique from its relationship with any other of its creditors. Each Borrower and
each of its Subsidiaries agrees that it shall not file any plan of arrangement
under the CCAA or proposal under the BIA which provides for, or would permit,
directly or indirectly, the Lenders to be classified with any other creditors of
such Borrower and each of its Subsidiaries for purposes of such CCAA plan of
arrangement, BIA proposal or otherwise.

 

NEGATIVE COVENANTS

 

Each Borrower agrees that, without the prior written consent of Lenderthe
Lenders, from and after the date hereof until the Termination Date, Borrowers
shall comply with each of the following covenants:

 

Mergers, Subsidiaries, Etc. No Borrower shall directly or indirectly, by
operation of law or otherwise, (a) form or acquire any Subsidiary, (b) merge
with, amalgamate with, consolidate with, acquire all or substantially all of the
assets or capital stock of, or otherwise combine with or acquire, any Person;
provided, that, the acquisition of any assets by a Borrower in connection with
any Liquidation Sale pursuant to the Liquidation Sales Agreements shall not be
violation of this covenant, or (c) liquidate, wind up, or dissolve itself (or
suffer any liquidation or dissolution).

 

Liquidation Related Agreements. No Borrower shall amend, modify, supplement,
waive, or assent to noncompliance with any material term, provision or condition
of any Liquidation Sales Agreements or any Liquidator Joint Venture Agreement
without Lender’sthe Lenders’ prior written consent.

 

Investments, Loans and Advances. No Borrower shall make or permit to exist any
Investment in, or make, accrue or permit to exist loans or advances of money to,
any Person, through the direct or indirect lending of money, holding of
securities or otherwise except that, so long as no Default or Event of Default
shall have occurred and be continuing, Borrowers may collectively make
Investments up to $2,000,000 in the aggregate, subject to Control Agreements in
favor of Lenderthe Lenders or otherwise subject to a perfected security interest
in favor of Lenderthe Lenders, in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America, the federal
government of Canada or any agency thereof maturing within one year from the
date of acquisition thereof, (ii) certificates of deposit, maturing no more than
one year from the date of creation thereof, issued by commercial banks
incorporated under the laws of the United States of America or Canada, each
having combined capital, surplus and undivided profits of not less than
$300,000,000 and having a senior secured rating of “A” or better by a nationally
recognized rating agency (an “A Rated Bank”), and (iii) time deposits, maturing
no more than 30 days from the date of creation thereof with A Rated Banks.
Notwithstanding the foregoing, so long as no Default or Event of Default shall
have occurred or be continuing, Retail shall be permitted to make: (i) a
one-time investment on or about the Third Amendment Effective Date in the form
of the Target L/C, and, (ii) a one-time investment on or about the Fifth
Amendment Effective Date in the form of the Jones L/C, in both cases, so long as
such Letter of Credit is fully cash collateralized in such amounts as may be
requested by the LenderLenders.

 

 - 63 - 

 

 

Indebtedness. No Borrower shall create, incur, assume or permit to exist any
Indebtedness or liabilities, other than (i) the Liquidation Borrowings and the
other Obligations, (ii) deferred Taxes (so long as no Default or Event of
Default would occur or occurs as a result thereof); (iii) obligations arising
under or in relation to Liquidation Sales Agreements or Liquidator Joint Venture
Agreements; and (iv) Indebtedness owed to Great American in an amount not to
exceed $1,000,000 in the aggregate and incurred solely in connection with
services provided by Great American or one of its Affiliates.

 

Affiliate Transactions. Except as otherwise permitted under Section 7.4(iv), no
Borrower shall enter into or be a party to any transaction with any Affiliate;
provided that, a Borrower, subject to and with funds received by Borrower in
accordance with Section 2.8, may (a) make payments to Great American so long as
such payments are not Restricted Payments (unless otherwise allowed hereunder)
and are limited to the reimbursement of actual out-of-pocket expenses consistent
with the Budget for any Liquidation Sale and (b) make payments to its other
Affiliates so long as such payments are limited to the payment or reimbursement
of such Affiliates’ actual, out of pocket costs and expenses (without any
mark-up or profit) related to providing goods or services which relate to a
Liquidation Sale. Notwithstanding anything to the contrary set forth in this
Agreement, in connection with any Liquidation Sale where Borrower is required to
post an Expense L/C, Borrower, at its discretion, shall have the right to
satisfy such requirement either through (a) a Letter of Credit Obligations
hereunder, or (b) Great American causing a letter of credit to be issued through
the Parent Capital Working Facility provided that Borrower shall not incur any
Indebtedness with respect to such letter of credit.

 

Capital Structure and Business. No Borrower shall (a) make any changes in any of
its business objectives or purposes, or any material change in its operations,
(b) make any change in its capital structure as described in Section 4.8 or (c)
form any Restricted Subsidiary that does not promptly execute a Borrower
Joinder.

 

Guaranteed Indebtedness. No Borrower shall create, incur, assume or permit to
exist any obligation to guaranty any Indebtedness or other obligation of any
other Person in any manner except by endorsement of instruments or items of
payment for deposit to the general account of Borrowers.

 

Liens. No Borrower shall create, incur, assume or permit to exist any Lien on or
with respect to the any of its properties or assets (whether now owned or
hereafter acquired) except (i) Liens in favor of (or assigned to) Lenderthe
Lenders pursuant to the Loan Documents, (ii) Liens for taxes not yet due (iii)
potential or actual retention of title claims known to a Borrower, disclosed in
writing to Lenderthe Lenders and reasonably acceptable to Lenderthe Lenders, in
relation to the assets of a Merchant which are the subject of Liquidation Sales
conducted outside of the US and Canada, (iv) materialmen’s, mechanic’s,
workmen’s, repairmen’s or other like Liens arising in the ordinary course of
business securing obligations that are not overdue and (v) to the extent the UK
Credit Agreement is in effect, Liens in favor of Burdale pursuant to the UK
Credit Agreement and related documents (which Liens shall be subordinate to the
Liens in favor of Lenderthe Lenders pursuant to the terms set forth in the
Subordination Agreement) (collectively, “Permitted Encumbrances”). In addition,
no Borrower shall become a party to any agreement, note, indenture or
instrument, or take any other action, that would prohibit the creation of a Lien
on any of its properties or other assets in favor of Lenderthe Lenders as
additional collateral for the Obligations.

 

Sale of Membership Interests and Assets. No Borrower shall sell, transfer,
convey, assign or otherwise dispose of any of its properties or other assets,
including any membership interest (whether in a public or a private offering or
otherwise), other than the sale of Retail Inventory or Other Assets in
Liquidation Sales pursuant to the Liquidation Sales Agreements. With respect to
any disposition of assets or other properties in connection with any Liquidation
Sale pursuant to the respective Liquidation Sales Agreements, Lender agreesthe
Lenders agree to release itstheir Lien on such assets or other properties in
order to permit Borrowers to effect such disposition and shall execute and
deliver to Borrowers, at Borrowers’ expense, appropriate UCC-3 termination
statements, PPSA termination statements and other releases as reasonably
requested by Borrowers.

 

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ERISA. No Borrower shall cause or permit any ERISA Affiliate to cause or permit
to occur an event which could result in the imposition of a Lien under Section
412 of the Internal Revenue Code or Section 302 or 4068 of ERISA.

 

Hazardous Materials. No Borrower shall cause nor, to the extent its permission
or acquiescence is sought or required, permit a Release of any Hazardous
Material on, at, in, under, above, to, from or about any of the real estate upon
which any Liquidation Sale is being held, where such Release would (a) violate
in any respect, or form the basis for any Environmental Liabilities under, any
Environmental Laws or Environmental Permits or (b) otherwise adversely impact
the value or marketability of any of the Collateral, Retail Inventory, or Other
Assets, other than such violations or impacts which could not reasonably be
expected to have a Material Adverse Effect.

 

Sale-Leasebacks. No Borrower shall engage in any sale-leaseback, synthetic lease
or similar transaction involving any assets.

 

Cancellation of Indebtedness. No Borrower shall cancel any claim or debt owing
to it, except for reasonable consideration negotiated on an arm’s-length basis
and in the ordinary course of its business.

 

Restricted Payments. No Borrower shall, directly or indirectly, (i) declare,
order, pay or make any Restricted Payment or (ii) set aside any sum or property
therefor, except: (A) Borrowers may make payments to Great American of Amounts
received by Borrowers in connection with a Liquidation Sale pursuant to Section
2.8(a)(xiv) and the last sentence of Section 2.8, and (B) so long as no Default
or Event of Default has occurred and is continuing, upon either the return of
the Target L/C undrawn or payment in full of all applicable Letter of Credit
Obligations related thereto, Retail shall be permitted to use any amounts
received by it from GA Retail Canada, ULC therefrom and any cash collateral
amounts released directly to Retail therefrom to make Restricted Payments in
such amounts as is necessary to redeem the preferred shares of Capital Stock of
Retail owned by B. Riley and to make dividends of any remaining amounts to Great
American and, in connection with the redemption, to B. Riley. .

 

Change of Company Name or Location; Change of Fiscal Year. No Borrower shall (a)
change its name, or (b) change its chief executive office, principal place of
business, other business offices, warehouses or other locations, or the location
of its records concerning the Collateral, in any case without at least thirty
(30) days prior written notice to Lenderthe Lenders and after completing or
taking any reasonable action requested by Lenderthe Lenders in connection
therewith, including to continue the perfection of any Liens in favor of
Lenderthe Lenders in any Collateral, and provided that any such new location
shall be in the continental United States or Canada. Without limiting the
foregoing, no Borrower shall change its name, identity or structure in any
manner which might make any financing statement, financing change statement or
continuation statement filed in connection herewith insufficient or inadequate
to comply with the requirements of Section 9-503 of the Code, the filing
requirements of the PPSA or any other then applicable provision of the Code
except upon prior written notice to Lenderthe Lenders and after completing or
taking any reasonable action requested by Lenderthe Lenders in connection
therewith, including to continue the perfection of any Liens in favor of
Lenderthe Lenders in any Collateral. No Borrower shall change, nor suffer or
permit Great American or GAG Inc. to change, its Fiscal year.

 

No Speculative Transactions. No Borrower shall engage in any transaction
involving commodity options, futures contracts or similar transactions.

 

Leases. No Borrower shall enter into any lease for real or personal property.

 

Change of Control. No Borrower shall cause, permit, or suffer, directly or
indirectly, any Change of Control with respect to any Borrower.

 

Accounting Methods. No Borrower shall modify or change its method of accounting
(other than as may be required to conform to GAAP) or enter into, modify, or
terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of any Borrower’s accounting records without said accounting firm or
service bureau agreeing to provide Lenderthe Lenders information regarding the
Collateral and each Borrower’s financial condition.

 

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Suspension. No Borrower shall suspend or go out of a substantial portion of any
of its business.

 

Benefit Plans. No Borrower nor any ERISA Affiliate shall maintain or contribute
to any Benefit Plan.

 

Preferred Stock. GAG Inc. agrees not to issue any Capital Stock to any Person
that would constitute “Preferred Stock” as defined and described in GAG Inc.’s
Certificate of Incorporation filed with the State of Delaware on May 7, 2009,
without providing Lenderthe Lenders with at least 30 days advance written notice
thereof, together with copies of all documents, certificates, and agreements to
be issued by GAG Inc. or any other Person in connection with such issuance.

 

Canadian Pension Plans. No Borrower shall contribute to or assume an obligation
to contribute to any Canadian Pension Plan that has a “defined benefit”
provisions as such term is defined in the Income Tax Act (Canada).

 

TERM

 

Termination. The financing arrangements contemplated hereby shall be in effect
until the Revolving Credit Termination Date, and any then outstanding
Obligations shall be automatically due and payable in full on such date.

 

Survival of Obligations Upon Termination of Financing Arrangements. Except as
otherwise expressly provided for in the Loan Documents, no termination or
cancellation (regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the obligations, duties
and liabilities of any Borrower or the rights of Lenderthe Lenders relating to
any unpaid portion of the Obligations, due or not due, liquidated, contingent or
unliquidated or any transaction or event occurring prior to such termination, or
any transaction or event, the performance of which is required after the
Revolving Credit Termination Date. Except as otherwise expressly provided herein
or in any other Loan Document, all undertakings, agreements, covenants,
warranties and representations of or binding upon any Borrower, and all rights
of Lenderthe Lenders, all as contained in the Loan Documents, shall not
terminate or expire, but rather shall survive any such termination or
cancellation and shall continue in full force and effect until the Termination
Date; provided, however that in all events the provisions of Section 11, the
payment of obligations under Sections 2.11 and 2.13, and the indemnities
contained in the Loan Documents shall survive the Termination Date.

 

EVENTS OF DEFAULT; RIGHTS AND REMEDIES

 

Events of Default. The occurrence of any one or more of the following events
(regardless of the reason therefor) shall constitute an “Event of Default”
hereunder:

 

Any Borrower (i) shall fail to make any payment of principal of any Revolving
Credit Advance or any of the other Obligations when due and payable, (ii) shall
fail to make any payment of interest or any Fee when due and payable and the
same remains unremedied for more than one (1) Business Day, or (iii) fails to
pay or reimburse the Applicable Lender for any expense reimbursable hereunder or
under any other Loan Document within ten (10) Business Days following such
Borrower’s receipt of the Applicable Lender’s written demand for such
reimbursement or payment of expenses.

 

Any Borrower shall fail or neglect to perform, keep or observe any of the
provisions of Sections 2.2, 2.6, 6.4 or 7.

 

Any Borrower shall fail or neglect to perform, keep or observe any of the
provisions of Section 5, and the same shall remain unremedied for more than five
(5) Business Days.

 

Any Borrower shall fail or neglect to perform, keep or observe any other
provision of this Agreement or of any of the other Loan Documents (other than
any provision embodied in or covered by any other clause of this Section 9) and
such failure continues after the earlier of (i) three (3) Business Days after
such Borrower shall receive written notice of any such failure from the
Applicable Lender or (ii) five (5) Business Days after such Borrower shall
become aware thereof.

 

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Any representation or warranty herein or in any Loan Document or in any written
statement, report, financial statement or certificate made or delivered to the
Applicable Lender by any Borrower shall be untrue or incorrect in any material
respect as of the date when made or deemed made.

 

Any assets of any Borrower shall be attached, seized, levied upon or subjected
to a writ or distress warrant, or come within the possession of any receiver,
trustee, custodian or assignee for the benefit of creditors of any Borrower.

 

An Insolvency Proceeding shall be commenced by GAG Inc., Great American or any
Borrower.

 

An Insolvency Proceeding shall be commenced against GAG Inc., Great American or
any Borrower and any of the following events occur: (i) such Person consents to
the institution of the Insolvency Proceeding against it, (ii) the petition
commencing the Insolvency Proceeding is not timely controverted, (iii) the
petition commencing the Insolvency Proceeding is not dismissed within forty-five
(45) days of the date of the filing thereof, (iv) an interim trustee or received
is appointed to take possession of all or any substantial portion of the
properties or assets of, or to operate all or any substantial portion of the
business of such Person, or (v) an order for relief shall have been entered
therein.

 

A notice of Lien, levy, or assessment shall be filed of record with respect to
the assets of GAG Inc. or Great American valued in the aggregate in excess of
$100,000 or any asset of a Borrower by the United States, Canada or any
department, agency, or instrumentality thereof, or by any state, province,
territory, county, municipal, or governmental agency, or any other Governmental
Authority and with respect to GAG Inc. and Great American the same is not
discharged within ten (10) Business Days of the date of such filing and with
respect to a Borrower the same is not discharged within two (2) Business Days of
the date of such filing, or if any taxes or debts owing at any time hereafter to
any one or more of such entities becomes a Lien, whether choate or otherwise,
upon such entities’ assets and the same is not paid on the payment date thereof.

 

A final judgment or judgments for the payment of money involving an aggregate
amount of (i) $100,000 or more shall be rendered against any Borrower or
(ii) $2,000,000 or more shall be rendered against GAG Inc. or Great American and
in each case the same shall not, within thirty (30) days after the entry
thereof, have been discharged or execution thereof stayed or bonded pending
appeal, or shall not have been discharged prior to the expiration of any such
stay.

 

Any material provision of any Loan Document shall for any reason cease to be
valid, binding and enforceable in accordance with its terms (or any Borrower,
GAG Inc., or Great American, as the case may be, shall challenge the
enforceability of any Loan Document or shall assert in writing, or engage in any
action or inaction based on any such assertion, that any provision of any of the
Loan Documents has ceased to be or otherwise is not valid, binding and
enforceable in accordance with its terms), or any security interest created
under any Loan Document shall cease to be a valid and perfected first priority
security interest or Lien (except as otherwise permitted herein or therein) in
any of the Collateral purported to be covered thereby, unless such security
interests cease to be a valid and perfected first priority security interest or
Lien in the Collateral solely by reason of any Lender’s act or failure to act.

 

GAG Inc., Great American or any Borrower shall be enjoined, restrained, or in
any way prevented by court order or otherwise from continuing to conduct all or
any material part of its business affairs.

 

There shall be a default in any other agreement material to the operations of
the business of any Borrower or Great American and such default (i) shall occur
at the final maturity of the obligations thereunder or (ii) shall result in a
right by the other party thereto, irrespective of whether exercised, to
accelerate the maturity of such Borrower’s or Great American’s obligations
thereunder, to terminate such agreement, or to refuse to renew such agreement
pursuant to an automatic renewal right therein.

 

Any material misstatement or misrepresentation shall exist in any warranty,
representation, statement, or Record made to Lenderthe Lenders by any Borrower,
Great American, or any officer, employee, agent, director (or comparable
manager) of any Borrower or Great American on behalf of any Borrower or Great
American.

 

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There shall occur an event of default or any other material breach under the
Great American Guaranty or, if the GA Asset Advisors Guaranty is in effect, the
GA Asset Advisors Guaranty (after taking into account any applicable notice and
cure provisions related thereto), provided that, with respect to the GA Asset
Advisors Guaranty (if it is then in effect), the Applicable Lender has given
Borrower written notice of such event of default or other material breach.

 

There shall occur a Change of Control.

 

There shall occur an indictment of, or institution of any legal process or
proceeding against, GAG Inc., Great American or any Borrower, or any member,
officer, director, or senior manager of GAG Inc., Great American or any
Borrower, where the relief, penalties or remedies sought or available include
the forfeiture of any property of GAG Inc., Great American or any Borrower
and/or the imposition of any stay or other order, the effect of which could be
to restrain in any material way the conduct by GAG Inc., Great American or any
Borrower of its business in the ordinary course or would otherwise result in a
Material Adverse Effect.

 

There shall occur an event of default or any other material breach by any Person
party to any Liquidator Joint Venture Agreement, Liquidation Sales Agreement,
Agency Agreement or Purchase Agreement (after taking into account any applicable
notice and cure provisions related thereto). Any Expense L/C required under any
Liquidation Sales Agreement shall not be issued when and as required by such
Liquidation Sales Agreement, or shall be cancelled, terminated, or shall be
permitted to expire except in accordance with the terms of any Liquidation Sales
Agreement.

 

If the UK Credit Agreement is in effect, there shall occur an event of default
or any other material breach under the UK Credit Agreement or any related
documents (after taking into account any applicable notice and cure provisions
related thereto), provided that the Applicable Lender has given Borrower written
notice of such event of default or other material breach.

 

There shall occur any other event that has a Material Adverse Effect.

 

Remedies. Upon the occurrence, and during the continuation, of an Event of
Default, Lenderthe Lenders may exercise any of the rights and remedies of a
secured party under the Code and any other rights and remedies provided for in
this Agreement or any other Loan Document or otherwise available to it at Law or
in equity, such rights and remedies to include, without limitation, the
following, all of which are authorized by each Borrower:

 

If any Default or Event of Default shall have occurred and be continuing,
Lenderthe Lenders may without notice suspend this facility with respect to
further Revolving Credit Advances and the incurrence of further Letter of Credit
Obligations whereupon any further Revolving Credit Advances and Letter of Credit
Obligations shall be made or extended in Lender’sthe Lenders’ sole discretion so
long as such Default or Event of Default is continuing.

 

If any Event of Default shall have occurred and be continuing, Lenderthe Lenders
may, without notice, (i) terminate this facility with respect to further
Revolving Credit Advances and the incurrence of further Letter of Credit
Obligations; (ii) except as otherwise expressly provided herein, increase the
rate of interest and Letter of Credit Fees applicable to the Obligations to the
Default Rate; (iii) declare all or any portion of the Obligations, including all
or any portion of any Liquidation Borrowing to be forthwith due and payable, and
require that the Letter of Credit Obligations be cash collateralized as provided
in Annex B, all without presentment, demand, protest or further notice of any
kind, all of which are expressly waived by Borrowers; and (iv) exercise any
rights and remedies provided to Lenderthe Lenders under the Loan Documents
and/or at Law or equity, including all remedies provided under the Code;
provided, that upon the occurrence of an Event of Default specified in Sections
9.1 (f), (g) or (h), all of the Obligations, including all portions of the
Revolving Loan, shall become immediately due and payable without declaration,
notice or demand by any Person.

 

If any Event of Default shall have occurred and be continuing and if Lender
determinesthe Lenders determine that any Borrower is unwilling or unable to
conduct any Liquidation Sale as required under a Liquidation Sales Agreement,
then Lenderthe Lenders may assume control of, and conduct and complete, or
appoint an agent to assume control of, conduct, and complete, such Liquidation
Sale pursuant to the terms of such Liquidation Sales Agreement.

 

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If any Event of Default shall have occurred and be continuing, Lenderthe Lenders
may, without notice to any Borrower (such notice being expressly waived), and
without constituting a retention of any collateral in satisfaction of an
obligation (within the meaning of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of any Borrower held by
Lenderthe Lenders or any Affiliate thereof (including any amounts received in
the Cash Management Accounts), or (ii) Indebtedness at any time owing to or for
the credit or the account of any Borrower held by Lenderthe Lenders or any
Affiliate thereof.

 

If any Event of Default shall have occurred and be continuing, Lenderthe Lenders
may: (i) hold, as cash collateral, any and all balances and deposits of any
Borrower held by Lenderthe Lenders, and any amounts received in the Cash
Management Accounts, to secure the full and final repayment of all of the
Obligations; (ii) instruct each Cash Management Bank and any other depositary
with whom a DDA subject to a Control Agreement is maintained, to pay any and all
balances and deposits in the applicable Cash Management Account or other DDA to
Lender’s Account.

 

Remedies Cumulative. The rights and remedies of Lenderthe Lenders under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative and may be exercised simultaneously. Each Lender shall have all other
rights and remedies not inconsistent herewith as provided under the Code, by
Law, or in equity. No exercise by Lenderthe Lenders of one right or remedy shall
be deemed an election, and no waiver by Lenderthe Lenders of any Event of
Default shall be deemed a continuing waiver. No delay by Lenderthe Lenders shall
constitute a waiver, election, or acquiescence by it.

 

Waivers by Borrower. Except as otherwise provided for in this Agreement or by
applicable Law, each Borrower waives: (a) presentment, demand and protest and
notice of presentment, dishonor, notice of intent to accelerate, notice of
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties at any
time held by Lenderthe Lenders on which such Borrower may in any way be liable,
and hereby ratifies and confirms whatever Lenderthe Lenders may do in this
regard, (b) all rights to notice and a hearing prior to any Lender’s taking
possession or control of, or to such Lender’s replevy, attachment or levy upon,
the Collateral or any bond or security which might be required by any court
prior to allowing the such Lender to exercise any of its remedies, and (c) the
benefit of all valuation, appraisal and exemption laws.

 

SUCCESSORS AND ASSIGNS

 

This Agreement and the other Loan Documents shall be binding on and shall inure
to the benefit of each Borrower, Lenderthe Lenders and their respective
successors and assigns (including a debtor-in-possession on behalf of any
Borrower), except as otherwise provided herein or therein.

 

No Borrower shall assign, transfer, hypothecate or otherwise convey its rights,
benefits, obligations or duties hereunder or under any of the other Loan
Documents without the prior express written consent of Lender. No Borrower shall
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents without
the prior express written consent of the Lenders. Any such purported assignment,
transfer, hypothecation or other conveyance by any Borrower without the prior
express written consent of Lenderthe Lenders shall be void.

 

Each Lender (“Assignor”) may assign and delegate to one or more assignees (each,
an “Assignee”) all, or any ratable part of all, of the Obligations and the other
rights and obligations of the Assignor hereunder and under the other Loan
Documents (except that any documents or agreements concerning Bank Products may
only be assigned in accordance with their terms); provided, however, that
Borrowers may continue to deal solely and directly with such Assignor in
connection with the interest so assigned to an Assignee until (a) written notice
of such assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, have been given to Borrowers and (b)
the Assignor and its Assignee have delivered to Borrowers an Assignment and
Acceptance substantially in the form of Exhibit 10.3 hereto..

 

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The terms and provisions of this Agreement are for the purpose of defining the
relative rights and obligations of Borrowers and Lenderthe Lenders with respect
to the transactions contemplated hereby and no Person shall be a third party
beneficiary of any of the terms and provisions of this Agreement or any of the
other Loan Documents..

 

MISCELLANEOUS

 

Complete Agreement; Modification of Agreement. This Agreement, together with the
other Loan Documents constitute the complete agreement between the parties with
respect to the subject matter thereof and shall not be contradicted or qualified
by any other agreement, oral or written, before the date hereof. This Agreement
may not be modified, altered or amended except as set forth in Section 11.2
below.

 

Amendments. No amendment, modification, or termination of any provision of this
Agreement or any other Loan Document, or any consent to any departure by any
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by Lenderthe Lenders and the Credit Party who is a party to
this Agreement or such Loan Document (as applicable).

 

Releases. Upon indefeasible payment in full in cash and performance of all of
the Obligations (other than indemnification Obligations under Section 2.11),
termination of the this Agreement and a release of all claims against Lenderthe
Lenders, and so long as no suits, actions proceedings, or claims are pending or
threatened against any Indemnified Person asserting any damages, losses or
liabilities that are Indemnified Liabilities, Lenderthe Lenders shall deliver to
Borrowers termination statements, mortgage releases and other documents
necessary or appropriate to evidence the termination of the Liens securing
payment of the Obligations.

 

Fees and Expenses.

 

Borrowers jointly and severally agree to pay from time to time on demand all
costs of collection, Lender Expenses and all reasonable costs, expenses, and
disbursements (including reasonable attorneys’ fees and expenses) which are
incurred by Lenderthe Lenders in connection with the preparation, negotiation,
execution, administration and delivery of this Agreement and of any other Loan
Documents, and all other reasonable costs, expenses, and disbursements which may
be incurred in connection with or in respect to the credit facility contemplated
hereby or which otherwise are incurred with respect to the Obligations.

 

Borrowers jointly and severally agree to pay from time to time on demand all
Lender Expenses (including reasonable attorneys’ fees and reasonable attorneys’
expenses) incurred by Lenderthe Lenders, following the occurrence of any Event
of Default.

 

Each Borrower authorizes Lenderthe Lenders to pay all such fees and expenses,
and in Lender’sthe Lenders’ discretion, to add such fees and expenses to the
Loan Account.

 

The undertaking on the part of Borrowers in this Section 11.4 shall survive
payment of the Obligations and/or any termination, release, or discharge
executed by Lenderthe Lenders in favor of any Borrower, other than a
termination, release, or discharge which makes specific reference to this
Section 11.4.

 

Tax and Expenses. If any Borrower fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, the Applicable Lender, in its
sole discretion and without prior notice to any Borrower, may do any or all of
the following: (a) make payment of the same or any part thereof, or (b) in the
case of the failure to comply with Section 6.4 hereof, obtain and maintain
insurance policies of the type described in Section 6.4 and take any action with
respect to such policies as the Applicable Lender deems prudent. Any such
amounts paid by the Applicable Lender shall constitute Lender Expenses and any
such payments shall not constitute an agreement by the Applicable Lender to make
similar payments in the future or a waiver by the Applicable Lender of any Event
of Default under this Agreement. Each Lender need not inquire as to, or contest
the validity of, any such expense, tax, or Lien and the receipt of the usual
official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing.

 

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No Waiver. The Applicable Lender’s failure, at any time or times, to require
strict performance by any Borrower of any provision of this Agreement and any of
the other Loan Documents shall not waive, affect or diminish any right of the
Applicable Lender thereafter to demand strict compliance and performance
therewith. Any suspension or waiver of an Event of Default shall not suspend,
waive or affect any other Event of Default whether the same is prior or
subsequent thereto and whether the same or of a different type. None of the
undertakings, agreements, warranties, covenants and representations of any
Borrower contained in this Agreement or any of the other Loan Documents and no
Default or Event of Default by any Borrower shall be deemed to have been
suspended or waived by the Applicable Lender, unless such waiver or suspension
is by an instrument in writing signed by an officer of or other authorized
employee of the Applicable Lender and directed to Borrowers specifying such
suspension or waiver.

 

Remedies. Each Lender’s and the Credit Parties’ respective rights and remedies
under this Agreement shall be cumulative and nonexclusive of any other rights
and remedies which the Applicable Lender or any Credit Party may have under any
other agreement, including the other Loan Documents, by operation of Law or
otherwise. Recourse to the Collateral shall not be required.

 

Severability. Wherever possible, each provision of this Agreement and the other
Loan Documents shall be interpreted in such a manner as to be effective and
valid under applicable Law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable Law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

 

Conflict of Terms. Except as otherwise provided in this Agreement or any of the
other Loan Documents by specific reference to the applicable provisions of this
Agreement, if any provision contained in this Agreement is in conflict with, or
inconsistent with, any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.

 

Confidentiality. Each Lender agrees to use reasonable efforts (equivalent to the
efforts such Lender applies to maintain as confidential its own confidential
information) to maintain as confidential all information provided to it by
Borrowers and/or any other Credit Party and/or their Affiliates and designated
as confidential; provided, that each Lender may disclose such information (a) to
Persons employed or engaged by such Lender in evaluating, approving, structuring
or administering the Liquidation Borrowings and the credit facility evidenced by
the Loan Documents; (b) to any bona fide participant or potential participant
that has agreed to comply with the covenant contained in this Section 11.10 (and
any such bona fide participant or potential participant may disclose such
information to Persons employed or engaged by them as described in clause (a)
above); (c) as required or requested by any Governmental Authority or reasonably
believed by such Lender to be compelled by any court decree, subpoena or legal
or administrative order or process; (d) as, in the opinion of such Lender’s
counsel, required by Law; (e) in connection with the exercise of any right or
remedy under the Loan Documents or in connection with any litigation to which
such Lender is a party, or (f) which ceases to be confidential through no fault
of such Lender. Each Lender may at any time destroy any documents containing
such confidential information.

 

CHOICE OF LAW AND VENUE.

 

THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY
PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN
DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF,
AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS
ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED
UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS.

 

 - 71 - 

 

 

THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN
THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF SUFFOLK, COMMONWEALTH OF
MASSACHUSETTS, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT LENDER’S OPTION, IN THE COURTS
OF ANY JURISDICTION WHERE LENDER ELECTS TO BRING SUCH ACTION OR WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWERS WAIVE, TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS
BROUGHT IN ACCORDANCE WITH THIS SECTION 11.11(b).

 

Notices. Unless otherwise provided in this Agreement, all notices or demands by
any Borrower or Lenderthe Lenders to the other relating to this Agreement or any
other Loan Document shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight courier, electronic mail
(at such email addresses as Borrowers or Lenderthe Lenders, as applicable, may
designate to each other in accordance herewith), or telefacsimile (with a
confirming receipt from the sending machine) to Borrowers or to Lenderthe
Lenders, as the case may be, at its address set forth below:

 

If to any

Credit Party:Great American Group WF, LLC

21860 Burbank, Boulevard

Suite 300 South

Woodland Hills, CA 91367

Attn: Phillip Ahn, Chief Financial Officer

Fax No.: (818) 746-9921

Email: pahn@greatamerican.com

 

With copies

in all cases to:Great American GroupB. Riley Financial, Inc.

Nine Parkway North

Suite 300

Deerfield, Illinois 60015

590 Madison Ave., 29th Floor

New York, NY 10022

Attn: Mark Naughton,Alan Forman, Executive Vice President & General Counsel

Fax No.: (847) 444-1401

Email: mnaughton@greatamericanaforman@brileyfin.com

 

And:

Greenberg & Bass LLP

16000 Ventura Boulevard

Suite 1000

Encino, CA 91436

Attn: David Adelman, Esquire

Fax No.: (818) 986-6534

Email: dadelman@greenbass.com

 

 - 72 - 

 

 

If to Lenderthe Lenders:Wells Fargo Bank, National Association
One Boston Place, 18th Floor
Boston, MA 02108
Attn: Joseph Burt
Fax No. (617) 523-4032

Email: Joseph.Burt@wellsfargo.com

 

With copies

in all cases to:Choate, Hall & Stewart LLP

Two International Place

Boston, MA 02110

Attn: Kevin J. Simard, Esquire

Fax No. (617) 248-4000

Email: ksimard@choate.com

 

Lenderthe Lenders and Borrowers may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this Section
11.12, other than notices by Lenderthe Lenders in connection with enforcement
rights against the Collateral under the provisions of the Code, shall be deemed
received on the earlier of the date of actual receipt or three (3) Business Days
after the deposit thereof in the mail. Borrowers acknowledge and agree that
notices sent by Lenderthe Lenders in connection with the exercise of enforcement
rights against Collateral under the provisions of the Code shall be deemed sent
when deposited in the mail or personally delivered, or, where permitted by Law,
transmitted by telefacsimile or any other method set forth above.

 

Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.

 

Counterparts; Telefacsimile Execution. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis, except as otherwise specifically provided therein or therefor.

 

WAIVER OF JURY TRIAL. BORROWERS AND LENDER EACH HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. BORROWERS AND LENDER REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

 

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Press Releases. Each Borrower agrees that neither it nor its Affiliates will in
the future issue any press releases or other public disclosure using the name of
Lenderthe Lenders or itstheir Affiliates or referring to this Agreement or the
other Loan Documents without at least two (2) Business Days’ prior notice to
Lenderthe Lenders and without the prior written consent of Lenderthe Lenders
unless (and only to the extent that) such Borrower or Affiliate is required to
do so under applicable Law and then, in any event, such Borrower or Affiliate
will consult with Lenderthe Lenders before issuing such press release or other
public disclosure. Each Borrower, on its own behalf and on behalf of its
Affiliates, consents to the publication by Lenderthe Lenders of advertising
material relating to the financing transactions contemplated by this Agreement
using any Borrower’s or Affiliate’s name, product photographs, logo or
trademark. LenderThe Lenders shall provide a draft reasonably in advance of any
advertising material to Borrowers for review and comment prior to the
publication thereof. Each Lender reserves the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements.

 

Reinstatement. This Agreement shall remain in full force and effect and continue
to be effective should any petition be filed by or against any Borrower for
liquidation or reorganization, should any Borrower become insolvent or make an
assignment for the benefit of any creditor or creditors or should a receiver or
trustee be appointed for all or any significant part of any Borrower’s assets,
and shall continue to be effective or to be reinstated, as the case may be, if
at any time payment and performance of the Obligations, or any part thereof, is,
pursuant to applicable Law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as a “voidable
preference,” “fraudulent conveyance,” or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.

 

Advice of Counsel. Each of the parties represents to each other party hereto
that it has discussed this Agreement and, specifically, the provisions of
Sections 11.11 and 11.15, with its counsel.

 

No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.

 

Effectiveness. This Agreement shall be binding and deemed effective when
executed by Borrowers and Lenderthe Lenders.

 

Intentionally Deleted.

 

Right of Set-Off. Any and all deposits or other sums at any time credited by or
due to a Borrower from the Applicable Lender or from any Affiliate of the
Applicable Lender, and any cash, securities, instruments or other property of a
Borrower in the possession of any of the foregoing, whether for safekeeping or
otherwise (regardless of the reason such Person had received the same) shall at
all times constitute security for any and all Obligations of Borrowers to the
Applicable Lender or such Affiliate and may be applied or set off against the
Obligations at any time, whether or not such are then due and whether or not
other collateral is then available to the Applicable Lender or such Affiliate.

 

Pledges To Federal Reserve Banks. Nothing included in this Agreement shall
prevent or limit the Applicable Lender, to the extent that the Applicable Lender
is subject to any of the twelve Federal Reserve Banks organized under §4 of the
Federal Reserve Act (12 U.S.C. §341) from pledging all or any portion of the
Applicable Lender’s interest and rights under this Agreement, provided, however,
neither such pledge nor the enforcement thereof shall release the Applicable
Lender from any of its obligations hereunder or under any of the Loan Documents.

 

 - 74 - 

 

 

USA Patriot Act Notice. Each Lender hereby notifies Borrowers that pursuant to
the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the “Act”), it is required to obtain, verify and
record information that identifies each Borrower, Great American, and their
respective Subsidiaries, which information includes the name and address of each
Borrower, Great American, and their respective Subsidiaries, and other
information that will allow such Lender to identify each Borrower, Great
American, and their respective Subsidiaries in accordance with the Act. Each
Borrower, Great American, and their respective Subsidiaries are in compliance,
in all materials respects, with the Patriot Act. No part of the proceeds of any
Liquidation Borrowing will be used by any Borrower, directly or indirectly, for
any payments to any governmental official or employee, political party, official
of a political party, candidate for political office, or anyone else acting in
official capacity, in order to obtain, retain or direct business or obtain any
improper advantage, in violation of the United States Foreign Corrupt Practices
Act of 1977, as amended.

 

Canadian Anti-Money Laundering Legislation. Each Borrower acknowledges that,
pursuant to the Canadian Anti-Money Laundering Legislation, the Lenders may be
required to obtain, verify and record information regarding the Borrowers and
their respective directors, authorized signing officers, direct or indirect
shareholders or other Persons in control of the Borrowers, and the transactions
contemplated hereby. Each Borrower shall promptly provide all such information,
including supporting documentation and other evidence, as may be reasonably
requested by the Lenders or any assignee thereof, in order to comply with any
applicable Canadian Anti-Money Laundering Legislation, whether now or hereafter
in existence.

 

No Joint Venture. Nothing contained herein shall be deemed or construed to
create a partnership or joint venture between any Borrower and Lenderthe
Lenders.

 

Judgment Currency. If, for the purposes of obtaining judgment in any court, it
is necessary to convert a sum due hereunder or any other Loan Document in one
currency into another currency, the rate of exchange used shall be that at which
in accordance with normal banking procedures the Applicable Lender could
purchase the first currency with such other currency on the Business Day
preceding that on which final judgment is given. The obligation of each Borrower
in respect of any such sum due from it to the Applicable Lender hereunder or
under the other Loan Documents shall, notwithstanding any judgment in a currency
(the "Judgment Currency") other than that in which such sum is denominated in
accordance with the applicable provisions of this Agreement (the "Agreement
Currency"), be discharged only to the extent that on the Business Day following
receipt by such the Applicable Lender of any sum adjudged to be so due in the
Judgment Currency, such the Applicable Lender may in accordance with normal
banking procedures purchase the Agreement Currency with the Judgment Currency.
If the amount of this Agreement Currency so purchased is less than the sum
originally due to the Applicable Lender from any Borrower in the Agreement
Currency, such Borrower agrees, as a separate obligation and notwithstanding any
such judgment, to indemnify such the Applicable Lender against such loss. If the
amount of the Agreement Currency so purchased is greater than the sum originally
due to such the Applicable Lender in such currency, such the Applicable Lender
may be, agrees to return the amount of any excess to such Borrower (or to any
other Person who may be entitled thereto under applicable Law).

 

Appointment for Perfection. The Canadian Lender hereby appoints the U.S. Lender
as its agent for the purpose of perfecting Liens, including, without limitation,
for assets which, in accordance with Article 9 of the UCC, the PPSA, the
Securities Transfer Act (Ontario) or any other applicable law can be perfected
only by possession or control. Should the Canadian Lender obtain possession or
control of any such Collateral, Canadian Lender shall notify the U.S. Lender
thereof, and, promptly upon the U.S. Lender’s request therefor shall deliver
such Collateral to the U.S. Lender or otherwise deal with such Collateral in
accordance with the U.S. Lender’s instructions.

 

Loss Sharing. If following the occurrence of an Event of Default and realization
upon the Collateral and the Guarantee Agreements, the U.S. Lender on the one
hand and the Canadian Lender on the other hand has suffered or incurred a loss
not recovered from available Collateral, each Lender shall make such payments to
the other of them so that the loss is shared by all the Lenders.

 

 - 75 - 

 

 

Amendment & Restatement. Upon satisfaction of the conditions precedent to the
effectiveness of this Agreement, (a) this Agreement shall amend and restate the
Existing Credit Agreement in its entirety (except to the extent that definitions
from the Existing Credit Agreement are incorporated herein by reference) and (b)
the rights and obligations of the parties under the Existing Credit Agreement
shall be subsumed within, and be governed by, this Agreement; provided, however,
that Borrowers, GAG Inc., and Great American each hereby agree that (y) the
Letters of Credit issued pursuant to the Existing Credit Agreement and
outstanding on the Restatement Date (and any outstanding Obligations with
respect thereto), shall be hereafter deemed to be Letters of Credit issued
hereunder, and (z) all Obligations under, and as defined in, the Existing Credit
Agreement shall remain outstanding, shall constitute continuing Obligations
secured by the Collateral, and this Agreement shall not be deemed to evidence or
result in a novation or repayment and reborrowing of such Obligations and other
liabilities.

 

Appointment of Hypothecary Representative. Without limiting the powers of the
U.S. Lender, for the purposes of holding any hypothec granted to the Attorney
(as defined below) pursuant to the laws of the Province of Québec to secure the
prompt payment and performance of any and all Obligations by any Credit Party,
each of the Lenders hereby irrevocably appoints and authorizes the U.S. Lender
and, to the extent necessary, ratifies the appointment and authorization of the
U.S. Lender, to act as the hypothecary representative of the creditors as
contemplated under Article 2692 of the Civil Code of Québec (in such capacity,
the “Attorney”), and to enter into, to take and to hold on their behalf, and for
their benefit, any hypothec, and to exercise such powers and duties that are
conferred upon the Attorney under any related deed of hypothec.  The Attorney
shall:  (a) have the sole and exclusive right and authority to exercise, except
as may be otherwise specifically restricted by the terms hereof, all rights and
remedies given to the Attorney pursuant to any such deed of hypothec and
applicable law, and (b) benefit from and be subject to all provisions hereof
with respect to the U.S. Lender mutatis mutandis, including, without limitation,
all such provisions with respect to the liability or responsibility to and
indemnification by the Lenders and Credit Parties.  Any person who becomes a
Lender shall be deemed to have consented to and confirmed the Attorney as the
person acting as hypothecary representative holding the aforesaid hypothecs as
aforesaid and to have ratified, as of the date it becomes a Lender, all actions
taken by the Attorney in such capacity.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first
written above.

 

  GREAT AMERICAN GROUP WF, LLC,   a California limited liability company        
By:     Its.           gA RETAIL, Inc., a California corporation1         By:  
    Name:     Title:             GA RETAIL CANADA, ULC, an unlimited liability
company formed under the laws of the Province of British Columbia 2        
By:     Name:     Title:             WELLS FARGO BANK, NATIONAL ASSOCIATION    
    By:     Name:             Duly Authorized Signatory

 

 

1 NTD: Added by joinder

2 NTD: Added by joinder

 

 

 

 

[ADDITIONAL SIGNATURES ON THE FOLLOWING PAGE]

 

 

 

 

ACKNOWLEDGMENT AND AGREEMENT

 

Each of the undersigned hereby acknowledges and agrees to the provisions of the
foregoing Credit Agreement applicable to it, including but not limited to the
first offer provisions set forth in Section 2.1(f)(i); the indemnity provisions
set forth in Section 2.11; the access provisions in Section 2.12, the currency
indemnity set forth in Section 2.19(a); the covenants contained in Sections 6.13
and 6.15; and the provisions of Section 7.22; and agrees to cause Borrowers to,
and take all action necessary to permit Borrowers to, comply with all reporting
requirements set forth in Article 5 of the foregoing Credit Agreement.

 

  GREAT AMERICAN GROUP, INC., a Delaware corporation3         By:     Name:    
Title:         GREAT AMERICAN GROUP, LLC, a California limited liability company
        By:     Name:     Title:  

 

 

3 NTD: Now referred to as, “B. RILEY FINANCIAL, INC., a Delaware corporation
(f/k/a Great American Group, Inc.)”

 

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