Exhibit 10.1
[EXECUTION COPY]
[CONFORMED SIGNATURES]

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TERM LOAN CREDIT AGREEMENT
Dated as of February 16, 2018
among
SEARS AUTHORIZED HOMETOWN STORES, LLC,
as the Lead Borrower
for
The Borrowers Named Herein

SEARS HOMETOWN AND OUTLET STORES, INC.,
as the Parent

GORDON BROTHERS FINANCE COMPANY
as Agent
and

The Lenders Party Hereto
GORDON BROTHERS FINANCE COMPANY
as Lead Arranger and Sole Bookrunner

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TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS
1

1.01
Defined Terms    1

1.02
Other Interpretive Provisions    49

1.03
Accounting Terms    50

1.04
Rounding    50

1.05
Times of Day    50

ARTICLE II. THE COMMITMENTS AND Borrowings
50

2.01
Term Loans    50

2.02
Borrowings of Term Loans    51

2.03
Reserved    52

2.04
Reserved    52

2.05
Prepayments    52

2.06
Termination of Commitments    53

2.07
Repayment of Obligations    53

2.08
Interest    53

2.09
Fees    54

2.10
Computation of Interest and Fees    54

2.11
Evidence of Debt    54

2.12
Payments Generally; Agent’s Clawback    55

2.13
Sharing of Payments by Lenders    56

2.14
Settlement Amongst Lenders    57

2.15
Increase in Commitments    57

2.16
Defaulting Lenders    59

ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY;
APPOINTMENT OF LEAD BORROWER
60

3.01
Taxes    60

3.02
Illegality    65

3.03
Inability to Determine Rates    65

3.04
Increased Costs; Reserves on LIBOR Rate Loans    65

3.05
Compensation for Losses    66

3.06
Mitigation Obligations; Replacement of Lenders    67

3.07
Survival    67

3.08
Designation of Lead Borrower as Borrowers’ Agent    67

ARTICLE IV. CONDITIONS PRECEDENT
68

4.01
Conditions of Initial Term Loans    68

4.02
Conditions to all Borrowings    71

ARTICLE V. REPRESENTATIONS AND WARRANTIES
72

(i)

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5.01
Existence, Qualification and Power    72

5.02
Authorization; No Contravention    72

5.03
Governmental Authorization; Other Consents    72

5.04
Binding Effect    73

5.05
Financial Statements; No Material Adverse Effect    73

5.06
Litigation    73

5.07
Reserved    74

5.08
Ownership of Property; Liens    74

5.09
Environmental Compliance    74

5.10
Insurance    75

5.11
Taxes    75

5.12
ERISA Compliance    75

5.13
Subsidiaries; Equity Interests    76

5.14
Margin Regulations; Investment Company Act    77

5.15
Disclosure    77

5.16
Compliance with Laws    77

5.17
Intellectual Property; Licenses, Etc    77

5.18
Labor Matters    77

5.19
Security Documents    78

5.20
Solvency    78

5.21
Deposit Accounts; Credit Card Arrangements    78

5.22
Brokers    79

5.23
Customer and Trade Relations    79

5.24
Material Contracts    79

5.25
Casualty    79

5.26
Separation Agreements    79

5.27
EEA Financial Institution    79

5.28
Sanctions Concerns and Anti-Corruption Laws    80

ARTICLE VI. AFFIRMATIVE COVENANTS
80

6.01
Financial Statements    80

6.02
Certificates; Other Information    81

6.03
Notices    84

6.04
Payment of Taxes    85

6.05
Preservation of Existence, Etc    85

6.06
Maintenance of Properties    85

6.07
Maintenance of Insurance    85

6.08
Compliance with Laws    87

6.09
Books and Records; Accountants    87

6.10
Inspection Rights    87

6.11
Additional Loan Parties    88

6.12
Cash Management    89

6.13
Information Regarding the Collateral    91

6.14
Physical Inventories    91

6.15
Term Loan Push-Down Reserve    91

(ii)

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6.16
Further Assurances    91

6.17
Compliance with Terms of Leaseholds    92

6.18
Material Contracts    92

ARTICLE VII. NEGATIVE COVENANTS
93

7.01
Liens    93

7.02
Investments    93

7.03
Indebtedness; Equity Issuances    93

7.04
Fundamental Changes    93

7.05
Dispositions    94

7.06
Restricted Payments    94

7.07
Prepayments of Indebtedness    94

7.08
Change in Nature of Business    94

7.09
Transactions with Affiliates    95

7.10
Burdensome Agreements    95

7.11
Use of Proceeds    96

7.12
Amendment of Organization Documents and Material Indebtedness    96

7.13
Fiscal Year    96

7.14
Minimum Availability    96

7.15
Sanctions    96

7.16
Anti-Corruption Laws    96

ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES
97

8.01
Events of Default    97

8.02
Remedies Upon Event of Default    99

8.03
Application of Funds    100

ARTICLE IX. THE AGENT
101

9.01
Appointment and Authority    101

9.02
Rights as a Lender    101

9.03
Exculpatory Provisions    101

9.04
Reliance by Agent    102

9.05
Delegation of Duties    103

9.06
Resignation of Agent    103

9.07
Non-Reliance on Agent and Other Lenders    104

9.08
No Other Duties, Etc    104

9.09
Agent May File Proofs of Claim    104

9.10
Collateral and Guaranty Matters    105

9.11
Notice of Transfer    105

9.12
Reports and Financial Statements    105

9.13
Agency for Perfection    106

9.14
Indemnification of Agent    107

9.15
Relation among Lenders    107

9.16
ABL Intercreditor Agreement    107

(iii)

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ARTICLE X. MISCELLANEOUS
107

10.01
Amendments, Etc    107

10.02
Notices; Effectiveness; Electronic Communications    110

10.03
No Waiver; Cumulative Remedies    112

10.04
Expenses; Indemnity; Damage Waiver    112

10.05
Payments Set Aside    114

10.06
Successors and Assigns    114

10.07
Treatment of Certain Information; Confidentiality    117

10.08
Right of Setoff    118

10.09
Interest Rate Limitation    119

10.10
Counterparts; Integration; Effectiveness    119

10.11
Survival    119

10.12
Severability    120

10.13
Replacement of Lenders    120

10.14
Governing Law; Jurisdiction; Etc    121

10.15
Waiver of Jury Trial    122

10.16
No Advisory or Fiduciary Responsibility    122

10.17
USA PATRIOT Act Notice    123

10.18
Foreign Asset Control Regulations    123

10.19
Time of the Essence    124

10.20
Press Releases    124

10.21
Releases    124

10.22
No Strict Construction    125

10.23
Attachments    125

10.24
Electronic Execution of Assignments and Certain Other Documents    125

10.25
Intercreditor Agreement    125

10.26
Reserved    126

10.27
Acknowledgment and Consent to Bail-In of EEA Financial Institutions    126

 

(iv)

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SCHEDULES
1.01        Borrowers
1.03        Immaterial Subsidiaries
2.01        Commitments and Applicable Percentages
5.18        Collective Bargaining Agreements
6.02        Financial and Collateral Reporting
6.12        Blocked Account Banks
10.02        Agent’s Office; Certain Addresses for Notices

EXHIBITS
Form of
A    Committed Loan Notice
B    Term Note
C    Compliance Certificate
D    Assignment and Assumption
E    Borrowing Base Certificate
F-1
U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships
For U.S. Federal Income Tax Purposes)

F-2
U.S. Tax Compliance Certificate (For Foreign Participants That Are Not
Partnerships For U.S. Federal Income Tax Purposes)

F-3
U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships
For U.S. Federal Income Tax Purposes)

F-4
U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For
U.S. Federal Income Tax Purposes)

G
Credit Card Notification

TERM LOAN CREDIT AGREEMENT
This TERM LOAN CREDIT AGREEMENT (“Agreement”) is entered into as of February 16,
2018 among
SEARS AUTHORIZED HOMETOWN STORES, LLC, a Delaware limited liability company (the
“Lead Borrower”);
the Persons named on Schedule 1.01 hereto (collectively with the Lead Borrower,
the “Borrowers”);
SEARS HOMETOWN AND OUTLET STORES, INC., a Delaware corporation (the “Parent”);
each Person from time to time party hereto as a lender (collectively, the
“Lenders” and individually, a “Lender”); and
GORDON BROTHERS FINANCE COMPANY, as administrative agent and collateral agent
(in such capacities, the “Agent”).
W I T N E S S E T H:
WHEREAS, the Borrowers have requested, and the Lenders and the Agent have agreed
to provide, a term loan credit facility in an aggregate principal amount of
$40,000,000, all in accordance with and subject to the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth in this Agreement, and for good and valuable consideration, the receipt of
which is hereby acknowledged, the undersigned hereby agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
1.01    Defined Terms. As used in this Agreement, the following terms shall have
the meanings set forth below:
“ABL Collateral” means all “Collateral” (as defined in the Guaranty and Security
Agreement) consisting of the following (in each case, as defined in the Guaranty
and Security Agreement to the extent not defined in this Agreement): (a) all
Accounts, including all Credit Card Receivables, (b) all Inventory, (c) all cash
and cash equivalents, (d) all Deposit Accounts, (e) all Securities Accounts, (f)
all General Intangibles (other than Intellectual Property), Letter-of-Credit
Rights, Documents, Instruments, Chattel Paper, and Commercial Tort Claims, in
each case relating to Accounts, Credit Card Receivables and Inventory, (g) all
books and records relating to the foregoing clauses (a) through (f); and (h) to
the extent not otherwise included in the foregoing, all Proceeds (including all
insurance claims and proceeds thereof), Supporting Obligations and products of
each of the foregoing, and all indemnities, warranties, collateral security and
guarantees payable to any Loan Party from time to time with respect to any of
the foregoing.
“ABL Intercreditor Agreement” means that certain Intercreditor Agreement, dated
as of the Effective Date, between the Agent and the Revolver Agent, and
acknowledged by the Loan Parties, as amended, amended and restated, supplemented
or otherwise modified from time to time.
“Accelerated Borrowing Base Delivery Event” means either (i) the occurrence and
continuance of any Event of Default, or (ii) the failure of the Borrowers to
maintain Availability at least equal to the greater of (x) $35,000,000 or (y)
seventeen and one-half percent (17.5%) of the Revolver Loan Cap. For purposes of
this Agreement, the occurrence of an Accelerated Borrowing Base Delivery Event
shall be deemed continuing (i) so long as such Event of Default has not been
waived, and/or (ii) if the Accelerated Borrowing Base Delivery Event arises as a
result of the Borrowers’ failure to achieve Availability as required hereunder,
until Availability has exceeded the greater of (x) $35,000,000 or (y) seventeen
and one-half percent (17.5%) of the Revolver Loan Cap for thirty (30)
consecutive calendar days, in which case an Accelerated Borrowing Base Delivery
Event shall no longer be deemed to be continuing for purposes of this Agreement.
The termination of an Accelerated Borrowing Base Delivery Event as provided
herein shall in no way limit, waive or delay the occurrence of a subsequent
Accelerated Borrowing Base Delivery Event in the event that the conditions set
forth in this definition again arise. Notwithstanding the foregoing, in
connection with any reduction of the “Aggregate Commitments” (as defined in the
Revolver Credit Agreement) after the Revolver Effective Date to an amount less
than $250,000,000, the amounts set forth in each instance of clauses (x) above,
shall reduce on a ratable basis; provided that, in no event shall such amounts
be less than $25,000,000 at any time.
“Account” means “accounts” as defined in the UCC, and also means a right to
payment of a monetary obligation, whether or not earned by performance, (a) for
property that has been or is to be sold, leased, licensed, assigned, or
otherwise disposed of, (b) for services rendered or to be rendered, or (c)
arising out of the use of a credit or charge card or information contained on or
for use with the card.
“ACH” means automated clearing house transfers.
“Acquisition” means, with respect to any Person (a) a purchase of a Controlling
interest in the Equity Interests of any other Person, (b) a purchase or other
acquisition of all or substantially all of the assets or properties of, another
Person or of any business unit of another Person, or (c) any merger or
consolidation of such Person with any other Person or other transaction or
series of transactions resulting in the acquisition of all or substantially all
of the assets, or a Controlling interest in the Equity Interests, of any Person,
in each case in any transaction or group of transactions which are part of a
common plan, but in each case excluding any transaction resulting in the
acquisition solely of Store locations or other interests in real property or of
Equity Interests of Persons substantially all of whose assets constitutes Store
locations or other interest in real property.
“Act” shall have the meaning provided in Section 10.17.
“Additional Commitment Lender” shall have the meaning provided in Section
2.15(a).
“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Agent.
“Affiliate” means, with respect to any Person (the “Subject Person”), (i)
another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Subject Person,
(ii) any director, officer, managing member, partner, trustee, or beneficiary of
the Subject Person, and (iii) for purposes of Section 7.09, (a) any other Person
directly or indirectly holding 10% or more of any class of the Equity Interests
of the Subject Person, and (b) any other Person 10% or more of any class of
whose Equity Interests is held directly or indirectly by the Subject Person.
“Agent” has the meaning assigned to such term in the introductory paragraph
hereto, or any successor thereto in accordance with the terms hereof.
“Agent Parties” shall have the meaning specified in Section 10.02(c).
“Agent’s Office” means the Agent’s address and, as appropriate, account as set
forth on Schedule 10.02, or such other address or account as the Agent may from
time to time notify the Lead Borrower and the Lenders.
“Aggregate Commitments” means the sum of the Commitments of all the Lenders. As
of the Effective Date, the Aggregate Commitments are $40,000,000.
“Agreement” has the meaning set forth in the introductory paragraph hereto.
“Anti-Corruption Laws” means the U.S. Foreign Corrupt Practices Act of 1977, as
amended, the U.K. Bribery Act of 2010, and all applicable anti-corruption and
anti-money laundering laws of the United States or any other jurisdiction where
one or more properties owned or leased by any Loan Party are located or where
any Loan Party transacts business.
“Applicable Lenders” means the Required Lenders, all affected Lenders, or all
Lenders, as the context may require.
“Applicable Margin” means a rate of interest per annum equal to 8.50%.
“Applicable Percentage” means with respect to any Lender (a) at any time prior
to the funding of the Term Loans on the Effective Date, the percentage (carried
out to the ninth decimal place) of the Aggregate Commitments represented by such
Lender’s Commitment at such time and (b) at any time after the Effective Date,
the percentage (carried out to the ninth decimal place) of the Total
Outstandings represented by the Outstanding Amount of such Lender’s Term Loans.
The initial Applicable Percentage of each Lender is set forth opposite the name
of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to
which such Lender becomes a party hereto, as applicable.
“Applicable Reference Rate” means, with respect to any Borrowing, an interest
rate per annum equal to the LIBOR Rate, provided, however, that in the event
that the LIBOR Rate is unavailable for any reason (including, as a result of the
occurrence of any event described in Sections 3.02 or 3.03), subject to the last
sentence of the definition of “LIBOR Rate”, the Applicable Reference Rate shall
mean an interest rate per annum equal to the Base Rate. The Applicable Reference
Rate will be determined and adjusted monthly (as of the beginning of each month)
as to all Borrowings then outstanding.
“Appraised Value” means, with respect to Eligible Inventory, the appraised
orderly liquidation value, net of costs and expenses to be incurred in
connection with any such liquidation, which value is expressed as a percentage
of Cost of Eligible Inventory as set forth in the inventory stock ledger of the
Borrowers, which value shall be determined from time to time by the most recent
appraisal undertaken by an independent appraiser engaged by the Agent.
“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender (c) an entity or an Affiliate of an entity that
administers or manages a Lender, or (d) the same investment advisor or an
advisor under common control with such Lender, Affiliate or advisor, as
applicable.
“Arranger” means GBFC, in its capacity as joint sole arranger and sole
bookrunner.
“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 10.06(b)), and accepted by the Agent, in substantially the
form of Exhibit D or any other form approved by the Agent.
“Attributable Indebtedness” means, on any date, (a) in respect of any Capital
Lease Obligation of any Person, the capitalized amount thereof that would appear
on a balance sheet of such Person prepared as of such date in accordance with
GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized
amount of the remaining lease or similar payments under the relevant lease or
other applicable agreement or instrument that would appear on a balance sheet of
such Person prepared as of such date in accordance with GAAP if such lease,
agreement or instrument were accounted for as a capital lease.
“Audited Financial Statements” means the audited consolidated balance sheet of
the Parent and its Subsidiaries for the Fiscal Year ended January 28, 2017, and
the related consolidated statements of income or operations, Shareholders’
Equity and cash flows for such Fiscal Year of the Parent and its Subsidiaries,
including the notes thereto.
“Availability” means, as of any date of determination thereof by the Agent, the
result, if a positive number, of:
(a)    The Revolver Loan Cap
Minus
(b)    The Revolver Outstandings.
“Availability Reserves” means “Availability Reserves” under and as defined in
the Revolver Credit Agreement, as in effect on the date hereof (it being
understood and agreed that, in the event that such Availability Reserves are not
maintained (for any reason whatsoever) by the Revolver Agent in a manner
consistent with the Revolver Credit Agreement and the ABL Intercreditor
Agreement, any such Availability Reserves may be implemented and maintained by
the Agent against the Borrowing Base in its Permitted Discretion (as if
references to “Agent” in such underlying definition of “Availability Reserves”
(or any component definition thereof) in the Revolver Credit Agreement were
references to the Agent)), without duplication of any Reserves maintained
against the Revolver Borrowing Base.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by
the applicable EEA Resolution Authority in respect of any liability of an EEA
Financial Institution.
“Bail-In Legislation” means, with respect to any EEA Member Country implementing
Article 55 of Directive 2014/59/EU of the European Parliament and of the Council
of the European Union, the implementing law for such EEA Member Country from
time to time which is described in the EU Bail-In Legislation Schedule.
“Bank of America” means Bank of America, N.A. and its successors.
“Base Rate” means for any day a fluctuating rate per annum equal to the higher
of (a) the rate of interest published by the Wall Street Journal as the “WSJ
Prime Rate”, and (b) the Federal Funds Rate for such day, plus 0.50%. Any change
in the WSJ Prime Rate or the Federal Funds Rate, respectively, shall take effect
at the opening of business on the day specified in the public announcement of
such change.
“Blocked Account” means each DDA that is subject to a Blocked Account Agreement.
“Blocked Account Agreement” means with respect to an account established by a
Loan Party, an agreement, in form and substance reasonably satisfactory to the
Agent, establishing control (as defined in the UCC) of such account by the
Agent.
“Blocked Account Bank” means each bank with whom deposit accounts are maintained
in which any funds of any of the Loan Parties from one or more DDAs are
concentrated and with whom a Blocked Account Agreement has been, or is required
to be, executed in accordance with the terms hereof.
“Borrower Materials” has the meaning specified in Section 6.02.
“Borrowers” has the meaning specified in the introductory paragraph hereto.
“Borrowing” means a borrowing consisting of simultaneous Term Loans made by the
Lenders pursuant to Section 2.01.
“Borrowing Base” means, at any time of calculation, an amount equal to:
(a)    the face amount of Eligible Credit Card Receivables multiplied by 100%;
plus
(b)    the lesser of (i) the Cost of Eligible Inventory, net of Inventory
Reserves, multiplied by 97.5% multiplied by the Appraised Value of Eligible
Inventory, or (ii) the Cost of Eligible Inventory, net of Inventory Reserves,
multiplied by 82.5%;
minus
(c)    Revolver Loan Cap (determined without giving effect to the Term Loan
Push-Down Reserve or the Revolver Availability Block);
minus
(d)    the then amount of all Availability Reserves.
“Borrowing Base Certificate” means a certificate substantially in the form of
Exhibit E hereto (with such changes therein as may be required by the Agent to
reflect the components of and reserves against the Borrowing Base as provided
for hereunder from time to time), executed and certified as accurate and
complete by a Responsible Officer of the Lead Borrower which shall include
appropriate exhibits, schedules, supporting documentation, and additional
reports as reasonably requested by the Agent.
“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Agent’s Office is located.
“Capital Expenditures” means, with respect to any Person for any period, all
expenditures made (whether made in the form of cash or other property) or costs
incurred for the acquisition or improvement of fixed or capital assets of such
Person (excluding normal replacements and maintenance which are properly charged
to current operations), in each case that are (or should be) set forth as
capital expenditures in a Consolidated statement of cash flows of such Person
for such period, in each case prepared in accordance with GAAP; provided, that,
notwithstanding the foregoing, capital expenditures constituting IT
Transformation Investments, to the extent made during the 2016 and 2017 Fiscal
Years of the Borrowers and in an amount not to exceed $5,000,000 in the
aggregate, shall not constitute “Capital Expenditures” for any purpose under
this Agreement and/or any other Loan Document.
“Capital Lease Obligations” means, with respect to any Person for any period,
the obligations of such Person to pay rent or other amounts under any lease of
(or other arrangement conveying the right to use) real or personal property, or
a combination thereof, which obligations are required to be classified and
accounted for as liabilities on a balance sheet of such Person under GAAP and
the amount of which obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
“Cash Dominion Event” means either (i) the occurrence and continuance of any
Event of Default, or (ii) the failure of the Borrowers to maintain Availability
of at least the greater of (x) 17.5% of the Revolver Loan Cap and (y)
$35,000,000. For purposes of this Agreement, the occurrence of a Cash Dominion
Event shall be deemed continuing (i) so long as such Event of Default has not
been waived, and/or (ii) if the Cash Dominion Event arises as a result of the
Borrowers’ failure to achieve Availability as required hereunder, until
Availability has exceeded the greater of (x) 17.5% of the Revolver Loan Cap and
(y) $35,000,000 for thirty (30) consecutive days, in which case a Cash Dominion
Event shall no longer be deemed to be continuing for purposes of this Agreement;
provided that, a Cash Dominion Event shall be deemed continuing (even if an
Event of Default is no longer continuing and/or Availability exceeds the
required amount for thirty (30) consecutive days) at all times after a Cash
Dominion Event has occurred and been discontinued on two occasions in any twelve
month period until both no Event of Default is then continuing and Availability
has exceed the amounts set forth above for ninety (90) consecutive days. The
termination of a Cash Dominion Event as provided herein shall in no way limit,
waive or delay the occurrence of a subsequent Cash Dominion Event in the event
that the conditions set forth in this definition again arise. Notwithstanding
the foregoing, in connection with any reduction of the “Aggregate Commitments”
(as defined in the Revolver Credit Agreement) after the Revolver Effective Date
to an amount less than $250,000,000, the amounts set forth in each instance of
clauses (y) above, shall reduce on a ratable basis; provided that, in no event
shall such amounts be less than $25,000,000 at any time.
“CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. § 9601 et seq.
“CERCLIS” means the Comprehensive Environmental Response, Compensation, and
Liability Information System maintained by the United States Environmental
Protection Agency.
“CFC” means a Person that is a controlled foreign corporation under Section 957
of the Code.
“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation, implementation or application thereof by any
Governmental Authority or (c) the making or issuance of any request, rule,
guideline or directive (whether or not having the force of law) by any
Governmental Authority; provided that notwithstanding anything herein to the
contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and
all requests, rules, guidelines or directives thereunder or issued in connection
therewith and (y) all requests, rules, guidelines or directives promulgated by
the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United States or
foreign regulatory authorities, in each case pursuant to Basel III, shall in
each case be deemed to be a “Change in Law”, regardless of the date enacted,
adopted or issued.
“Change of Control” means an event or series of events by which:
(a)    any “person” or “group” (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit
plan of such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such plan)
other than a Permitted Holder becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a
person or group shall be deemed to have “beneficial ownership” of all securities
that such person or group has the right to acquire, whether such right is
exercisable immediately or only after the passage of time (such right, an
“option right”)), directly or indirectly, of both (i) 35% or more of the Equity
Interests of the Parent entitled to vote for members of the board of directors
or equivalent governing body of the Parent on a fully-diluted basis (and taking
into account all such Equity Interests that such “person” or “group” has the
right to acquire pursuant to any option right), and (ii) a greater percentage of
such Equity Interests than are held by the Permitted Holders in the aggregate;
or
(b)    during any period of 12 consecutive months, a majority of the members of
the board of directors or other equivalent governing body of the Parent cease to
be composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or by a Permitted Holder or (iii) whose election or nomination to that
board or other equivalent governing body was approved by individuals referred to
in clauses (i) and (ii) above constituting at the time of such election or
nomination at least a majority of that board or equivalent governing body or by
a Permitted Holder; or
(c)    any “change in control” or similar event as defined in any Material
Contract, or any document governing Material Indebtedness of any Loan Party; or
(d)    the Parent fails at any time to own, directly or indirectly, 100% of the
Equity Interests of each Borrower.
“Code” means the Internal Revenue Code of 1986, and the regulations promulgated
thereunder, as amended and in effect.
“Collateral” means any and all “Collateral” as defined in any applicable
Security Document and all other property that is or is intended under the terms
of the Security Documents to be subject to Liens in favor of the Agent.
“Collateral Access Agreement” means an agreement reasonably satisfactory in form
and substance to the Agent executed by (a) a bailee or other Person in
possession of Collateral, and (b) any landlord of Real Estate leased by any Loan
Party, pursuant to which such Person (i) acknowledges the Agent’s Lien on the
Collateral, (ii) releases or subordinates such Person’s Liens in the Collateral
held by such Person or located on such Real Estate, (iii) provides the Agent
with access to the Collateral held by such bailee or other Person or located in
or on such Real Estate, (iv) provides the Agent with a reasonable time to sell
and dispose of the Collateral from such Real Estate, and (v) makes such other
agreements with the Agent as the Agent may reasonably require. It is understood
and agreed that the form of the Collateral Access Agreements in existence on the
Effective Date in favor of the Revolver Agent are reasonably satisfactory to the
Agent.
“Collection Account” has the meaning provided in Section 6.12(c).
“Combined Loan Cap” means at any time, an amount equal to the sum of (a) the
Revolver Loan Cap (determined without giving effect to the Term Loan Push-Down
Reserve) plus (b) the lesser of (x) the Total Outstandings and (y) the Borrowing
Base.
“Commitment” means, as to each Lender, its obligation to make Term Loans to the
Borrowers pursuant to Section 2.01 in an aggregate principal amount equal to the
amount set forth opposite such Lender’s name on Schedule 2.01.
“Committed Loan Notice” means a notice of a Borrowing, which, shall be
substantially in the form of Exhibit A.
“Compliance Certificate” means a certificate substantially in the form of
Exhibit C.
“Consolidated” means, when used to modify a financial term, test, statement, or
report of a Person, the application or preparation of such term, test, statement
or report (as applicable) based upon the consolidation, in accordance with GAAP,
of the financial condition or operating results of such Person and its
Subsidiaries.
“Consolidated EBITDA” means, at any date of determination, without duplication,
an amount equal to Consolidated Net Income of the Parent and its Subsidiaries on
a Consolidated basis for the most recently completed Measurement Period, plus
(a) the following to the extent deducted in calculating such Consolidated Net
Income: (i) Consolidated Interest Charges, (ii) the provision for Federal,
state, local and foreign income Taxes, (iii) depreciation and amortization
expense, (iv) any items of loss resulting from the sale of assets other than in
the ordinary course of business, (v) costs and expenses related to IT
Transformation Investments (provided that the amount of such costs and expenses
paid in cash and added back pursuant to this clause (v) shall not exceed
$10,000,000 in the aggregate for the Borrowers’ 2016 and 2017 Fiscal Years and
$0 thereafter), (vi) non-cash charges associated with accounts receivable owing
by a Third Party Franchisee to a Borrower or a Subsidiary arising in connection
with the termination of a franchise agreement, or allowances recognized for
losses on franchisee receivables in an amount equal to estimated probable losses
net of recoveries, with such Third Party Franchisee, and (vii) other expenses
reducing such Consolidated Net Income which do not represent a cash item in such
period or any future period (in each case of or by the Parent and its
Subsidiaries for such Measurement Period), minus (b) the following to the extent
included in calculating such Consolidated Net Income: (i) Federal, state, local
and foreign income tax credits, (ii) any items of gain resulting from the sale
of assets other than in the ordinary course of business and (iii) all non-cash
items increasing Consolidated Net Income (in each case of or by the Parent and
its Subsidiaries for such Measurement Period), all as determined on a
Consolidated basis in accordance with GAAP.
“Consolidated Fixed Charge Coverage Ratio” means, at any date of determination,
the ratio of (a) (i) Consolidated EBITDA for such period minus (ii) Capital
Expenditures made during such period (other than Financed Capital Expenditures),
minus (iii) the aggregate amount of Federal, state, local and foreign income
taxes paid in cash during such period net of cash refunds of such Taxes received
during such period (but in no event shall the amounts calculated under this
clause (iii) be less than zero) to (b) Debt Service Charges, in each case, of or
by the Parent and its Subsidiaries for the most recently completed Measurement
Period, all as determined on a Consolidated basis in accordance with GAAP.
“Consolidated Interest Charges” means, for any Measurement Period, the sum of
(a) all interest, premium payments, debt discount, fees, charges and related
expenses in connection with borrowed money (including capitalized interest) or
in connection with the deferred purchase price of assets, in each case to the
extent treated as interest in accordance with GAAP, including, without
limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers’ acceptance financing and net costs
under applicable Swap Contracts, but excluding any non-cash or deferred interest
financing costs, and (b) the portion of rent expense with respect to such period
under Capital Lease Obligations that is treated as interest in accordance with
GAAP, in each case of or by the Parent and its Subsidiaries for the most
recently completed Measurement Period, all as determined on a Consolidated basis
in accordance with GAAP.
“Consolidated Net Income” means, as of any date of determination, the net income
of the Parent and its Subsidiaries for the most recently completed Measurement
Period, all as determined on a Consolidated basis in accordance with GAAP,
provided, however, that there shall be excluded (a) extraordinary gains and
extraordinary losses for such Measurement Period, (b) the income (or loss) of
any Subsidiary that is not a Loan Party during such Measurement Period in which
any other Person has a joint interest, and of any non-Subsidiary joint venture,
except to the extent of the amount of cash dividends or other distributions
actually paid in cash to the Parent or a wholly-owned Subsidiary of the Parent
during such period, (c) the income (or loss) of such Subsidiary during such
Measurement Period and accrued prior to the date it becomes a Subsidiary of the
Parent or any of its Subsidiaries or is merged into or consolidated with the
Parent or any of its Subsidiaries or that Person’s assets are acquired by the
Parent or any of its Subsidiaries, and (d) the income of any direct or indirect
Subsidiary of the Parent that is not a Loan Party to the extent that the
declaration or payment of dividends or similar distributions by that Subsidiary
of that income is not at the time permitted by operation of the terms of its
Organization Documents or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary, except
that the Parent’s equity in any net loss of any such Subsidiary for such
Measurement Period shall be included in determining Consolidated Net Income.
“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.
“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.
“Cost” means the lower of cost or market value of Inventory, based upon the
Borrowers’ accounting practices, known to the Agent, which practices are in
effect on the Effective Date as such calculated cost is determined from invoices
received by the Borrowers, the Borrowers’ purchase journals or the Borrowers’
stock ledger and on a consistent basis with the calculation of cost set forth in
the most recent Inventory appraisal delivered to the Agent. “Cost” does not
include inventory capitalization costs or other non-purchase price charges (such
as freight) used in the Borrowers’ calculation of cost of goods sold.
“Credit Card Issuer” shall mean any person (other than a Borrower or other Loan
Party) who issues or whose members issue credit cards, including, without
limitation, MasterCard or VISA bank credit or debit cards or other bank credit
or debit cards issued through MasterCard International, Inc., Visa, U.S.A., Inc.
or Visa International and American Express, Discover, Diners Club, Carte Blanche
and other non-bank credit or debit cards, including, without limitation, credit
or debit cards issued by or through American Express Travel Related Services
Company, Inc., and Novus Services, Inc. and other issuers approved by the Agent.
“Credit Card Processor” shall mean any servicing or processing agent or any
factor or financial intermediary who facilitates, services, processes or manages
the credit authorization, billing transfer and/or payment procedures with
respect to any Borrower’s sales transactions involving credit card or debit card
purchases by customers using credit cards or debit cards issued by any Credit
Card Issuer.
“Credit Card Notifications” has the meaning provided in Section 6.12(a)(i).
“Credit Card Receivables” means each “Account” or “payment intangible” (each as
defined in the UCC) together with all income, payments and proceeds thereof,
owed by a Credit Card Issuer or Credit Card Processor to a Loan Party resulting
from charges by a customer of a Loan Party on credit or debit cards issued by
such Credit Card Issuer in connection with the sale of goods by a Loan Party, or
services performed by a Loan Party, in each case in the ordinary course of its
business.
“Credit Party” or “Credit Parties” means (a) individually, (i) each Lender,
(ii) the Agent, (iii) the Arranger, (iv) any other Person to whom Obligations
are owing, and (v) the successors and assigns of each of the foregoing, and (b)
collectively, all of the foregoing.
“Credit Party Expenses” means (a) all reasonable out-of-pocket expenses incurred
by the Agent, the Arranger and their respective Affiliates, in connection with
this Agreement and the other Loan Documents, including without limitation (i)
the reasonable fees, charges and disbursements of (A) one primary counsel and of
one local counsel for the Agent and the Arranger, (B) outside consultants for
the Agent, (C) appraisers and (D) commercial finance examiners, and (ii) in
connection with (A) the syndication of the credit facilities provided for
herein, (B) the preparation, negotiation, administration, management, execution
and delivery of this Agreement and the other Loan Documents or any amendments,
modifications or waivers of the provisions thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (C) the
enforcement or protection of their rights in connection with this Agreement or
the Loan Documents or efforts to preserve, protect, collect, or enforce the
Collateral or in connection with any proceeding under any Debtor Relief Laws, or
(D) any workout, restructuring or negotiations in respect of any Obligations,
and (b) all reasonable out-of-pocket expenses incurred by the Lenders who are
not the Agent, the Arranger, or any Affiliate of any of them in connection with
the enforcement of the Loan Documents after the occurrence and during the
continuance of an Event of Default, provided that such Lenders shall be entitled
to reimbursement for no more than one counsel representing all such Lenders
(absent a conflict of interest in which case the Lenders may engage and be
reimbursed for additional counsel).
“DDA” means each checking, savings or other demand deposit account maintained by
any of the Loan Parties, other than Excluded Accounts.
“Debt Service Charges” means for any Measurement Period, the sum of (a)
Consolidated Interest Charges paid or required to be paid in cash for such
Measurement Period, plus (b) scheduled principal payments made or required to be
made on account of Indebtedness (excluding the Revolver Obligations and any
Synthetic Lease Obligations but including, without limitation, principal
payments made in respect of Capital Lease Obligations) for such Measurement
Period, in each case determined on a Consolidated basis in accordance with GAAP.
“Debtor Relief Laws” means the Bankruptcy Code of the United States, and 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 or other applicable
jurisdictions from time to time in effect.
“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.
“Default Rate” means (a) when used with respect to Term Loans, an interest rate
equal to the interest rate (including the Applicable Margin) otherwise
applicable to such Term Loan plus two percent (2%) per annum, and (b) with
respect to all other Obligations, an interest rate equal to the Base Rate, plus
the Applicable Margin, plus two percent (2%) per annum.
“Defaulting Lender” means, subject to Section 2.16(b), any Lender that has
failed to (a) fund all or any portion of its Term Loans on the date such Term
Loans were required to be funded hereunder or (b) pay to the Agent or any other
Lender any other amount required to be paid by it hereunder within two Business
Days of the date when due. Any determination by the Agent that a Lender is a
Defaulting Lender under clauses (a) or (b) above, and of the effective date of
such status, shall be conclusive and binding absent manifest error, and such
Lender shall be deemed to be a Defaulting Lender (subject to Section 2.16(b)) as
of the date established therefor by the Agent in a written notice of such
determination, which shall be delivered by the Agent to the Borrower and each
other Lender promptly following such determination.
“Designated Jurisdiction” means any country, territory or region to the extent
that such country, territory or region is the target of any Sanction, which
countries or territories (including, as of the Effective Date, Iran, North
Korea, Cuba, and Syria).
“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction), whether in one
transaction or in a series of transactions, of any property (including, without
limitation, any Equity Interests other than Equity Interests of the Parent) by
any Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.
“Disqualified Stock” means any Equity Interest that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is ninety-one (91)
days after the Maturity Date. The amount of Disqualified Stock deemed to be
outstanding at any time for purposes of this Agreement will be the maximum
amount that the Parent and its Subsidiaries may become obligated to pay upon
maturity of, or pursuant to any mandatory redemption provisions of, such
Disqualified Stock or portion thereof, plus accrued dividends.
“Dollars” and “$” mean lawful money of the United States.
“EEA Financial Institution” means (a) any credit institution or investment firm
established in any EEA Member Country which is subject to the supervision of an
EEA Resolution Authority, (b) any entity established in an EEA Member Country
which is a parent of an institution described in clause (a) of this definition,
or (c) any financial institution established in an EEA Member Country which is a
subsidiary of an institution described in clauses (a) or (b) of this definition
and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union,
Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any
person entrusted with public administrative authority of any EEA Member Country
(including any delegee) having responsibility for the resolution of any EEA
Financial Institution.
“Effective Date” means the first date all the conditions precedent in Section
4.01 are satisfied or waived in accordance with Section 10.01.
“Eligible Assignee” means (a) a Lender or any of its Affiliates; (b) a bank,
insurance company, or company engaged in the business of making commercial
loans; (c) an Approved Fund; and (d) any Person to whom a Lender assigns its
rights and obligations under this Agreement as part of an assignment and
transfer of such Lender’s rights in and to a material portion of such Lender’s
portfolio of asset based credit facilities; provided that, notwithstanding the
foregoing, “Eligible Assignee” shall not include a Permitted Holder, a Loan
Party or any of their respective Affiliates or Subsidiaries or any natural
Person.
“Eligible Credit Card Receivables” means at the time of any determination
thereof, each Credit Card Receivable that satisfies the following criteria at
the time of creation and continues to meet the same at the time of such
determination: such Credit Card Receivable (i) has been earned by performance
and represents the bona fide amounts due to a Loan Party from a Credit Card
Issuer or Credit Card Processor (or from SHC and its Subsidiaries on behalf of
any such Credit Card Issuer or Credit Card Processor as set forth below), and in
each case is originated in the ordinary course of business of such Loan Party,
and (ii) in each case is not ineligible for inclusion in the calculation of the
Borrowing Base pursuant to any of clauses (a) through (i) below. Without
limiting the foregoing, to qualify as an Eligible Credit Card Receivable, a
Credit Card Receivable shall indicate no Person other than a Loan Party as payee
or remittance party. In determining the amount to be so included, the face
amount of a Credit Card Receivable shall be reduced by, without duplication, to
the extent not reflected in such face amount, (i) the amount of all accrued and
actual discounts, claims, credits or credits pending, promotional program
allowances, price adjustments, finance charges or other allowances (including
any amount that a Loan Party may be obligated to rebate to a customer, a Credit
Card Issuer or Credit Card Processor pursuant to the terms of any written
agreement or understanding) and (ii) the aggregate amount of all cash received
in respect of such Credit Card Receivable but not yet applied by the Loan
Parties to reduce the amount of such Credit Card Receivable. Except as otherwise
agreed by the Agent, any Credit Card Receivable included within any of the
following categories shall not constitute an Eligible Credit Card Receivable:
(a)    Credit Card Receivables which do not constitute an “Account” or “payment
intangible” (each as defined in the UCC);
(b)    Credit Card Receivables that have been outstanding for more than five (5)
Business Days from the date of sale;
(c)    except with respect to amounts due from SHC and its Subsidiaries as
provided above, Credit Card Receivables (i) that are not subject to a perfected
first priority security interest in favor of the Agent (subject to (x) the
Revolver Agent Liens and (y) Permitted Encumbrances having priority over the
Lien of the Agent by operation of applicable Law), or (ii) with respect to which
a Loan Party does not have good and valid title thereto, free and clear of any
Lien (other than Permitted Encumbrances);
(d)    Credit Card Receivables which are disputed or with respect to which a
claim, counterclaim, offset or chargeback has been asserted (to the extent of
such dispute, claim, counterclaim, offset or chargeback);
(e)    Credit Card Receivables as to which a Credit Card Issuer or a Credit Card
Processor has the right under certain circumstances to require a Loan Party to
repurchase the entire portfolio of Credit Card Receivables from such Credit Card
Issuer or Credit Card Processor;
(f)    Credit Card Receivables due from a Credit Card Issuer or a Credit Card
Processor of the applicable credit card which is the subject of any bankruptcy
or insolvency proceedings;
(g)    Credit Card Receivables which are not a valid, legally enforceable
obligation of the applicable Credit Card Issuer or a Credit Card Processor with
respect thereto;
(h)    Credit Card Receivables which do not conform to all representations,
warranties or other provisions in the Loan Documents relating to Credit Card
Receivables; or
(i)    Credit Card Receivables which the Revolver Agent determines in its
Permitted Discretion to be uncertain of collection or which do not meet such
other reasonable eligibility criteria for Credit Card Receivables as the
Revolver Agent may determine in its Permitted Discretion.
“Eligible Inventory” means, as of the date of determination thereof, items of
Inventory of a Loan Party that are finished goods, merchantable and readily
saleable to the public in the ordinary course of the Loan Parties’ business, in
each case that, except as otherwise agreed by the Agent, (A) complies with each
of the representations and warranties respecting Inventory made by the Loan
Parties in the Loan Documents, and (B) is not excluded as ineligible by virtue
of one or more of the criteria set forth below. Except as otherwise agreed by
the Agent, in its Permitted Discretion, the following items of Inventory shall
not be included in Eligible Inventory:
(a)    Inventory (i) that is not subject to a perfected first priority security
interest in favor of the Agent (subject to (x) the Revolver Agent Liens and
(y) Permitted Encumbrances having priority over the Lien of the Agent by
operation of applicable Law), or (ii) with respect to which a Loan Party does
not have good and valid title thereto, free and clear of any Lien (other than
Permitted Encumbrances);
(b)    Inventory that is leased or consigned from a vendor to a Loan Party;
(c)    Inventory that is consigned by a Loan Party to a Person which is not a
Loan Party other than Inventory that is consigned to Third Party Dealers and
Third Party Franchisees for which the Loan Parties have met the Third Party
Dealer and Franchisee Eligibility Requirements;
(d)    Inventory that is not located in the United States of America (excluding
territories or possessions of the United States) or Puerto Rico at a location
that is owned or leased by a Loan Party, except (i) Inventory in transit between
such owned or leased locations, or (ii) Inventory at locations owned or leased
by Third Party Dealers and Third Party Franchisees for which the Loan Parties
have met the Third Party Dealer and Franchisee Eligibility Requirements;
(e)    (i) Inventory that is located in a distribution center leased by a Loan
Party unless the applicable lessor has delivered to the Agent a Collateral
Access Agreement; provided, that if such a Collateral Access Agreement is not
obtained within thirty (30) days following such time as the applicable Loan
Party has entered into such arrangement with such applicable lessor (or such
later date as the Agent may agree in its Permitted Discretion), Inventory at
such locations shall constitute Eligible Inventory as long as the Revolver Agent
has established an Availability Reserve in such amount as the Revolver Agent in
its Permitted Discretion deemed appropriate or (ii) Inventory that is located in
any other distribution or warehouse center unless the applicable owner or lessee
of such distribution or warehouse center has delivered to the Agent a Collateral
Access Agreement; provided, that if such a Collateral Access Agreement is not
obtained within thirty (30) days following such time as the applicable Loan
Party has entered into such arrangement with such applicable distribution or
warehouse center owner or lessee (or such later date as the Agent may agree in
its Permitted Discretion), Inventory at such locations shall constitute Eligible
Inventory as long as the Revolver Agent has established an Availability Reserve
in such amount as the Revolver Agent in its Permitted Discretion deemed
appropriate;
(f)    Other than Inventory customarily sold at outlet locations in the ordinary
course of business or otherwise in a manner consistent with past practice,
Inventory that is comprised of goods which (i) are damaged, defective,
“seconds,” or otherwise unmerchantable, (ii) are to be returned to the vendor,
(iii) are obsolete, or custom items, work-in-process, raw materials, or that
constitute samples, spare parts, promotional, marketing, labels, bags and other
packaging and shipping materials or supplies used or consumed in a Loan Party’s
business, (iv) which have been packed away and stored for more than 12 months,
(v) are not in material compliance with all standards imposed by any
Governmental Authority having regulatory authority over such Inventory, its use
or sale, or (vi) are bill and hold goods;
(g)    Inventory that is not insured in compliance with the provisions of
Section 5.10 hereof;
(h)    Inventory that has been sold but not yet delivered or as to which a Loan
Party has accepted a deposit from a third party;
(i)    Inventory that exhibits, includes or is identified by any trademark,
tradename or other Intellectual Property right which trademark, tradename or
other Intellectual Property right (i) is subject to a restriction that could
reasonably be expected to adversely affect the Agent’s ability to liquidate such
Inventory or (ii) the relevant Loan Party does not have the right to use in
connection with the sale of such Inventory, either through direct ownership or
through a written license or sublicense;
(j)    Inventory acquired in a Permitted Acquisition, unless and until the
Revolver Agent has completed or received (A) an appraisal of such Inventory from
appraisers reasonably satisfactory to the Revolver Agent and establishes
Inventory Reserves (if applicable) therefor, and (B) such other due diligence as
the Revolver Agent may reasonably require, all of the results of the foregoing
to be reasonably satisfactory to the Revolver Agent and Agent; provided that
such Inventory shall be deemed to constitute Eligible Inventory for a period of
45 days after the date of its acquisition notwithstanding that the Revolver
Agent has not completed such due diligence as long as such Inventory is of the
same kind and quality as other of the Loan Parties’ Inventory and would
otherwise constitute Eligible Inventory;
(k)    Inventory (other than Inventory acquired in a Permitted Acquisition which
is governed by clause (j) above) which is not of the type usually sold in the
ordinary course of any Loan Party’s business, unless and until the Agent agrees
in its Permitted Discretion that such Inventory shall be deemed Eligible
Inventory; or
(l)    Inventory which does not meet such other reasonable eligibility criteria
for Inventory as the Revolver Agent may determine in its Permitted Discretion.
“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.
“Environmental Liability” means any liability, obligation, damage, loss, claim,
action, suit, judgment, order, fine, penalty, fee, expense, or cost, contingent
or otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of any Borrower, any other Loan
Party or any of their respective Subsidiaries directly or indirectly resulting
from or based upon (a) violation of any Environmental Law, (b) the generation,
use, handling, transportation, storage, treatment or disposal or presence of any
Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.
“Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or non-voting, and whether or not such shares,
warrants, options, rights or other interests are outstanding on any date of
determination.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.
“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Parent within the meaning of Section 414(b) or (c)
of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code).
“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan;
(b) the withdrawal of the Parent or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which such entity was a
“substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Parent or any ERISA Affiliate
from a Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate a Pension
Plan, or the treatment of a Multiemployer Plan amendment as a termination, under
Section 4041 or 4041A of ERISA, respectively; (e) the institution by the PBGC of
proceedings to terminate a Pension Plan or a Multiemployer Plan; (f) any event
or condition determined by the PBGC to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Pension Plan; (g) the determination that any Pension Plan is considered an
at-risk plan or that a Multiemployer Plan is in endangered or critical status
within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304
and 305 of ERISA; or (h) the imposition of any liability under Title IV of
ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Parent or any ERISA Affiliate.
“ETSA” means the Employee Transition and Administrative Services Agreement dated
August 31, 2012, by and between SHC and the Parent.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule
published by the Loan Market Association (or any successor person), as in effect
from time to time.
“Event of Default” has the meaning specified in Section 8.01. An Event of
Default shall be deemed to be continuing unless and until that Event of Default
has been duly waived as provided in Section 10.01 hereof.
“Excluded Accounts” means payroll, trust, tax withholding and zero balance
disbursement accounts funded in the ordinary course of business.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to
any Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) Taxes imposed on or measured by net income (however denominated
and including any Taxes imposed in lieu of income Taxes), franchise Taxes, and
branch profits Taxes, in each case, (i) imposed as a result of such Recipient
being organized under the laws of, or having its principal office or, in the
case of any Lender, its Lending Office located in, the jurisdiction imposing
such Tax (or any political subdivision thereof) or (ii) that are Other
Connection Taxes, (b) U.S. federal withholding Taxes imposed on amounts payable
to or for the account of such Recipient with respect to an applicable interest
in a Term Loan or Commitment pursuant to a law in effect on the date on which
(i) such Recipient acquires such interest in the Term Loan or Commitment (other
than pursuant to an assignment request by the Borrower under Section 10.13) or
(ii) in the case of a Lender, such Lender changes its Lending Office, except in
each case to the extent that, pursuant to Section 3.01(a)(ii) or (c), amounts
with respect to such Taxes were payable either to such Lender’s assignor
immediately before such Lender became a party hereto or to such Lender
immediately before it changed its Lending Office, (c) Taxes attributable to such
Recipient’s failure to comply with Section 3.01(e) and (d) any Taxes imposed
pursuant to FATCA.
“Extraordinary Receipt” means any cash received by or paid to or for the account
of any Person not in the ordinary course of business, including tax refunds,
pension plan reversions, indemnity payments and any purchase price adjustments.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof and any agreements entered into
pursuant to Section 1471(b)(1) of the Code.
“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of
America, N.A. (or such other major national bank reasonably acceptable to Agent)
on such day on such transactions as determined by the Agent.
“Fee Letter” means the letter agreement dated as of February 16, 2018, among the
Borrowers and the Agent.
“Financed Capital Expenditures” shall mean Capital Expenditures made with the
proceeds of Indebtedness (other than from extensions of credit under the
Revolver Credit Agreement), including capital lease transactions permitted
hereunder.
“Fiscal Quarter” means any fiscal quarter of any Fiscal Year, which quarters
shall generally end on (i) with respect to the first fiscal quarter of any
Fiscal Year, the Saturday of the thirteenth week of such Fiscal Year, (ii) with
respect to the second fiscal quarter of any Fiscal Year, the Saturday of the
twenty- sixth week of such Fiscal Year, (iii) with respect to the third fiscal
quarter of any Fiscal Year, the Saturday of the thirty-ninth week of such Fiscal
Year, and (iv) with respect to the last fiscal quarter of any Fiscal Year, the
last day of such Fiscal Year, as such Fiscal Quarters may be amended in
accordance with the provisions of Section 7.13 hereof.
“Fiscal Year” means any period of twelve consecutive months ending on the
Saturday closest to January 31 of any calendar year, as such Fiscal Year may be
amended in accordance with the provisions of Section 7.13 hereof.
“Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Parent is resident for tax purposes.
For purposes of this definition, the United States, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
“Foreign Subsidiary Holding Company” means any direct or indirect Subsidiary,
all or substantially all of the assets of which consist of, directly or
indirectly, the equity interests in one or more CFCs.
“FRB” means the Board of Governors of the Federal Reserve System of the United
States.
“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.
“GBFC” means Gordon Brothers Finance Company, a Delaware corporation.
“GBFC LLC” means Gordon Brothers Finance Company LLC, a Delaware limited
liability company, in its capacity as a Lender hereunder.
“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank).
“Guarantee” means, as to any Person, any obligation, contingent or otherwise, of
such Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation payable or performable by another Person (the
“primary obligor”) in any manner, whether directly or indirectly, and including
any obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation, (ii) to purchase or lease property, securities or services for
the purpose of assuring the obligee in respect of such Indebtedness or other
obligation of the payment or performance of such Indebtedness or other
obligation, (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity or level of income or cash flow of
the primary obligor so as to enable the primary obligor to pay such Indebtedness
or other obligation, or (iv) entered into for the purpose of assuring in any
other manner the obligee in respect of such Indebtedness or other obligation of
the payment or performance thereof or to protect such obligee against loss in
respect thereof (in whole or in part). The amount of any Guarantee shall be
deemed to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Guarantee is
made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof. The term “Guarantee” as a verb has a corresponding
meaning.
“Guarantor” means the Parent and each wholly-owned domestic Subsidiary of the
Parent (other than any Borrower and any Immaterial Subsidiary) existing on the
Effective Date and each other wholly-owned domestic Subsidiary of the Parent
that shall be required to execute and deliver a Joinder Agreement pursuant to
Section 6.11 (and excluding, for the avoidance of doubt, any Immaterial
Subsidiary).
“Guaranty and Security Agreement” means the Guaranty and Security Agreement
dated as of the Effective Date among the Loan Parties and the Agent.
“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.
“Immaterial Subsidiary” means, as of any date of determination, any Subsidiary
that, on an unconsolidated basis, does not have (a) assets in excess of 1.0% of
consolidated total assets of Parent and its Subsidiaries as set forth on the
most recent financial statements delivered pursuant to Section 6.01(a) or (b),
or (b) four quarter revenues in excess of 1.0% of the consolidated revenues of
Parent and its Subsidiaries as set forth on the most recent financial statements
delivered pursuant to Section 6.01(a) or (b); provided that, if at any time the
aggregate amount of revenues or assets attributable to all Subsidiaries that are
Immaterial Subsidiaries exceeds three percent (3%) of consolidated revenues of
Parent and its Subsidiaries for any such period or three percent (3%) of
consolidated total assets of Parent and its Subsidiaries as of the end of any
such fiscal quarter, the Lead Borrower shall designate sufficient domestic
Subsidiaries as “Material Subsidiaries” to eliminate such excess, and such
designated Subsidiaries shall for all purposes of this Agreement constitute
Material Subsidiaries. As of the Effective Date, the Immaterial Subsidiaries are
listed on Schedule 1.03.
“Increase Effective Date” shall have the meaning provided therefor in Section
2.15(b).
“Incremental Term Loan” shall have the meaning provided therefor in Section
2.15(b).
“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:
(a)    all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments;
(b)    the maximum amount of all direct or contingent obligations of such Person
arising under letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments;
(c)    net obligations of such Person under any Swap Contract;
(d)    all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business and, in each case, not past due for more than sixty (60) days);
(e)    indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse;
(f)    All Attributable Indebtedness of such Person;
(g)    all obligations of such Person in respect of Disqualified Stock of such
Person; and
(h)    all Guarantees of such Person in respect of any of the foregoing.
For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company unless the
Indebtedness of such joint venture is Guaranteed by such Person and covered by
clause (h) above) in which such Person is a general partner or a joint venturer,
unless such Indebtedness is expressly made non-recourse to such Person. The
amount of any net obligation under any Swap Contract on any date shall be deemed
to be the Swap Termination Value thereof as of such date.
“Indemnified Taxes” means Taxes, other than Excluded Taxes, imposed on or with
respect to any payment made by or on account of any obligation of any Loan Party
under any Loan Document.
“Indemnitees” has the meaning specified in Section 10.04(b).
“Information” has the meaning specified in Section 10.07.
“Intellectual Property” means all present and future: trade secrets, know-how
and other proprietary information; trademarks, trademark applications, internet
domain names, service marks, trade dress, trade names, business names, designs,
logos, slogans (and all translations, adaptations, derivations and combinations
of the foregoing) indicia and other source and/or business identifiers, and all
registrations or applications for registrations which have heretofore been or
may hereafter be issued thereon throughout the world; copyrights and copyright
applications; (including copyrights for computer programs) and all tangible and
intangible property embodying the copyrights, unpatented inventions (whether or
not patentable); patents and patent applications; industrial design applications
and registered industrial designs; license agreements related to any of the
foregoing and income therefrom; books, records, writings, computer tapes or
disks, flow diagrams, specification sheets, computer software, source codes,
object codes, executable code, data, databases and other physical
manifestations, embodiments or incorporations of any of the foregoing; all other
intellectual property; and all common law and other rights throughout the world
in and to all of the foregoing.
“Interest Payment Date” means the first Business Day of each month and the
Maturity Date and each date of any prepayment of the Term Loans (with regard to
the amount so prepaid).
“Internal Control Event” means a material weakness in, or fraud that involves
management or other employees who have a significant role in, the Parent’s
and/or its Subsidiaries’ internal controls over financial reporting, in each
case as described in the Securities Laws.
“Inventory” has the meaning given that term in the UCC, and shall also include,
without limitation, all: (a) goods which (i) are leased by a Person as lessor,
(ii) are held by a Person for sale or lease or to be furnished under a contract
of service, (iii) are furnished by a Person under a contract of service, or (iv)
consist of raw materials, work in process, or materials used or consumed in a
business; (b) goods of said description in transit; (c) goods of said
description which are returned, repossessed or rejected; and (d) packaging,
advertising, and shipping materials related to any of the foregoing.
“Inventory Reserves” means “Inventory Reserves” under and as defined in the
Revolver Credit Agreement, as in effect on the date hereof (it being understood
and agreed that, in the event that such Inventory Reserves are not maintained
(for any reason whatsoever) by the Revolver Agent in a manner consistent with
the Revolver Credit Agreement and the ABL Intercreditor Agreement, any such
Inventory Reserves may be implemented and maintained by the Agent against the
Borrowing Base in its Permitted Discretion (as if references to “Agent” in the
underlying definition of “Inventory Reserves” (or any component definition
thereof) in the Revolver Credit Agreement were references to the Agent)),
without duplication of any Reserves maintained against the Revolver Borrowing
Base
“Investment” means, as to any Person, any direct or indirect (a) purchase or
other acquisition of Equity Interests of another Person, (b) loan, advance or
capital contribution to, Guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or interest in, another Person, or (c) any
Acquisition. For purposes of covenant compliance, the amount of any Investment
shall be the amount actually invested, without adjustment for subsequent
increases or decreases in the value of such Investment.
“IRS” means the United States Internal Revenue Service.
“IT Transformation Investments” means investments and expenditures by Parent and
its Subsidiaries in connection with transferring certain of their information
technology systems and corporate services (including, without limitation, store
point of sale systems and corporate enterprise resource planning systems) from
those operated or supplied by SHC to those operated by one or more of Parent and
its Subsidiaries.
“Joinder Agreement” means an agreement, in form reasonably satisfactory to the
Agent pursuant to which, among other things, a Person becomes a party to, and
bound by the terms of, this Agreement and/or the other Loan Documents in the
same capacity and to the same extent as either a Borrower or a Guarantor, as the
Agent may determine.
“Laws” means, collectively, all international, foreign, Federal, state 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.
“Lease” means any written agreement, no matter how styled or structured,
pursuant to which a Loan Party is entitled to the use or occupancy of any real
property for any period of time.
“Lender” has the meaning specified in the introductory paragraph hereto.
“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Lead Borrower and
the Agent.
“LIBOR Rate” means, at any time of determination, the greater of (a) one percent
(1.00%), and (b) the London Interbank Offered Rate (“LIBOR”) or a comparable or
successor rate, which rate is approved by the Agent, as published on Reuters
Screen Page LIBOR01 at approximately 11:00 A.M. (London, England time) two (2)
Business Days prior to the first day of such month for Dollar deposits with a
term equivalent to three months. The LIBOR Rate shall be determined on a monthly
basis. Notwithstanding the foregoing, if the Agent has made the reasonable
determination adequate and reasonable means do not exist for determining the
LIBOR Rate, the Agent, in consultation with the Borrower, may establish a
reasonably equivalent alternative interest rate for the Term Loans (using a
methodology substantially consistent with the methodology Agent has used (or, is
using) with respect to similarly situated borrowers), in which case, such
alternative rate of interest shall apply with respect to the Term Loans (which
rate of interest shall be deemed to be the “LIBOR Rate” for all purposes of this
Agreement).
“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other), charge, or other security interest or
preferential arrangement in the nature of a security interest of any kind or
nature whatsoever (including the lien or retained security title of a
conditional vendor, any easement, right of way or other encumbrance on title to
real property, but excluding the interests of lessors under operating leases).
“Liquidation” means the exercise by the Agent of those rights and remedies
accorded to the Agent under the Loan Documents and applicable Laws as a creditor
of the Loan Parties with respect to the realization on the Collateral, including
(after the occurrence and during the continuation of an Event of Default) the
conduct by the Loan Parties acting with the consent of the Agent, of any public,
private or “going-out-of-business”, “store closing” or other similar sale or any
other disposition of the Collateral for the purpose of liquidating the
Collateral. Derivations of the word “Liquidation” (such as “Liquidate”) are used
with like meaning in this Agreement.
“Loan Account” has the meaning assigned to such term in Section 2.11.
“Loan Documents” means this Agreement, each Note, the ABL Intercreditor
Agreement, the Perfection Certificate, the Fee Letter, all Borrowing Base
Certificates, the Blocked Account Agreements, the Credit Card Notifications, the
Security Documents, the Sears Tri-Party Agreement, and any other instrument or
agreement now or hereafter executed and delivered in connection herewith, each
as amended and in effect from time to time.
“Loan Parties” means, collectively, the Borrowers and each Guarantor.
“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual
or contingent), or financial condition of the Parent and its Subsidiaries taken
as a whole; (b) a material impairment of the ability of the Loan Parties taken
as a whole to perform their obligations under the Loan Documents to which they
are a party; or (c) a material impairment of the rights and remedies of the
Agent or the Lenders under the Loan Documents taken as a whole or a material
adverse effect upon the legality, validity, binding effect or enforceability
against the Loan Parties of the Loan Documents to which they are a party taken
as a whole. In determining whether any individual event would result in a
Material Adverse Effect, notwithstanding that such event in and of itself does
not have such effect, a Material Adverse Effect shall be deemed to have occurred
if the cumulative effect of such event and all other then existing events would
result in a Material Adverse Effect.
“Material Contract” means, with respect to any Person, (a) the Separation
Agreements unless, with respect to any Separation Agreement, such Separation
Agreement has been terminated on a basis reasonably satisfactory to the Agent,
and (b) each contract to which such Person is a party set forth in the
Perfection Certificate as a Material Contract, and (c) any replacements of, or
substitutions for, any of the foregoing.
“Material Indebtedness” means (a) Indebtedness under the Revolver Credit
Agreement and (b) Indebtedness (other than the Obligations) of the Loan Parties
in an aggregate principal amount exceeding $25,000,000. Notwithstanding the
foregoing, any Indebtedness incurred under clause (j) of the definition of
“Permitted Indebtedness” shall at all times be deemed Material Indebtedness
hereunder. For purposes of determining the amount of Material Indebtedness at
any time, (a) the amount of the obligations in respect of any Swap Contract at
such time shall be calculated at the Swap Termination Value thereof, (b) undrawn
and committed amounts shall be included, and (c) all amounts owing to all
creditors under any combined or syndicated credit arrangement shall be included.
“Material Subsidiary” means any Subsidiary other than an Immaterial Subsidiary.
“Maturity Date” means the earlier to occur of (a) February 16, 2023 and (b) the
Revolver Maturity Date.
“Maximum Rate” has the meaning provided therefor in Section 10.09.
“Measurement Period” means, at any date of determination, the most recently
completed twelve fiscal month period.
“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.
“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Parent or any ERISA Affiliate makes or
is obligated to make contributions or has any continuing liability.
“Multiple Employer Plan” means a Plan which has two or more contributing
sponsors (including the Parent or any ERISA Affiliate) at least two of whom are
not under common control, as such a plan is described in Section 4064 of ERISA.
“Net Proceeds” means (a) with respect to any Disposition by any Loan Party or
any of its Subsidiaries, or any Extraordinary Receipt received or paid to the
account of any Loan Party or any of its Subsidiaries, the excess, if any, of (i)
the sum of cash and cash equivalents received in connection with such
transaction (including any cash or cash equivalents received by way of deferred
payment pursuant to, or by monetization of, a note receivable or otherwise, but
only as and when so received) minus (ii) the sum of (A) the principal amount of
any Indebtedness that is secured by the applicable asset by a Lien permitted
hereunder which is senior to the Agent’s Lien (if any) on such asset and that is
required to be repaid (or to establish an escrow for the future repayment
thereof) in connection with such transaction (other than Indebtedness under the
Loan Documents), and (B) the reasonable and customary out-of-pocket expenses
incurred by such Loan Party or such Subsidiary in connection with such
transaction (including, without limitation, appraisals, and brokerage, legal,
title and recording or transfer tax expenses and commissions) paid by any Loan
Party to third parties (other than Affiliates)); and
(b)    with respect to the sale or issuance of any Equity Interest by any Loan
Party or any of its Subsidiaries, or the incurrence or issuance of any
Indebtedness by any Loan Party or any of its Subsidiaries, the excess of (i) the
sum of the cash and cash equivalents received in connection with such
transaction minus (ii) the underwriting discounts and commissions, and other
reasonable and customary out-of-pocket expenses, incurred by such Loan Party or
such Subsidiary in connection therewith.
“Non-Consenting Lender” has the meaning provided therefor in Section 10.01.
“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting
Lender at such time.
“Note” means a promissory note made by the Borrowers in favor of a Lender
evidencing Term Loans made by such Lender, substantially in the form of Exhibit
B, as each may be amended, supplemented or modified from time to time.
“NPL” means the National Priorities List under CERCLA.
“Obligations” means all advances to, and debts (including principal, interest,
fees, costs, and expenses), liabilities, obligations, covenants, indemnities,
and duties of, any Loan Party arising under any Loan Document with respect to
any Term Loan, whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest, fees, costs, expenses and indemnities
that accrue after the commencement by or against any Loan Party of any
proceeding under any Debtor Relief Laws naming such Person as the debtor in such
proceeding, regardless of whether such interest, fees costs, expenses and
indemnities are allowed claims in such proceeding.
“Operating Segment” means each of (a) the hometown dealer business, including
the hardware business and the appliance showroom business, and (b) the outlet
stores business.
“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; (c) with respect to any
partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity, and (d) in each case, all shareholder or other
equity holder agreements, voting trusts and similar arrangements to which such
Person is a party.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such Tax (other than connections arising solely from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in any Term Loan or Loan
Document).
“Other Property” shall have the meaning provided in clause (r) of the definition
of “Permitted Encumbrances”.
“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Excluded
Taxes (other than with respect to an assignment made pursuant to Section 3.06).
“Outstanding Amount” means with respect to the Term Loans on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowings and prepayments or repayments of Term Loans occurring on such date.
“Overadvance” means any Term Loan made or deemed made hereunder to the extent
that, immediately after giving effect thereto, the Total Outstandings exceed the
sum of the (x) Borrowing Base plus (y) the amount (if any) of the Term Loan
Push-Down Reserve maintained against the Revolver Borrowing Base.
“Parent” has the meaning specified in the introductory paragraph hereto.
“Participant” has the meaning specified in Section 10.06(d).
“Participant Register” has the meaning provided therefor in Section 10.06(d).
“Payment Conditions” means, at the time of determination with respect to any
specified transaction or payment, that (a) no Default or Event of Default then
exists or would arise as a result of entering into such transaction or the
making of such payment, (b) after giving effect to such transaction or payment,
the Pro Forma Availability Condition has been satisfied, and (c) after giving
effect to such transaction or payment, the Consolidated Fixed Charge Coverage
Ratio, as calculated on a pro forma basis for the Measurement Period preceding
such transaction or payment, is equal to or greater than 1.0:1.0. Prior to
undertaking any transaction or payment which is subject to the Payment
Conditions, the Loan Parties shall deliver to the Agent evidence of satisfaction
of the conditions contained in clauses (b) and (c) above on a basis reasonably
satisfactory to the Agent, including pursuant to good faith projections prepared
consistent with past practice, which projections shall be reasonably
satisfactory to the Agent.
“PBGC” means the Pension Benefit Guaranty Corporation.
“PCAOB” means the Public Company Accounting Oversight Board.
“Pension Act” means the Pension Protection Act of 2006.
“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum
required contributions (including any installment payment thereof) to Pension
Plans and Multiemployer Plans and set forth in, with respect to plan years
ending prior to the effective date of the Pension Act, Section 412 of the Code
and Section 302 of ERISA, each as in effect prior to the Pension Act and,
thereafter, Sections 412, 430, 431, 432 and 436 of the Code and Sections 302,
303, 304 and 305 of ERISA.
“Pension Plan” means any employee pension benefit plan (including a Multiple
Employer Plan but excluding a Multiemployer Plan) that is maintained or is
contributed to by the Parent and any ERISA Affiliate and is either covered by
Title IV of ERISA or is subject to the minimum funding standards under
Section 412 of the Code.
“Perfection Certificate” means the Perfection Certificate dated as of the
Effective Date by the Loan Parties.
“Permitted Acquisition” means an Acquisition in which all of the following
conditions are satisfied:
(a)    such Acquisition shall have been approved by the Board of Directors of
the Person (or similar governing body if such Person is not a corporation) which
is the subject of such Acquisition and such Person shall not have announced that
it will oppose such Acquisition or shall not have commenced any action which
alleges that such Acquisition shall violate applicable Law;
(b)    the Lead Borrower shall have furnished the Agent with thirty (30) days’
prior written notice of such intended Acquisition and a current draft of the
Acquisition documents (and final copies thereof as and when executed);
(c)    if the total consideration payable in connection such Acquisition is
$20,000,000 or more, the Lead Borrower shall have furnished the Agent with a
summary of any due diligence undertaken by the Loan Parties in connection with
such Acquisition, customary historical financial statements of the Person which
is the subject of such Acquisition to the extent available, pro forma financial
statements for the most recently completed Measurement Period of the Parent
after giving effect to such Acquisition (including a balance sheet and income
statement), and such other information as the Agent may reasonably require;
(d)    if the Acquisition is of Equity Interests and if any of the proceeds of
any Borrowing or any extensions of credit under the Revolver Credit Agreement
are to be used to consummate the Acquisition, the legal structure of the
Acquisition shall be reasonably acceptable to the Agent;
(e)    any assets acquired shall be utilized in, and if the Acquisition involves
a merger, consolidation or acquisition of Equity Interests, the Person which is
the subject of such Acquisition shall be engaged in, a business otherwise
permitted to be engaged in by the Parent and its Subsidiaries under this
Agreement;
(f)    any Subsidiary acquired or formed in such Acquisition shall be joined as
a Loan Party, shall grant a first priority (subject to (x) the Revolver Agent
Liens and (y) Permitted Encumbrances having priority over the Lien of the Agent
by operation of applicable Law) security interest in such property of such
Subsidiary of the same nature as constitutes Collateral under the Security
Documents and shall take such further actions within the time set forth in, and
subject to and in accordance with the provisions of, Section 6.11 hereof, to the
extent required thereunder; and
(g)    the Payment Conditions shall have been satisfied.
“Permitted Cash Equivalents” shall mean:
(a)     readily marketable obligations issued or directly and fully guaranteed
or insured by the United States of America or any agency or instrumentality
thereof having maturities of not more than 360 days from the date of acquisition
thereof; provided that the full faith and credit of the United States of America
is pledged in support thereof;
(b)    commercial paper issued by any Person organized under the laws of any
state of the United States of America and rated at least “Prime-1” (or the then
equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by
S&P, in each case with maturities of not more than 180 days from the date of
acquisition thereof;
(c)    time deposits with, or insured certificates of deposit or bankers’
acceptances of, any commercial bank that (i) (A) is a Lender or a “Lender” under
the Revolver Credit Agreement or (B) is organized under the laws of the United
States of America, any state thereof or the District of Columbia or is the
principal banking subsidiary of a bank holding company organized under the laws
of the United States of America, any state thereof or the District of Columbia,
and is a member of the Federal Reserve System, and (ii) has combined capital and
surplus of at least $1,000,000,000, in each case with maturities of not more
than 180 days from the date of acquisition thereof;
(d)    fully collateralized repurchase agreements with a term of not more than
thirty (30) days for securities described in clause (a) above (without regard to
the limitation on maturity contained in such clause) and entered into with a
financial institution satisfying the criteria described in clause (c) above or
with any primary dealer and having a market value at the time that such
repurchase agreement is entered into of not less than 100% of the repurchase
obligation of such counterparty entity with whom such repurchase agreement has
been entered into; and
(e)    Investments, classified in accordance with GAAP as current assets of the
Loan Parties, in any money market fund, mutual fund, or other investment
companies that are registered under the Investment Company Act of 1940, as
amended, which are administered by financial institutions that have the highest
rating obtainable from either Moody’s or S&P, and which invest solely in one or
more of the types of securities described in clauses (a) through (d) above.
“Permitted Discretion” means a determination made by the Agent in good faith and
in the exercise of commercially reasonable business judgment.
“Permitted Disposition” means any of the following:
(a)    Dispositions of Inventory in the ordinary course of business;
(b)    bulk sales or other Dispositions of the Inventory of a Loan Party not in
the ordinary course of business in connection with Permitted Store Closings, at
arm’s length;
(c)    non-exclusive licenses of Intellectual Property of a Loan Party or any of
its Subsidiaries to Third Party Dealers and Third Party Franchisees in the
ordinary course of business;
(d)    licenses for the conduct of licensed departments within the Loan Parties’
Stores in the ordinary course of business; provided that, with respect to
licensed departments established after the Effective Date or with respect to any
material increase in revenue after the Effective Date of any existing licensed
departments as of the Effective Date, if requested by the Agent, the Lead
Borrower shall use commercially reasonable efforts to cause the Person operating
such licensed department to enter into an intercreditor agreement with the Agent
on terms and conditions similar to those entered into in connection with other
credit agreements in which GBFC acts as agent or on other current market
agreements;
(e)    Dispositions of equipment and other property in the ordinary course of
business that is worn, damaged, obsolete or, in the judgment of a Loan Party, no
longer useful or necessary in its business or that of any Subsidiary;
(f)    sales, transfers and other Dispositions among the Loan Parties or by any
Subsidiary to a Loan Party;
(g)    sales, transfers and other Dispositions by any Subsidiary which is not a
Loan Party to another Subsidiary that is not a Loan Party;
(h)    Dispositions which constitute Restricted Payments that are otherwise
permitted hereunder;
(i)    Dispositions permitted pursuant to Sections 7.02 and 7.04 hereof;
(j)    the Disposition of defaulted receivables and the compromise, settlement
and collection of receivables in the ordinary course of business or in
bankruptcy or other proceedings concerning the other account party thereon and
not as part of an accounts receivable financing transaction;
(k)    leases, licenses or subleases or sublicenses of any real or personal
property not constituting Collateral in the ordinary course of business;
(l)    any surrender or waiver of contract rights or the settlement, release,
recovery on or surrender of contract, tort or other claims of any kind (other
than, in each case, with respect to rights to license the Related Intellectual
Property, unless the limited license granted to the Agent in such Related
Intellectual Property pursuant to the Loan Documents remains in effect and is
acknowledged by the licensee) to the extent that any of the foregoing could not
reasonably be expected to have a Material Adverse Effect;
(m)    the sale of other Permitted Cash Equivalents in the ordinary course of
business;
(n)    sales of Inventory (other than Eligible Inventory) determined by the
management of the applicable Loan Party not to be saleable in the ordinary
course of business of such Loan Party or any of the Loan Parties;
(o)    Dispositions of Related Intellectual Property to Persons that have
entered into an agreement, reasonably satisfactory to the Agent, acknowledging
the limited license granted to the Agent in such Related Intellectual Property
pursuant to the Loan Documents and agreeing to abide by, and not interfere with,
such limited license;
(p)    Dispositions of property not constituting Collateral in an amount not to
exceed $20,000,000 in the aggregate as to all such dispositions occurring after
the Revolver Effective Date, irrespective of whether the Payment Conditions have
been satisfied;
(q)    Dispositions of other property not constituting Collateral so long as the
Payment Conditions are satisfied; and
(r)    Dispositions pursuant to Permitted Sale Leaseback transactions.
“Permitted Encumbrances” means:
(a)    Liens imposed by law for Taxes that are not yet due or are being
contested in compliance with Section 6.04;
(b)    carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and
other like Liens imposed by applicable Laws, arising in the ordinary course of
business and securing obligations that are not overdue by more than thirty (30)
days or are being contested in compliance with Section 6.04;
(c)    Liens, pledges and deposits made in the ordinary course of business in
connection with workers’ compensation and other casualty insurance lines,
unemployment insurance and other types of social security laws or regulations,
other than any Lien imposed by ERISA;
(d)    Liens incurred or deposits made to secure the performance of tenders,
bids, trade contracts and leases (other than Indebtedness for borrowed money),
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business;
(e)    Liens in respect of judgments that would not constitute an Event of
Default hereunder;
(f)    easements, covenants, conditions, restrictions, building code laws,
zoning restrictions, rights-of-way and similar encumbrances on real property
imposed by Law or arising in the ordinary course of business that do not
materially interfere with the ordinary conduct of business of a Loan Party and
such other minor title defects or survey matters that are disclosed by current
surveys that, in each case, do not materially interfere with the current use of
the real property;
(g)    Liens existing on the Revolver Effective Date that are listed in the
Perfection Certificate (other than the Revolver Agent Liens) and Liens to secure
any Permitted Refinancings of the Indebtedness with respect thereto;
(h)    Liens on fixed or capital assets of any Loan Party which secure
Indebtedness permitted under clause (c) of the definition of Permitted
Indebtedness so long as (i) such Liens and the Indebtedness secured thereby are
incurred prior to or within ninety (90) days after the acquisition thereof, (ii)
the Indebtedness secured thereby does not exceed the cost of acquisition of the
applicable assets, and (iii) such Liens shall attach only to the assets
acquired, improved or refinanced with such Indebtedness and shall not extend to
any other property or assets of the Loan Parties;
(i)    Liens in favor of the Agent securing the Obligations;
(j)    landlords’ and lessors’ statutory Liens in respect of rent not in
default;
(k)    possessory Liens in favor of brokers and dealers arising in connection
with the acquisition or disposition of Investments owned as of the Revolver
Effective Date and other Permitted Investments, provided that such liens (a)
attach only to such Investments and (b) secure only obligations incurred in the
ordinary course and arising in connection with the acquisition or disposition of
such Investments and not any obligation in connection with margin financing;
(l)    Liens arising solely by virtue of any statutory or common law provisions
or customary contractual provisions relating to banker’s Liens, Liens in favor
of securities intermediaries, rights of setoff or similar rights and remedies as
to deposit accounts or securities accounts or other funds maintained with
depository institutions or securities intermediaries, including rights of setoff
relating to the establishment of depository relations with banks not given in
connection with the issuance of Indebtedness or relating to pooled deposit or
sweep accounts of the Loan Parties to permit the satisfaction of overdraft or
similar obligations incurred in the ordinary course of business;
(m)    any interest of a lessor or sublessor under, and Liens arising from,
precautionary UCC filings (or equivalent filings) regarding leases and subleases
permitted under the Loan Documents (including, for the avoidance of doubt, in
connection with Permitted Sale Leasebacks);
(n)    any interest of, and Liens granted to consignors in the ordinary course
of business with respect to the consignment of goods to a Loan Party;
(o)    voluntary Liens on property (other than property of the type included in
the Borrowing Base) in existence at the time such property is acquired or on
such property of a Subsidiary in existence at the time such Subsidiary is
acquired pursuant to a Permitted Acquisition; provided, that such Liens are not
incurred in connection with or in anticipation of such Permitted Acquisition and
do not attach to any other assets of any Loan Party or any Subsidiary;
(p)    Liens in favor of customs and revenues authorities imposed by applicable
Laws arising in the ordinary course of business in connection with the
importation of goods and securing obligations that are not overdue by more than
thirty (30) days or are being contested in compliance with Section 6.04;
(q)    Liens on Related Intellectual Property with Persons that have entered
into an agreement, reasonably satisfactory to the Agent, acknowledging the
limited license granted to the Agent in such Related Intellectual Property
pursuant to the Loan Documents and agreeing to abide by, and not interfere with,
such limited license;
(r)    Liens on property of the Loan Parties to secure Permitted Indebtedness
under clause (j) or (k) of the definition thereof and any Permitted Refinancings
thereof; provided that, (i) any Liens on the Collateral granted by the Loan
Parties pursuant to this clause (r) shall be junior and subordinate to the
Agent’s Lien on the Collateral and shall be subject to an intercreditor
agreement on commercially reasonable terms similar to those entered into in
connection with other credit agreements in which GBFC acts as agent or on other
current market agreements, and (ii) if the Loan Parties grant Liens on both
Collateral and on other Collateral or other property or assets which do not
constitute Collateral (such other Collateral, property or assets not
constituting ABL Collateral hereinafter referred to as “Other Property”)
pursuant to this clause (r), the Loan Parties may grant a first priority Lien on
such Other Property to the Revolver Agent and shall grant a second priority Lien
on such Other Property to the Agent and shall cause the holder of such Permitted
Indebtedness to enter into an intercreditor agreement with the Revolver Agent
and the Agent on commercially reasonable terms similar to those entered into in
connection with other credit agreements in which GBFC acts as agent or on other
current market agreements;
(s)    other Liens securing obligations in an amount not to exceed $10,000,000
in the aggregate;
(t)    Liens in favor of Credit Card Issuers and Credit Card Processors arising
in the ordinary course of business securing the obligation to pay customary fees
and expenses in connection with credit card arrangements;
(u)    Liens on premium rebates securing financing arrangements with respect to
insurance premiums;
(v)    Liens on securities that are the subject of repurchase agreements
constituting Permitted Cash Equivalents;
(w)    Liens on cash or Permitted Cash Equivalents posted as margin to secure
Indebtedness incurred pursuant to section (e) of the definition of Permitted
Indebtedness;
(x)    Liens solely on any cash earnest money deposits made by any Loan Party or
any of its Subsidiaries in connection with any letter of intent or purchase
agreement in respect of any Investment permitted hereunder; and
(y)    the Revolver Agent Liens (including, for the avoidance of doubt, in
respect of cash collateral provided in accordance with the Revolver Loan
Documents), provided that such Liens shall be subject to the ABL Intercreditor
Agreement.
“Permitted Holder” means ESL Investments, Inc. and any of its Affiliates other
than SHC and its Subsidiaries.
“Permitted Indebtedness” means each of the following:
(a)    Indebtedness outstanding on the Revolver Effective Date that is listed in
the Perfection Certificate and any Permitted Refinancing thereof;
(b)    Indebtedness of any Loan Party to any other Loan Party;
(c)    purchase money Indebtedness of the Parent or any Subsidiary to finance
the acquisition of any real or personal property consisting solely of fixed or
capital assets, including Capital Lease Obligations, and any Indebtedness
assumed in connection with the acquisition of any such assets or secured by a
Lien on any such assets prior to the acquisition thereof, and Permitted
Refinancings thereof, provided, however, that the aggregate principal amount of
Indebtedness permitted by this clause (c) shall not exceed $75,000,000 at any
time outstanding and further provided that, if reasonably requested by the Agent
with respect to property that is material to the realization on the Collateral,
the Loan Parties shall use commercially reasonable efforts to cause the holders
of such Indebtedness to enter into a use and access agreement on terms
reasonably satisfactory to the Agent;
(d)    contingent liabilities under surety bonds or similar instruments incurred
in the ordinary course of business in connection with the construction or
improvement of Stores;
(e)    obligations (contingent or otherwise) of any Loan Party or any Subsidiary
thereof existing or arising under any Swap Contract, provided that (i) such
obligations are (or were) entered into by such Person in the ordinary course of
business for the purpose of directly mitigating risks associated with
fluctuations in interest rates or foreign exchange rates, and not for purposes
of speculation or taking a “market view” and (ii) such Swap Contract does not
contain any provision exonerating the non-defaulting party from its obligation
to make payments on outstanding transactions to the defaulting party;
(f)    Indebtedness arising from agreements of the Parent or any Subsidiary
providing for indemnification, adjustment of purchase or acquisition price,
deferred purchase price or similar obligations with respect to any Acquisition
permitted under Section 7.02 or Disposition permitted by Section 7.05;
(g)    Indebtedness of any Person that becomes a Subsidiary of a Loan Party in a
Permitted Acquisition, which Indebtedness is existing at the time such Person
becomes a Subsidiary of a Loan Party (other than Indebtedness incurred solely in
contemplation of such Person’s becoming a Subsidiary of a Loan Party);
(h)    the Obligations;
(i)    Indebtedness that is unsecured or subordinated so long as the terms of
such Indebtedness and the subordination provisions relating to such Indebtedness
are reasonably acceptable to the Agent;
(j)    Indebtedness under one or more term loan facilities in an aggregate
amount not to exceed $250,000,000, which facilities have a maturity date of not
earlier than 91 days following the Maturity Date described in clause (a) of the
definition thereof, which do not require the repayment of principal prior to the
Maturity Date described in clause (a) of the definition thereof in excess of one
percent (1.00%) per annum of the original principal amount thereof (excluding,
for the avoidance of doubt, repayments required as a result of asset sales,
change of control or events of default thereunder) and which term loan
facilities if secured by Liens on Collateral, shall be subject to an
intercreditor agreement with the holder of such Indebtedness subordinating such
Liens on the Collateral to the Liens of the Agent and the Liens of the Revolver
Agent on the Collateral and otherwise on commercially reasonable terms similar
to those entered into in connection with other credit agreements in which Bank
of America acts as agent or on other current market agreements;
(k)    Reserved;
(l)    (i) Indebtedness of any Subsidiary of the Parent that is not a Loan Party
to any other Subsidiary that is not a Loan Party, (ii) Indebtedness of any Loan
Party to any Subsidiary that is not a Loan Party, provided such Indebtedness is
subordinated to the Obligations on terms reasonably satisfactory to the Agent
and such Indebtedness does not mature prior to the Maturity Date described in
clause (a) of the definition thereof, and (iii) Indebtedness of any Subsidiary
that is not a Loan Party to any Loan Party arising from a Permitted Investment
by such Loan Party in such Subsidiary that is not a Loan Party;
(m)    Indebtedness in respect of performance bonds, bid bonds, appeal bonds,
surety bonds and completion guarantees and similar obligations (including, in
each case, letters of credit issued to provide such bonds, guaranties and
similar obligations), in each case provided in the ordinary course of business,
including those incurred to secure health, safety and environmental obligations
in the ordinary course of business;
(n)    Indebtedness arising from overdraft facilities and/or the honoring by a
bank or other financial institution of a check, draft or similar instrument
drawn against insufficient funds in the ordinary course of business or other
cash management services (including, but not limited to, intraday, ACH and
purchasing card/T&E services) in the ordinary course of business; provided, that
(x) such Indebtedness (other than credit or purchase cards) is extinguished
within ten Business Days of notification to the applicable Loan Party of its
incurrence and (y) such Indebtedness in respect of credit or purchase cards is
extinguished within 60 days from its incurrence;
(o)    Indebtedness consisting of (i) the financing of insurance premiums or
(ii) take or pay obligations contained in supply arrangements, in each case, in
the ordinary course of business;
(p)    To the extent constituting Indebtedness, obligations incurred in the
ordinary course of business in respect of private label trade letters of credit
not constituting Obligations;
(q)    Indebtedness that is Permitted Refinancing Indebtedness;
(r)    Indebtedness arising from a Guarantee of any Indebtedness otherwise
constituting Permitted Indebtedness;
(s)    Guarantees issued to vendors in connection with invoices and purchase
orders in the ordinary course of business;
(t)    Indebtedness arising from any lease classified as Indebtedness and
entered into pursuant to any Permitted Sale Leaseback; provided that the
aggregate Indebtedness pursuant to this clause (t) shall not exceed $20,000,000
at any time outstanding; and
(u)    the Revolver Obligations; provided that Revolver Outstandings shall in no
event exceed $220,000,000.
“Permitted Investments” means each of the following:
(a)    Permitted Cash Equivalents;
(b)    Investments existing on the Revolver Effective Date and listed in the
Perfection Certificate, but not any increase in the amount thereof or any other
modification of the terms thereof;
(c)    (i) Investments by any Loan Party and its Subsidiaries in their
respective Subsidiaries outstanding on the Revolver Effective Date, (ii)
additional Investments by any Loan Party and the Subsidiaries in Loan Parties
(other than the Parent), (iii) additional Investments by Subsidiaries of the
Loan Parties that are not Loan Parties in other Subsidiaries that are not Loan
Parties and (iv) additional Investments by the Loan Parties in Subsidiaries that
are not Loan Parties in an aggregate amount invested after the Revolver
Effective Date not to exceed $15,000,000;
(d)    Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors to the extent
reasonably necessary in order to prevent or limit loss;
(e)    Guarantees constituting Permitted Indebtedness and Guarantees of
operating leases or other obligations that do not constitute Indebtedness, in
each case entered into in the ordinary course of business;
(f)    so long as no Default or Event of Default has occurred and is continuing
or would result from such Investment, Investments by any Loan Party in Swap
Contracts permitted hereunder;
(g)    Investments received in connection with the bankruptcy or reorganization
of, or settlement of delinquent accounts and disputes with, customers and
suppliers, in each case in the ordinary course of business;
(h)    advances to officers, directors and employees of the Loan Parties and
Subsidiaries in the ordinary course of business in an amount not to exceed
$1,000,000 to any individual at any time outstanding or in an aggregate amount
not to exceed $2,500,000 at any time outstanding, for ordinary business
purposes;
(i)    Investments constituting Permitted Acquisitions and Investments held by
the Person acquired in such Acquisition at the time of such Acquisition (and not
acquired in contemplation of the Acquisition);
(j)    Investments arising out of the receipt of non-cash consideration for the
sale of assets otherwise permitted under this Agreement;
(k)    Investments in Swap Contracts not entered into for speculative purposes;
(l)    advances in the form of a prepayment of expenses, so long as such
expenses are being paid in accordance with customary trade terms of the
applicable Loan Party;
(m)    Investments consisting of the licensing or contribution of Intellectual
Property pursuant to joint marketing arrangements with other Persons, provided
that no such Investment shall impair in any manner the limited license granted
to the Agent in such Intellectual Property pursuant to the Loan Documents; and
(n)    Investments in joint ventures that solely own real properties (and
ancillary assets) upon which Stores are located existing as of the Revolver
Effective Date and entered into thereafter in the ordinary course of business;
(o)    other Investments not otherwise specifically described herein not to
exceed $10,000,000 at any time outstanding irrespective of whether the Payment
Conditions have been satisfied; and
(p)    other Investments not otherwise specifically described herein so long as
the Payment Conditions have been satisfied.
“Permitted Overadvance” means an Overadvance made by the Agent, in its
discretion, which:
(a)    Is made to maintain, protect or preserve the Collateral and/or the Credit
Parties’ rights under the Loan Documents or which is otherwise for the benefit
of the Credit Parties; or
(b)    Is made to enhance the likelihood of, or to maximize the amount of,
repayment of any Obligation; or
(c)    Is made to pay any other amount chargeable to any Loan Party hereunder;
provided however, that the foregoing shall not result in any claim or liability
against the Agent (regardless of the amount of any Overadvance) for
Unintentional Overadvances, and such Unintentional Overadvances shall not reduce
the amount of Permitted Overadvances allowed hereunder, and further provided
that in no event shall the Agent make an Overadvance that, when taken together
with all other Permitted Overadvances then outstanding, would exceed 5% of the
Borrowing Base.
“Permitted Refinancing” means, with respect to any Person, any Indebtedness
issued in exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace, defease or refund (collectively, to “Refinance”), the
Indebtedness being Refinanced (or previous refinancings thereof constituting a
Permitted Refinancing); provided, that (a) the principal amount (or accreted
value, if applicable) of such Permitted Refinancing does not exceed the
principal amount (or accreted value, if applicable) of the Indebtedness so
Refinanced (plus unpaid accrued interest and premiums thereon and underwriting
discounts, defeasance costs, fees, commissions and expenses), (b) the weighted
average life to maturity of such Permitted Refinancing is greater than or equal
to the weighted average life to maturity of the Indebtedness being Refinanced
(c) such Permitted Refinancing shall not have a final maturity earlier than the
final maturity of the Indebtedness being refinanced, (d) in the case of a
Permitted Refinancing of Indebtedness of the type described in clause (j) of the
definition of Permitted Indebtedness, such Permitted Refinancing Indebtedness
shall not require any repayment of principal prior to the Maturity Date
described in clause (a) of the definition thereof in excess of one percent
(1.00%) per annum of the original principal amount thereof (excluding, for the
avoidance of doubt, repayments required as a result of assets sales, change of
control or events of default thereunder), (e) if the Indebtedness being
Refinanced is subordinated in right of payment to the Obligations, such
Permitted Refinancing shall be subordinated in right of payment to such
Obligations on terms at least as favorable to the Agent and the Lenders as those
contained in the documentation governing the Indebtedness being Refinanced and
(f) no Permitted Refinancing shall have direct or indirect obligors who were not
also obligors of the Indebtedness being Refinanced, or greater guarantees or
security, than the Indebtedness being Refinanced.
“Permitted Sale Leaseback” shall mean any Sale Leaseback consummated by the
Borrower or any of its Subsidiaries, provided that any such Sale Leaseback not
between (a) a Loan Party and another Loan Party or (b) a Subsidiary that is not
a Loan Party to another Subsidiary that is not a Loan Party is consummated for
fair value as determined at the time of consummation in good faith by the
Borrower or such Subsidiary; and provided further that, if requested by the
Agent in its Permitted Discretion, the Borrower shall use commercially
reasonable efforts to obtain a Collateral Access Agreement from any lessor with
respect to any such Permitted Sale Leaseback.
“Permitted Store Closings” means (a) Store closures and related Inventory
dispositions which do not exceed (i) in any Fiscal Year of the Parent and its
Subsidiaries, Stores representing ten (10%) percent of the amount of Inventory
of the Loan Parties’ as of the beginning of such Fiscal Year and (ii) in the
aggregate from and after the Revolver Effective Date, Stores representing forty
(40%) percent of the amount of Inventory of the Loan Parties’ as of the Revolver
Effective Date; provided that, for purposes of this clause (a), Store closures
and related Inventory dispositions occurring with respect to a “Sears Home
Appliance Showroom” or a “Sears Hardware Store” shall be excluded from the
calculations of such ten (10%) percent and forty (40%) percent limitations, as
applicable, and (b) the related Inventory is either moved to a distribution
center or another retail location of the Loan Parties for future sale in the
ordinary course of business or is disposed of at such Stores in accordance with
liquidation agreements and with professional liquidators reasonably acceptable
to the Agent.
“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, limited partnership,
Governmental Authority or other entity.
“Plan” means any employee benefit plan within the meaning of Section 3(3) of
ERISA (including a Pension Plan but excluding a Multiemployer Plan) maintained
for employees of the Parent or any ERISA Affiliate or any such Plan to which the
Parent or any ERISA Affiliate is required to contribute on behalf of any of its
employees.
“Platform” has the meaning specified in Section 6.02.
“Pro Forma Availability Condition” shall mean, as of any date of calculation,
Pro Forma Excess Availability will be equal to or greater than the greater of
(a) 20% of the Revolver Loan Cap and (b) $40,000,000.
“Pro Forma Excess Availability” shall mean, as of any date of calculation, after
giving pro forma effect to the transaction then to be consummated or payment to
be made, Availability as of the date of such transaction or payment and
projected average monthly Availability for each month during the subsequent
projected twelve (12) fiscal months.
“Public Lender” has the meaning specified in Section 6.02.
“Real Estate” means all Leases and all land, together with the buildings,
structures, parking areas, and other improvements thereon, now or hereafter
owned by any Loan Party, including all easements, rights-of-way, and similar
rights relating thereto and all leases, tenancies, and occupancies thereof.
“Recipient” means the Agent, any Lender, or any other recipient of any payment
to be made by or on account of any obligation of any Loan Party hereunder.
“Register” has the meaning specified in Section 10.06(c).
“Registered Public Accounting Firm” has the meaning specified by the Securities
Laws and shall be independent of the Parent and its Subsidiaries as prescribed
by the Securities Laws.
“Related Intellectual Property” means such rights with respect to the
Intellectual Property of the applicable Subsidiaries of SHC (other than Sears
Canada Inc. and its Subsidiaries) as are reasonably necessary to permit the
Agent to enforce its rights and remedies under the Loan Documents with respect
to the Collateral.
“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents, trustees,
administrators, managers, advisors and representatives of such Person and of
such Person’s Affiliates.
“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived as
of the date hereof.
“Reports” has the meaning provided in Section 9.12(c).
“Request for Credit Extension” means with respect to a Borrowing, a Committed
Loan Notice.
“Required Lenders” means, as of any date of determination, (a) prior to the
Effective Date and the funding of Term Loans hereunder, Lenders holding at least
51% of the Aggregate Commitments or (b) at any time after the Effective Date and
the funding of the Term Loans hereunder, Lenders holding in the aggregate at
least 51% of the Total Outstandings; provided that the Commitment of, and the
portion of the Total Outstandings held or deemed held by, any Defaulting Lender
shall be excluded for purposes of making a determination of Required Lenders.
“Reserves” means all Inventory Reserves and Availability Reserves. The Agent
shall have the right, at any time and from time to time after the Effective Date
in its Permitted Discretion to establish, modify or eliminate Reserves, in each
case, to the extent provided for in the definitions of Inventory Reserves and
Availability Reserves.
“Responsible Officer” means the chief executive officer, president, chief
financial officer, treasurer or assistant treasurer of a Loan Party or any of
the other individuals designated in writing to the Agent by an existing
Responsible Officer of a Loan Party as an authorized signatory of any
certificate or other document to be delivered hereunder. Any document delivered
hereunder that is signed by a Responsible Officer of a Loan Party shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Loan Party.
“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity
Interest of Parent or any of its Subsidiaries, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, defeasance, acquisition,
cancellation or termination of any such capital stock or other Equity Interest
of Parent or any of its Subsidiaries, or on account of any return of capital to
Parent’s or its Subsidiaries’ stockholders, partners or members (or the
equivalent of any thereof), or any option, warrant or other right to acquire any
such dividend or other distribution or payment. Without limiting the foregoing,
“Restricted Payments” with respect to any Person shall also include all payments
made by such Person with any proceeds of a dissolution or liquidation of such
Person.
“Restricted Payment Conditions” means, with respect to any Restricted Payment,
either (a) (i) no Default or Event of Default then exists or would arise as a
result of the making of such Restricted Payment, (ii) the Borrowers have
demonstrated to the reasonable satisfaction of the Agent that monthly
Availability, immediately following the making of such Restricted Payment and as
projected on a pro forma basis for the twelve (12) months following and after
giving effect to such Restricted Payment, will be at least equal to the greater
of (x) 25% of the Revolver Loan Cap, and (y) $50,000,000, and (iii) after giving
pro forma effect to such Restricted Payment as if such Restricted Payment
constituted a “Debt Service Charge”, the Consolidated Fixed Charge Coverage
Ratio, as calculated on a trailing twelve months basis, is equal to or greater
than 1.1:1.0, or (b) (i) no Default or Event of Default then exists or would
arise as a result of the making of such Restricted Payment, and (ii) the
Borrowers have demonstrated to the reasonable satisfaction of the Agent that
monthly Availability, immediately following the making of such Restricted
Payment and as projected on a pro forma basis for the twelve (12) months
following and after giving effect to such Restricted Payment, will be at least
equal to the greater of (x) 50% of the Revolver Loan Cap, and (y) $100,000,000.
Any projections provided by the Borrowers to the Agent in order to demonstrate
compliance with the forgoing Restricted Payment Conditions shall be good faith
projections prepared consistent with past practice, which projections shall be
reasonably satisfactory to the Agent.
“Revolver Agent” means Bank of America, N.A., in its capacity as administrative
agent and collateral agent under the Revolver Credit Agreement.
“Revolver Agent Liens” means Liens on Collateral granted by the Loan Parties in
favor of the Revolver Agent pursuant to the Revolver Loan Documents to secure
the Revolver Obligations.
“Revolver Availability Block” means the “Availability Block” under and as
defined in the Revolver Credit Agreement, as in effect on the date hereof or as
modified from time to time with the consent of the Agent or in accordance with
the ABL Intercreditor Agreement.
“Revolver Borrowing Base” means the “Borrowing Base” under and as defined in the
Revolver Credit Agreement, as in effect on the date hereof or as modified from
time to time with the consent of the Agent or in accordance with the ABL
Intercreditor Agreement.
“Revolver Credit Agreement” means that certain Amended and Restated Credit
Agreement, dated as of November 1, 2016, by and among the Borrowers, the Parent,
the other Loan Parties party thereto, the Revolver Agent and the other agents
and arrangers from time to time party thereto, as the same may from time to time
be amended, amended and restated, supplemented or otherwise modified from time
to time in accordance with this agreement and the ABL Intercreditor Agreement.
“Revolver Effective Date” means November 1, 2016.
“Revolver Loan Cap” means, at any time of determination, the “Loan Cap” under
and as defined in the Revolver Credit Agreement, as in effect on the date
hereof.
“Revolver Loan Documents” means the “Loan Documents” under and as defined in the
Revolver Credit Agreement.
“Revolver Maturity Date” means the “Termination Date” under and as defined in
the Revolver Credit Agreement, as in effect on the date hereof, as such date may
be extended from time to time with the consent of the Agent or in accordance
with the ABL Intercreditor Agreement.
“Revolver Obligations” means the “Obligations” under and as defined in the
Revolver Credit Agreement, as in effect on the Effective Date.
“Revolver Outstandings” means “Total Outstandings” as defined in the Revolver
Credit Agreement, as in effect on the Effective Date.
“Rights Offering” means the planned distribution by SHC to each holder of its
common stock of transferable subscription rights to purchase the Equity
Interests of the Parent on the terms and conditions set forth in the Form S-1
Registration Statement dated April 26, 2012 (as amended and in effect on
October 11, 2012.
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. and any successor thereto.
“Sale Leaseback” shall mean any transaction or series of related transactions
pursuant to which the Borrower or any of its Subsidiaries (a) sells, transfers
or otherwise disposes of any property, real or personal (other than Inventory),
whether now owned or hereafter acquired, and (b) as part of such transaction,
thereafter rents or leases such property or other property that it intends to
use for substantially the same purpose or purposes as the property being sold,
transferred or disposed.
“Sanction(s)” means any sanction administered or enforced by the United States
Government (including, without limitation, the Office of Foreign Assets Control
(“OFAC”), the United Nations Security Council, the European Union, Her Majesty’s
Treasury (“HMT”) or other relevant sanctions authority.
“Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002.
“Sears Tri-Party Agreement” means the Amended and Restated Agreement dated the
Effective Date among the Agent, the Revolver Agent, the Loan Parties and SHC and
certain of its Subsidiaries, and as the same may be amended and in effect from
time to time.
“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
“Securities Laws” means the Securities Act of 1933, the Securities Exchange Act
of 1934, Sarbanes-Oxley, and the applicable accounting and auditing principles,
rules, standards and practices promulgated, approved or incorporated by the SEC
or the PCAOB.
“Security Documents” means the Guaranty and Security Agreement, the Blocked
Account Agreements, the Credit Card Notifications, and each other security
agreement or other instrument or document executed and delivered to the Agent
pursuant to this Agreement or any other Loan Document granting a Lien to secure
any of the Obligations.
    “Separation Agreements” means each of: (a) the Services Agreement dated
August 8, 2012 between Sears Holding Management Corporation and the Parent, (b)
the Merchandising Agreement dated August 8, 2012 by and among Sears, Roebuck and
Co., Kmart Corporation and SHC, on the one hand, and the Parent, the Lead
Borrower, and Sears Outlet Stores, L.L.C., on the other hand, (c) the Store
License Agreement dated August 8, 2012 between Sears, Roebuck and Co. and the
Lead Borrower, (d) the Store License Agreement dated August 8, 2012 between
Sears, Roebuck and Co. and Sears Outlet Stores, L.L.C., (e) the Store License
Agreement dated August 8, 2012 between Sears, Roebuck and Co. and Sears Home
Appliance Showrooms, LLC, (f) the Trademark License Agreement dated August 8,
2012 between Sears, Roebuck and Co. and the Parent, (g) the Shop Your Way
Rewards Retail Establishment Agreement dated August 8, 2012 between Sears
Holdings Management Corporation and the Parent, (h) the Tax Sharing Agreement
dated August 8, 2012 between SHC and the Parent, and (i) the ETSA, in each case,
as amended from time to time following the Rights Offering, including by the
applicable amendments to such agreements as disclosed on the Parent’s Form 8-K
on May 17, 2016.
“Settlement Date” has the meaning provided in Section 2.14(a).
“Shareholders’ Equity” means, as of any date of determination, consolidated
shareholders’ equity of the Parent and its Subsidiaries as of that date
determined in accordance with GAAP.
“SHC” means Sears Holdings Corporation, a Delaware corporation.
“Shrink” means Inventory which has been lost, misplaced, stolen, or is otherwise
unaccounted for.
“Solvent” and “Solvency” means, with respect to any Person and its Subsidiaries
on a Consolidated basis on a particular date, that on such date (a) at fair
valuation, all of the properties and assets of such Person are greater than the
sum of the debts, including contingent liabilities, of such Person, (b) the
present fair saleable value of the properties and assets of such Person is not
less than the amount that would be required to pay the probable liability of
such Person on its debts as they become absolute and matured, (c) such Person is
able to realize upon its properties and assets and pay its debts and other
liabilities, contingent obligations and other commitments as they mature in the
normal course of business, (d) such Person does not intend to, and does not
believe that it will, incur debts beyond such Person’s ability to pay as such
debts mature, and (e) such Person is not engaged in a business or a transaction,
and is not about to engage in a business or transaction, for which such Person’s
properties and assets would constitute unreasonably small capital after giving
due consideration to the prevailing practices in the industry in which such
Person is engaged. The amount of all guarantees at any time shall be computed as
the amount that, in light of all the facts and circumstances existing at the
time, can reasonably be expected to become an actual or matured liability.
“Store” means any retail store (which may include any real property, fixtures,
equipment, inventory and other property related thereto) operated, or to be
operated, by any Loan Party (other than any location operated by a Third Party
Dealer or a Third Party Franchisee).
“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
Equity Interests having ordinary voting power for the election of directors or
other governing body are at the time beneficially owned, or the management of
which is otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise specified, all
references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of the Parent. Notwithstanding anything in this
Agreement or any other Loan Document to the contrary, an “Immaterial Subsidiary”
shall not be considered a “Subsidiary” of the Parent or any other Loan Party for
purposes of Articles V, VI, VII and VIII of this Agreement except for purposes
of Section 8.01(h).
“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.
“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).
“Synthetic Lease Obligation” means the obligations of a Person under any lease
that is treated as an operating lease for financial accounting purposes and a
financing lease for tax purposes.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.
“Term Loan” has the meaning specified in Section 2.01 and shall be deemed to
include all Incremental Term Loans.
“Term Loan Facility” means, at any time, the term loan facility represented by
(a) prior to the Effective Date and the funding of the Term Loans hereunder, the
Aggregate Commitments and (b) thereafter, the aggregate outstanding principal
amount of the Term Loans made to the Borrowers by the Lenders at such time.
“Term Loan Facility Increase” has the meaning set forth in Section 2.15(a).
“Term Loan Prepayment Fee” shall have the meaning set forth in the Fee Letter.
“Term Loan Push-Down Reserve” means a Reserve maintained against the Revolver
Borrowing Base in an amount equal to the amount by which (if any) the Total
Outstandings exceed the Borrowing Base.
“Termination Date” means the earliest to occur of (i) the Maturity Date, (ii)
the date on which the maturity of the Obligations is accelerated (or deemed
accelerated) in accordance with Article VIII, or (iii) the repayment or
prepayment of all Obligations in accordance with the provisions of Section
2.05(a) hereof.
“Third Party Dealer and Franchisee Eligibility Requirements” means,
collectively, each of the following:
(a)    The applicable Loan Party has executed an agreement (i) with the
applicable Third Party Dealer to operate a “Sears Authorized Hometown Store”,
“Sears Home Appliance Showroom” or “Sears Hardware Store” at a location owned or
leased and operated by such Third Party Dealer, substantially on the standard
form agreements containing terms and conditions established by the Loan Parties
from time to time, and with respect to any agreement executed or renewed or
extended after October 11, 2012, to include (A) an acknowledgement from such
Third Party Dealer that the Loan Parties, or the Agent, acting on behalf of the
Loan Parties, are authorized to transfer proceeds of the Inventory consigned by
such Loan Party to such Third Party Dealer from the bank account maintained by
such Third Party Dealer to an account in the name of a Loan Party, and (B) an
acknowledgement by the Third Party Dealer that the applicable Loan Party has
granted a Lien to the Agent on the Inventory consigned by such Loan Party to the
Third Party Dealer and an agreement by the Third Party Dealer to reasonably
cooperate with the Agent in the event of the exercise by the Agent of its rights
and remedies with respect to such Lien, or (ii) with the applicable Third Party
Franchisee to operate a “Sears Home Appliance Showroom” or a “Sears Hardware
Store” at a location owned or leased and operated by such Third Party
Franchisee, substantially on the standard form agreements containing terms and
conditions established by the Loan Parties from time to time, and with respect
to any agreement executed or renewed or extended after October 11, 2012, to
include (A) an acknowledgement from such Third Party Franchisee that the Loan
Parties, or the Agent, acting on behalf of the Loan Parties, are authorized to
transfer proceeds of the Inventory consigned by such Loan Party to such Third
Party Franchisee from the bank account maintained by such Third Party Franchisee
to an account in the name of a Loan Party, and (B) an acknowledgement by the
Third Party Franchisee that the applicable Loan Party has granted a Lien to the
Agent on the Inventory consigned by such Loan Party to the Third Party
Franchisee and an agreement by the Third Party Franchisee to reasonably
cooperate with the Agent in the event of the exercise by the Agent of its rights
and remedies with respect to such Lien;
(b)    The applicable Loan Party has provided the Agent with evidence that such
Loan Party has filed appropriate UCC financing statements against the applicable
Third Party Dealer or Third Party Franchisee evidencing the consignment
arrangement between such Loan Party and the applicable Third Party Dealer or
Third Party Franchisee with respect to the Inventory consigned by the such Loan
Party to the applicable Third Party Dealer or Third Party Franchisee, and has
taken all other action required under applicable Law to obtain a valid, first
priority perfected security interest in such Inventory (including, without
limitation, providing notification to other secured parties of the applicable
Third Party Dealer or Third Party Franchisee as required by the UCC);
(c)    If requested by the Revolver Agent (or after the repayment of all
Revolver Obligations and the termination of commitments under the Revolver
Credit Agreement, the Agent), the applicable Loan Party has provided the
Revolver Agent or, as applicable, the Agent, with an assignment of the UCC
financing statements set forth in clause (b) above;
(d)     The applicable Loan Party has complied with all representations,
warranties and covenants set forth herein and in the other Loan Documents
relating to federal and state franchise and other regulatory Law in connection
with the operation of “Sears Authorized Hometown Stores”, “Sears Home Appliance
Showrooms” and “Sears Hardware Stores” by the applicable Third Party Dealer or
Third Party Franchisee; and
(e)    The agreements between the applicable Loan Party and the applicable Third
Party Dealer or Third Party Franchisee provide that all amounts owed by such
Third Party Dealer or Third Party Franchisee to such Loan Party shall be swept
daily into a Blocked Account.
For the purposes of paragraph (a) above, “reasonably cooperate with the Agent”
means that, subject to the ABL Intercreditor Agreement, the Third Party Dealer
or Third Party Franchisee, as the case may be, will, at the Agent’s expense, (i)
give the Agent and its representatives access during normal business hours to
all Inventory consigned by the applicable Loan Party to the Third Party Dealer
or Third Party Franchisee, as the case may be, (ii) permit the Agent and its
representatives to take possession and control of the Inventory consigned by the
applicable Loan Party to the Third Party Dealer or Third Party Franchisee, as
the case may be, and to remove the Inventory from the premises of the Third
Party Dealer or Third Party Franchisee, as the case may be, (iii) to the extent
not prohibited by applicable location occupancy agreements (such as leases),
conduct “going out of business sales” and engage in similar activities with
respect to the Inventory consigned by the applicable Loan Party to the Third
Party Dealer or Third Party Franchisee, as the case may be, and (iv) take all
other commercially reasonable actions with respect to the Inventory consigned by
the applicable Loan Party to the Third Party Dealer or Third Party Franchisee,
as the case may be, that, upon the Agent’s request, may be reasonably necessary
to permit the Agent to exercise all of its rights and remedies with respect to
the Lien on the Inventory consigned by such Loan Party to the Third Party Dealer
or Third Party Franchisee, as the case may be.
“Third Party Dealers” means, as of the Effective Date, the individuals and
entities listed in the Perfection Certificate as “third party dealers”, and
thereafter, any additional individual or entity that meets the Third Party
Dealer and Franchisee Eligibility Requirements.
“Third Party Franchisees” means, as of the Effective Date, the individuals and
entities listed in the Perfection Certificate as “third party franchisees”, and
thereafter, any additional individual or entity that meets the Third Party
Dealer and Franchisee Eligibility Requirements.
“Total Outstandings” means the aggregate Outstanding Amount of all Term Loans.
“UCC” or “Uniform Commercial Code” means the Uniform Commercial Code as in
effect from time to time in the state of New York; provided, however, that if a
term is defined in Article 9 of the Uniform Commercial Code differently than in
another Article thereof, the term shall have the meaning set forth in Article 9;
provided further that, if by reason of mandatory provisions of law, perfection,
or the effect of perfection or non-perfection, of a security interest in any
Collateral or the availability of any remedy hereunder is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than New York,
“Uniform Commercial Code” means the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection or availability of such
remedy, as the case may be.
“Unintentional Overadvance” means an Overadvance which, to the Agent’s
knowledge, did not constitute an Overadvance when made but which has become an
Overadvance resulting from changed circumstances beyond the control of the Agent
and the Lenders, including, without limitation, a reduction in the Appraised
Value of property or assets included in the Borrowing Base or misrepresentation
by the Loan Parties.
“United States” and “U.S.” mean the United States of America.
“U.S. Person” means any Person that is a “United States Person” as defined in
Section 7701(a)(30) of the Code.
“U.S. Tax Compliance Certificate” has the meaning specified in Section
3.01(e)(ii)(B)(III).
“Write-Down and Conversion Powers” means, with respect to any EEA Resolution
Authority, the write-down and conversion powers of such EEA Resolution Authority
from time to time under the Bail-In Legislation for the applicable EEA Member
Country, which write-down and conversion powers are described in the EU Bail-In
Legislation Schedule.
1.02    Other Interpretive Provisions. With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan
Document:
(a)    The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
“include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation.” The word “will” shall be construed to have the same
meaning and effect as the word “shall.” Unless the context requires otherwise,
(i) any definition of or reference to any agreement, instrument or other
document (including any Organization Document and including, for the avoidance
of doubt, any terms that are defined in this Agreement or any other Loan
Document by cross reference to such other agreement, instrument or other
document shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(except as expressly provided for and subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document); provided, however, that any terms used herein and defined herein by
reference to the Revolver Credit Agreement or any other Revolver Loan Document,
shall continue to be defined by reference to such documents notwithstanding that
such agreements may cease to be in effect or have been terminated), (ii) any
reference herein to any Person shall be construed to include such Person’s
successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and
words of similar import when used in any Loan Document, shall be construed to
refer to such Loan Document in its entirety and not to any particular provision
thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits
and Schedules shall be construed to refer to Articles and Sections of, and
Exhibits and Schedules to, the Loan Document in which such references appear,
(v) any reference to any law shall include all statutory and regulatory
provisions consolidating, amending, replacing or interpreting such law and any
reference to any law or regulation shall, unless otherwise specified, refer to
such law or regulation as amended, modified or supplemented from time to time,
and (vi) the words “asset” and “property” shall be construed to have the same
meaning and effect and to refer to any and all tangible and intangible assets
and properties, including cash, securities, accounts and contract rights.
(b)    In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”
(c)    Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.
(d)    Any reference herein or in any other Loan Document to the satisfaction,
repayment, or payment in full of the Obligations shall mean the repayment in
Dollars in full in cash or immediately available funds of all of the Obligations
other than unasserted contingent indemnification Obligations.
1.03    Accounting Terms.
(a)    Generally. All accounting terms not specifically or completely defined
herein shall be construed in conformity with, and all financial data (including
financial ratios and other financial calculations) required to be submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP applied on
a consistent basis, as in effect from time to time, applied in a manner
consistent with that used in preparing the Audited Financial Statements, except
as otherwise specifically prescribed herein.
(b)    Changes in GAAP. If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in any Loan
Document, and either the Lead Borrower or the Required Lenders shall so request,
the Agent, the Lenders and the Lead Borrower shall negotiate in good faith to
amend such ratio or requirement to preserve the original intent thereof in light
of such change in GAAP (subject to the approval of the Required Lenders);
provided that, until so amended, (i) such ratio or requirement shall continue to
be computed in accordance with GAAP prior to such change therein and (ii) the
Lead Borrower shall provide to the Agent and the Lenders financial statements
and other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.
1.04    Rounding. Any financial ratios required to be maintained by the Loan
Parties pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding up if
there is no nearest number).
1.05    Times of Day. Unless otherwise specified, all references herein to times
of day shall be references to Eastern time (daylight or standard, as
applicable).
ARTICLE II.    
THE COMMITMENTS AND BORROWINGS
2.01    Term Loans. Subject to the terms and conditions set forth herein, each
Lender severally agrees to make a term loan in Dollars (each such loan, a “Term
Loan” and, collectively, the “Term Loans”) to the Borrowers on the Effective
Date, in an aggregate amount equal to the amount of such Lender’s Commitment,
provided, that after giving effect to the Term Loans made on the Effective Date,
(i) the Total Outstandings shall not exceed the sum of the (x) Borrowing Base
plus (y) the amount (if any) of the Term Loan Push-Down Reserve maintained
against the Revolver Borrowing Base, and (ii) the sum of (x) Total Outstandings
plus (y) the Revolver Outstandings shall not exceed the Combined Loan Cap.
The Term Loans on the Effective Date shall be made concurrently by the Lenders
in accordance with their respective Commitments.  Term Loans that are repaid or
prepaid (to the extent permitted hereunder) may not be reborrowed.
2.02    Borrowings of Term Loans.
(a)    Each Borrowing shall be made upon the Lead Borrower’s irrevocable written
notice to the Agent. Each such notice must be received by the Agent not later
than 12:00 p.m. on the Business Day of the requested date of any Borrowing of
Term Loans. Each such notice by the Lead Borrower pursuant to this Section
2.02(a) shall be in the form of a Committed Loan Notice, appropriately completed
and signed by a Responsible Officer of the Lead Borrower and delivered to the
Agent. Each Committed Loan Notice shall specify (i) the requested date of the
Borrowing (which shall be a Business Day), and (ii) the principal amount of Term
Loans to be borrowed.
(b)    Following receipt of a Committed Loan Notice, the Agent shall promptly
notify each Lender in writing of the amount of its Applicable Percentage of the
requested Term Loans. Each Lender shall make the amount of its Term Loan
available to the Agent in immediately available funds at the Agent’s Office not
later than 3:00 p.m. on the Business Day specified in the applicable Committed
Loan Notice. Upon satisfaction of the applicable conditions set forth in Section
4.01 and 4.02, the Agent shall make all funds so received available to the
Borrowers in like funds as received by the Agent by wire transferring such
funds, in accordance with instructions provided to (and reasonably acceptable
to) the Agent by the Lead Borrower.
(c)    To the extent not paid when due, the Agent, without the request of the
Lead Borrower, may capitalize and add to the principal balance of any Term Loans
any interest, fee (including, the Term Loan Prepayment Fee), service charge
(including direct wire fees), expenses, or other payment to which the Agent or
any Lender is entitled from the Loan Parties pursuant hereto or any other Loan
Document and may charge the same to the Loan Account notwithstanding that an
Overadvance may result thereby. The Agent shall advise the Lead Borrower in
writing of any such capitalization or charge promptly after the making thereof.
Such action on the part of the Agent shall not constitute a waiver of the
Agent’s rights and the Borrowers’ obligations under Section 2.05(b). Any amount
which is added to the principal balance of the Loan Account as provided in this
Section 2.02(c) shall bear interest at the interest rate then and thereafter
applicable to Term Loans (including the Default Rate (if applicable)).
(d)    The Agent shall notify the Lead Borrower and the Lenders of any change in
Applicable Reference Rate applicable to Term Loans promptly following any change
therein.
(e)    The Agent and the Lenders shall have no obligation to make any Term Loan
if an Overadvance would result. The Agent may, in its discretion, make Permitted
Overadvances without the consent of the Borrowers or the Lenders and the
Borrowers and each Lender shall be bound thereby; provided that the Required
Lenders may suspend the Agent’s authorization to make any or all Permitted
Overadvances. A Permitted Overadvance is for the account of the Borrowers and
shall constitute a Term Loan and an Obligation and shall be repaid by the
Borrowers in accordance with the provisions of Section 2.05(b). The making of
any such Permitted Overadvance on any one occasion shall not obligate the Agent
or any Lender to make or permit any Permitted Overadvance on any other occasion
or to permit such Permitted Overadvances to remain outstanding. Except as
expressly provided in Section 9.03, the Agent shall have no liability for, and
no Loan Party or Credit Party shall have the right to, or shall, bring any claim
of any kind whatsoever against the Agent with respect to Unintentional
Overadvances regardless of the amount of any such Overadvance.
2.03    Reserved.
2.04    Reserved.
2.05    Prepayments.
(a)    The Borrowers may, upon irrevocable notice from the Lead Borrower to the
Agent, at any time or from time to time voluntarily prepay Term Loans in whole
or in part without premium or penalty (except as provided in Section 2.09(a));
provided that (i) such notice must be received by the Agent not later than (A)
5:00 p.m. five Business Days prior to any date of prepayment; and (ii) any
prepayment shall be in a principal amount of $2,000,000 or a whole multiple of
$1,000,000 in excess thereof or, in each case, if less, the entire principal
amount thereof then outstanding. Each such notice shall specify the date and
amount of such prepayment. The Agent will promptly notify each Lender of its
receipt of each such notice, and of the amount of such Lender’s Applicable
Percentage of such prepayment. If such notice is given by the Lead Borrower, the
Borrowers shall make such prepayment, together with the Term Loan Prepayment Fee
(if applicable), and the payment amount specified in such notice shall be due
and payable on the date specified therein. Any prepayment of a Term Loan shall
be accompanied by all accrued interest on the amount prepaid. Subject to Section
2.16, each such prepayment shall be applied to the Term Loans of the Lenders in
accordance with their respective Applicable Percentages and the amount of any
such Term Loan Prepayment Fee shall be distributed to the lenders in accordance
with their respective Applicable Percentages.
(b)    If for any reason the Total Outstandings at any time exceed the sum of
(x) the Borrowing Base plus (y) the amount of the Term Loan Push-Down Reserve
(as and when required under the ABL Intercreditor Agreement to be) maintained
against the Revolver Borrowing Base (which shall be determined in good faith),
the Borrowers shall immediately prepay the Term Loans in an aggregate amount
equal to such excess.
(c)    The Borrowers shall prepay the Term Loans and to the extent required
pursuant to the provisions of Section 6.12 hereof; provided, however that any
such amounts first, shall be applied to the Revolver Obligations until paid in
full, in accordance with the requirements of Section 2.05(d) of the Revolver
Credit Agreement and then, second shall be applied to the Obligations hereunder;
provided, further, that, notwithstanding the foregoing, no such amounts shall be
required to be applied to the Obligations hereunder unless an Event of Default
has occurred and is then continuing.
(d)    Prepayments made pursuant to Section 2.05(b) and (c) above (and in the
case of clause (c) above, only if an Event of Default has occurred and is then
continuing), first, shall be applied ratably to the outstanding Term Loans;
second, shall be applied ratably to any other Obligations that are then due and
owing, and, third, the amount remaining, if any, after the application of
prepayments pursuant to clauses first through second above shall be remitted to
the Lead Borrower.
2.06    Termination of Commitments. The Aggregate Commitments shall be
automatically and permanently reduced to zero on the Effective Date upon the
Borrowing of the Term Loans.
2.07    Repayment of Obligations. The Borrowers, jointly and severally, promise
to pay to the Lenders on the Termination Date all Obligations outstanding on
such date and due and owing to such Lenders (other than contingent
indemnification obligations for which claims have not been asserted).
2.08    Interest.
(a)    Subject to the provisions of Section 2.08(b) below and unless otherwise
provided with respect to an Incremental Term Loan, each Term Loan shall bear
interest on the outstanding principal amount thereof at a rate per annum equal
to the Applicable Reference Rate plus the Applicable Margin.
(b)    If any Event of Default exists, then the Agent may, and upon the request
of the Required Lenders shall, notify the Lead Borrower that all outstanding
Obligations shall thereafter bear interest at a fluctuating interest rate per
annum at all times equal to the Default Rate and thereafter (for so long as such
Event of Default is continuing) such Obligations shall bear interest at the
Default Rate to the fullest extent permitted by Law. Accrued and unpaid interest
on past due amounts (including interest on past due interest) shall be due and
payable upon demand.
(c)    Except as provided in Section 2.08(b), interest on each Term Loan shall
be due and payable in arrears on each Interest Payment Date applicable thereto
and at such other times as may be specified herein. Interest hereunder shall be
due and payable in accordance with the terms hereof before and after judgment,
and before and after the commencement of any proceeding under any Debtor Relief
Law.
2.09    Fees.
(a)    Term Loan Prepayment Fee. In the event that, at any time on or prior to
the third anniversary of the Effective Date, the Termination Date occurs, or in
the event that, at any time on or prior to the third anniversary of the
Effective Date, the Borrowers voluntarily prepay or repay, or are required to
prepay or repay (whether by acceleration of the Obligations pursuant to Section
8.02 or for any other reason whatsoever (other than, in each of the foregoing
cases, pursuant to or resulting from Section 2.05(b) or Section 2.05 (c)), the
Term Loans in whole or in part, then, on the Termination Date or the effective
date of such prepayment or repayment (or the date the requirement to prepay or
repay arises), as applicable, the Borrowers shall pay to the Agent, for the
ratable benefit of the Lenders, the Term Loan Prepayment Fee on the amount of
the Term Loans so prepaid or repaid or required to be prepaid or repaid (and to
the extent such Term Loan Prepayment Fee is not paid when due, such fee shall be
automatically capitalized and added to the principal balance of the Term Loans).
All parties to this Agreement agree and acknowledge that the Lenders will have
suffered damages on account of the early termination of this Agreement or
prepayment (or repayment) of any portion of the Term Loans and that, in view of
the difficulty in ascertaining the amount of such damages, the Term Loan
Prepayment Fee constitutes reasonable compensation and liquidated damages to
compensate the Lenders on account thereof.
(b)    Other Fees. The Borrower shall pay to the Arranger and the Agent for
their own respective accounts fees in the amounts and at the times specified in
the Fee Letter. Such fees shall be fully earned when paid and shall not be
refundable for any reason whatsoever.
2.10    Computation of Interest and Fees. All other computations of fees and
interest shall be made on the basis of a 360-day year and actual days elapsed.
Interest shall accrue on each Term Loan for the day on which the Term Loan is
made, and shall not accrue on a Term Loan, or any portion thereof, for the day
on which the Term Loan or such portion is paid, provided that any Term Loan that
is repaid on the same day on which it is made shall, subject to Section 2.12(a),
bear interest for one day. Each determination by the Agent of an interest rate
or fee hereunder shall be conclusive and binding for all purposes, absent
manifest error.
2.11    Evidence of Debt. The Term Loans made by each Lender shall be evidenced
by one or more accounts or records maintained by the Agent (the “Loan Account”)
in the ordinary course of business. In addition, each Lender may record in such
Lender’s internal records, an appropriate notation evidencing the date and
amount of each Term Loan from such Lender, each payment and prepayment of
principal of any such Term Loan, and each payment of interest, fees and other
amounts due in connection with the Obligations due to such Lender. The accounts
or records maintained by the Agent and each Lender shall be conclusive absent
manifest error of the amount of the Term Loans made by the Lenders to the
Borrowers and the interest and payments thereon. Any failure to so record or any
error in doing so shall not, however, limit or otherwise affect the obligation
of the Borrowers hereunder to pay any amount owing with respect to the
Obligations. In the event of any conflict between the accounts and records
maintained by any Lender and the accounts and records of the Agent in respect of
such matters, the accounts and records of the Agent shall control in the absence
of manifest error. Upon the request of any Lender made through the Agent, the
Borrowers shall execute and deliver to such Lender (through the Agent) a Note,
which shall evidence such Lender’s Term Loans in addition to such accounts or
records. Each Lender may attach schedules to its Note and endorse thereon the
date, amount and maturity of its Term Loans and payments with respect thereto.
Upon receipt of an affidavit of a Lender as to the loss, theft, destruction or
mutilation of such Lender’s Note and upon cancellation of such Note, the
Borrowers will issue, in lieu thereof, a replacement Note in favor of such
Lender, in the same principal amount thereof and otherwise of like tenor.
2.12    Payments Generally; Agent’s Clawback.
(a)    General. All payments to be made by the Borrowers shall be made without
condition or deduction for any counterclaim, defense, recoupment or setoff.
Except as otherwise expressly provided herein, all payments by the Borrowers
hereunder shall be made to the Agent, for the account of the respective Lenders
to which such payment is owed, at the Agent’s Office in Dollars and in
immediately available funds not later than 2:00 p.m. on the date specified
herein. The Agent will promptly distribute to each Lender its Applicable
Percentage (or other applicable share as provided herein) of such payment in
like funds as received by wire transfer to such Lender’s Lending Office. All
payments received by the Agent after 2:00 p.m. shall, at the option of the
Agent, be deemed received on the next succeeding Business Day and any applicable
interest or fee shall continue to accrue. If any payment to be made by the
Borrowers shall come due on a day other than a Business Day, payment shall be
made on the next following Business Day, and such extension of time shall be
reflected in computing interest or fees, as the case may be.
(b)    (i)    Funding by Lenders; Presumption by Agent. Unless the Agent shall
have received notice from a Lender prior to the proposed date of any Borrowing
of Term Loans, that such Lender will not make available to the Agent such
Lender’s share of such Borrowing, the Agent may assume that such Lender has made
such share available on such date in accordance with Section 2.02, and may, in
reliance upon such assumption, make available to the Borrowers a corresponding
amount. In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Agent, then the applicable Lender and the
Borrowers severally agree to pay to the Agent forthwith on demand such
corresponding amount in immediately available funds with interest thereon, for
each day from and including the date such amount is made available to the
Borrowers to but excluding the date of payment to the Agent, at the interest
rate applicable to Term Loans. If the Borrowers and such Lender shall pay such
interest to the Agent for the same or an overlapping period, the Agent shall
promptly remit to the Borrowers the amount of such interest paid by the
Borrowers for such period. If such Lender pays its share of the applicable
Borrowing to the Agent, then the amount so paid shall constitute such Lender’s
Term Loan included in such Borrowing. Any payment by the Borrowers shall be
without prejudice to any claim the Borrowers may have against a Lender that
shall have failed to make such payment to the Agent.
(i)    Payments by Borrowers; Presumptions by Agent. Unless the Agent shall have
received notice from the Lead Borrower prior to the time at which any payment is
due to the Agent for the account of any of the Lenders hereunder that the
Borrowers will not make such payment, the Agent may assume that the Borrowers
have made such payment on such date in accordance herewith and may, in reliance
upon such assumption, distribute to the Lenders the amount due. In such event,
if the Borrowers have not in fact made such payment, then each of the Lenders
severally agrees to repay to the Agent forthwith on demand the amount so
distributed to such Lender, in immediately available funds with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Agent, at the interest rate
applicable to Term Loans. A notice of the Agent to any Lender or the Lead
Borrower with respect to any amount owing under this subsection (b) shall be
conclusive, absent manifest error.
(c)    Failure to Satisfy Conditions Precedent. If any Lender makes available to
the Agent funds for any Term Loan to be made by such Lender as provided in the
foregoing provisions of this Article II, and such funds are not made available
to the Borrowers by the Agent because the conditions to the applicable
Borrowings set forth in Article IV are not satisfied or waived in accordance
with the terms hereof (subject to the provisions of the last paragraph of
Section 4.01 hereof), the Agent shall return such funds (in like funds as
received from such Lender) to such Lender, without interest.
(d)    Obligations of Lenders Several. The obligations of the Lenders hereunder
to make Term Loans and to make payments hereunder are several and not joint. The
failure of any Lender to make any Term Loan or to make any payment hereunder on
any date required hereunder shall not relieve any other Lender of its
corresponding obligation to do so on such date, and no Lender shall be
responsible for the failure of any other Lender to so make its Term Loan or to
make its payment hereunder.
(e)    Funding Source. Nothing herein shall be deemed to obligate any Lender to
obtain the funds for any Term Loan in any particular place or manner or to
constitute a representation by any Lender that it has obtained or will obtain
the funds for any Term Loan in any particular place or manner.
2.13    Sharing of Payments by Lenders. If any Lender shall, by exercising any
right of setoff or counterclaim or otherwise, obtain payment in respect of any
principal of, interest on, or other amounts with respect to, any of the
Obligations resulting in such Lender’s receiving payment of a proportion of the
aggregate amount of such Obligations greater than its pro rata share thereof as
provided herein (including as in contravention of the priorities of payment set
forth in Section 8.03), then the Lender receiving such greater proportion shall
(a) notify the Agent of such fact, and (b) purchase (for cash at face value)
participations in the Obligations of the other Lenders, or make such other
adjustments as shall be equitable, so that the benefit of all such payments
shall be shared by the Lenders ratably and in the priorities set forth in
Section 8.03, provided that:
(i)    if any such participations or subparticipations are purchased and all or
any portion of the payment giving rise thereto is recovered, such participations
or subparticipations shall be rescinded and the purchase price restored to the
extent of such recovery, without interest; and
(ii)    the provisions of this Section shall not be construed to apply to (x)
any payment made by the Loan Parties pursuant to and in accordance with the
express terms of this Agreement (including the application of funds arising from
the existence of a Defaulting Lender) or (y) any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Term Loans to any assignee or participant, other than to the Borrowers or any
Subsidiary thereof (as to which the provisions of this Section shall apply).
Each Loan Party consents to the foregoing and agrees, to the extent it may
effectively do so under Law, that any Lender acquiring a participation pursuant
to the foregoing arrangements may exercise against such Loan Party rights of
setoff and counterclaim with respect to such participation as fully as if such
Lender were a direct creditor of such Loan Party in the amount of such
participation.
2.14    Settlement Amongst Lenders.
(a)    The amount of each Lender’s Applicable Percentage, shall be computed
weekly (or more frequently in the Agent’s discretion) and shall be adjusted
upward or downward based on all Term Loans and repayments of Term Loans received
by the Agent as of 3:00 p.m. on the first Business Day (such date, the
“Settlement Date”) following the end of the period specified by the Agent.
(b)    The Agent shall deliver to each of the Lenders promptly after a
Settlement Date a summary statement of the amount of outstanding Term Loans for
the period and the amount of repayments received for the period. As reflected on
the summary statement, the Agent shall transfer to each Lender its Applicable
Percentage of repayments.
2.15    Increase in Commitments.
(a)    Request for Increase.  Provided no Default or Event of Default then
exists or would arise therefrom, upon notice to the Agent, the Lead Borrower may
from time to time, request an increase in the Term Loan Facility by an amount
(for all such requests) not exceeding $10,000,000; provided that (i) any such
request for an increase shall be in a minimum amount of $5,000,000, and (ii) the
Lead Borrower may make a maximum of two (2) such requests during the term of
this Agreement.  Any such requested increase shall first be made available to
GBFC LLC and, to the extent that (i) on or before the tenth (10th) Business Day
following the date that GBFC LLC is notified of such request for an increase
hereunder, GBFC LLC declines to provide the entire amount of the requested
increase in the Term Loan Facility (with any failure to respond within such time
being deemed to be an election by GBFC to decline such request) and (ii) the
Agent shall consent in writing thereto, the Arranger may upon the Lead
Borrower’s request, arrange for Lenders (other than GBFC LLC) or other financial
institutions (in each case, approved by both the Agent (in its sole discretion)
and the Lead Borrower (in its sole discretion)) to issue commitments in an
amount equal to the amount of the increase in the Term Loan Facility requested
by the Lead Borrower and not accepted by GBFC LLC (each such increase by either
means, a “Term Loan Facility Increase,”  and each Person providing any portion
of the Term Loan Facility Increase, an “Additional Commitment Lender”);
provided, however, that (x) no Lender (including GBFC LLC) shall be obligated to
provide any portion of a Term Loan Facility Increase and (y) no increase in the
Term Loan Facility shall be permitted, except as provided and arranged above. 
(b)    Effective Date and Allocations.  If the Term Loan Facility is increased
in accordance with this Section, the Agent, in consultation with the Lead
Borrower, shall determine the effective date (the “Increase Effective Date”) and
the final allocation of such increase.  The Agent shall promptly notify the Lead
Borrower and the Lenders of the final allocation of such increase and the
Increase Effective Date and on the Increase Effective Date (i) each Additional
Commitment Lender shall severally make a term loan in Dollars (each, an
“Incremental Term Loan”) to the Borrowers, in an amount equal to the amount of
the Term Loan Facility Increase that such Additional Commitment Lender has
agreed to provide (and, concurrently with the funding its Incremental Term Loan,
any commitments of such Additional Commitment Lender in respect thereof shall
automatically terminate), and (ii) Schedule 2.01 shall be deemed modified,
without further action, to reflect the Incremental Term Loans and revised
Applicable Percentages (taking into account such increase) of the Lenders.  All
Incremental Term Loans shall be deemed to be Term Loans for all purposes hereof
from the date such Incremental Term Loans are funded.
(c)    Conditions to Effectiveness of Increase.  As a condition precedent to
such increase, (i) the Lead Borrower shall deliver to the Agent (a) a
certificate of each Borrower dated as of the Increase Effective Date signed by a
Responsible Officer of such Borrower certifying and attaching the resolutions
adopted by such Borrower approving or consenting to such increase, (b) a
certificate of the Lead Borrower that (1) the representations and warranties
contained in Article V and the other Loan Documents are true and correct in all
material respects on and as of the Increase Effective Date, except (A) to the
extent that such representations and warranties specifically refer to an earlier
date, in which case they are true and correct in all material respects as of
such earlier date, (B) in the case of any representation and warranty qualified
by materiality, in which case they shall be true and correct in all respects,
and (C) except that for purposes of this Section 2.15, the representations and
warranties contained in subsections (A) and (B) of Section 5.05 shall be deemed
to refer to the most recent statements furnished pursuant to clauses (a) and
(b), respectively, of Section 6.01, and (2) before and after giving effect to
such increase, no Default or Event of Default exists or would arise therefrom,
(ii) the Loan Parties, the Agent, and any Additional Commitment Lender shall
have executed and delivered a joinder to the Loan Documents in such form as the
Agent shall reasonably require; (iii) the Borrowers shall have paid such fees
and other compensation to the Additional Commitment Lenders as the Lead Borrower
and such Additional Commitment Lenders shall agree; (iv) the Borrowers shall
have paid such arrangement fees to the Agent as the Lead Borrower and the Agent
may agree; (v) if requested by the Agent, the Borrowers shall deliver an opinion
or opinions, in form and substance reasonably satisfactory to the Agent, from
counsel to the Borrowers reasonably satisfactory to the Agent and dated such
date; (vi) the Borrowers and the Additional Commitment Lender shall have
delivered such other instruments, documents and agreements as the Agent may
reasonably have requested; and (vii) no Default or Event of Default exists.  Any
increase under this Section 2.15 shall be on terms identical to those applicable
to the existing Term Loans of the Lenders, except (x) as agreed to by Agent,
GBFC LLC, the Additional Commitment Lenders agreeing to participate in such
increase and the Lead Borrower, (y) with respect to any commitment, arrangement,
upfront or similar fees that may be agreed to among the Loan Parties and Agent
and Additional Commitment Lenders agreeing to participate in such increase, and
(z) with respect to the interest rate and maturity date applicable to the
applicable Incremental Term Loan, which may be agreed to among the Loan Parties,
the Agent, and the Additional Commitment Lenders agreeing to participate in such
increase.
(d)    Conflicting Provisions.  This Section shall supersede any provisions in
Sections 2.13 or 10.01 to the contrary.
2.16    Defaulting Lenders.
(a)    Adjustments. Notwithstanding anything to the contrary contained in this
Agreement, if any Lender becomes a Defaulting Lender, then, until such time as
that Lender is no longer a Defaulting Lender, to the extent permitted by
applicable Law:
(i)    Waivers and Amendments. Such Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement shall
be restricted as set forth in the definition of “Required Lenders” and Section
10.01.
(ii)    Defaulting Lender Waterfall. Any payment of principal, interest, fees or
other amounts received by the Agent for the account of such Defaulting Lender
(whether voluntary or mandatory, at maturity, pursuant to Article VIII or
otherwise) or received by the Agent from a Defaulting Lender pursuant to Section
10.08 shall be applied at such time or times as may be determined by the Agent
as follows: first, to the payment of any amounts owing by such Defaulting Lender
to the Agent hereunder; second, to the payment on a pro rata basis of any
amounts owing by such Defaulting Lender to the Non-Defaulting Lenders as a
result of any judgment of a court of competent jurisdiction obtained by any
Lender against such Defaulting Lender as a result of such Defaulting Lender’s
breach of its obligations under this Agreement; third, as the Lead Borrower may
request (so long as no Default or Event of Default exists), to the funding of
any Term Loan in respect of which such Defaulting Lender has failed to fund its
portion thereof as required by this Agreement, as determined by the Agent;
fourth, so long as no Default or Event of Default exists, to the payment of any
amounts owing to the Borrowers as a result of any judgment of a court of
competent jurisdiction obtained by the Borrowers against such Defaulting Lender
as a result of such Defaulting Lender’s breach of its obligations under this
Agreement; and fifth, to such Defaulting Lender or as otherwise directed by a
court of competent jurisdiction. Any payments, prepayments or other amounts paid
or payable to a Defaulting Lender that are applied (or held) to pay amounts owed
by a Defaulting Lender pursuant to this Section 2.16(a)(ii) shall be deemed paid
to and redirected by such Defaulting Lender, and each Lender irrevocably
consents hereto.
(iii)    Reserved.
(b)    Defaulting Lender Cure. If the Lead Borrower and the Agent agree in
writing that a Lender is no longer a Defaulting Lender, the Agent will so notify
the parties hereto, whereupon such Lender will cease to be a Defaulting Lender;
provided that no adjustments will be made retroactively with respect to fees
accrued or payments made by or on behalf of the Borrowers while that Lender was
a Defaulting Lender; and provided, further, that except to the extent otherwise
expressly agreed by the affected parties, no change hereunder from Defaulting
Lender to Lender will constitute a waiver or release of any claim of any party
hereunder arising from that Lender’s having been a Defaulting Lender.
ARTICLE III.    
TAXES, YIELD PROTECTION AND ILLEGALITY;
APPOINTMENT OF LEAD BORROWER
3.01    Taxes.
(a)    Payments Free of Taxes; Obligation to Withhold; Payments on Account of
Taxes.
(i)    Any and all payments by or on account of any obligation of any Loan Party
under any Loan Document shall be made without deduction or withholding for any
Taxes, except as required by applicable Laws. If any applicable Laws (as
determined in the good faith discretion of the Agent) require the deduction or
withholding of any Tax from any such payment by the Agent or a Loan Party, then
the Agent or such Loan Party shall be entitled to make such deduction or
withholding, upon the basis of the information and documentation to be delivered
pursuant to subsection (e) below.
(ii)    If any Loan Party or the Agent shall be required by any applicable Laws
other than the Code to withhold or deduct any Taxes from any payment, then (A)
such Loan Party or the Agent, as required by such Laws, shall withhold or make
such deductions as are determined by it to be required based upon the
information and documentation it has received pursuant to subsection (e) below,
(B) such Loan Party or the Agent, to the extent required by such Laws, shall
timely pay the full amount withheld or deducted to the relevant Governmental
Authority in accordance with such Laws, and (C) to the extent that the
withholding or deduction is made on account of Indemnified Taxes, the sum
payable by the applicable Loan Party shall be increased as necessary so that
after any required withholding or the making of all required deductions
(including deductions applicable to additional sums payable under this Section
3.01) the applicable Recipient receives an amount equal to the sum it would have
received had no such withholding or deduction been made.
(b)    Payment of Other Taxes by the Borrowers. Without limitation or
duplication of the provisions of subsection (a) above, the Borrowers shall
timely pay to the relevant Governmental Authority in accordance with applicable
Law, or at the option of the Agent timely reimburse it for the payment of, any
Other Taxes.
(c)    Tax Indemnifications.
(i)    The Loan Parties shall, and each Loan Party does hereby, jointly and
severally indemnify each Recipient, and shall make payment in respect thereof
within 10 days after demand therefor, for the full amount of any Indemnified
Taxes (including Indemnified Taxes imposed or asserted on or attributable to
amounts payable under this Section 3.01) payable or paid by such Recipient or
required to be withheld or deducted from a payment to such Recipient, and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes were correctly or legally imposed
or asserted by the relevant Governmental Authority. A certificate as to the
amount of such payment or liability delivered to the Lead Borrower by a Lender
(with a copy to the Agent), or by the Agent on its own behalf or on behalf of a
Lender, shall be conclusive absent manifest error.
(ii)    Each Lender shall, and does hereby, severally indemnify, and shall make
payment in respect thereof within 10 days after demand therefor, (x) the Agent
against any Indemnified Taxes attributable to such Lender (but only to the
extent that any Loan Party has not already indemnified the Agent for such
Indemnified Taxes and without limiting the obligation of the Loan Parties to do
so), (y) the Agent and the Loan Parties, as applicable, against any Taxes
attributable to such Lender’s failure to comply with the provisions of Section
10.06(d) relating to the maintenance of a Participant Register and (z) the Agent
and the Loan Parties, as applicable, against any Excluded Taxes attributable to
such Lender, in each case, that are payable or paid by the Agent or a Loan Party
in connection with any Loan Document, and any reasonable expenses arising
therefrom or with respect thereto, whether or not such Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to any
Lender by the Agent shall be conclusive absent manifest error. Each Lender
hereby authorizes the Agent to set off and apply any and all amounts at any time
owing to such Lender, as the case may be, under this Agreement or any other Loan
Document against any amount due to the Agent under this clause (ii).
(d)    Evidence of Payments. Upon request by the Lead Borrower or the Agent, as
the case may be, after any payment of Taxes by the Lead Borrower or by the Agent
to a Governmental Authority as provided in this Section 3.01, the Lead Borrower
shall deliver to the Agent or the Agent shall deliver to the Lead Borrower, as
the case may be, the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of any return required by
Laws to report such payment or other evidence of such payment reasonably
satisfactory to the Lead Borrower or the Agent, as the case may be.
(e)    Status of Recipients; Tax Documentation.
(i)    Any Recipient that is entitled to an exemption from or reduction of
withholding Tax with respect to payments made under any Loan Document shall
deliver to the Lead Borrower and the Agent, at the time or times reasonably
requested by the Lead Borrower or the Agent, such properly completed and
executed documentation reasonably requested by the Lead Borrower or the Agent as
will permit such payments to be made without withholding or at a reduced rate of
withholding. In addition, any Recipient, if reasonably requested by the Lead
Borrower or the Agent, shall deliver such other documentation prescribed by
applicable Law or reasonably requested by the Lead Borrower or the Agent as will
enable the Lead Borrower or the Agent to determine whether or not such Recipient
is subject to backup withholding or information reporting requirements.
Notwithstanding anything to the contrary in the preceding two sentences, the
completion, execution and submission of such documentation (other than such
documentation set forth in Section 3.01(e)(ii)(A), (ii)(B) and (ii)(D) below)
shall not be required if in the Recipient’s reasonable judgment such completion,
execution or submission would subject such Recipient to any material
unreimbursed cost or expense or would materially prejudice the legal or
commercial position of such Recipient.
(ii)    Without limiting the generality of the foregoing, in the event that the
Lead Borrower is a U.S. Person,
(A)    any Lender that is a U.S. Person shall deliver to the Lead Borrower and
the Agent on or prior to the date on which such Lender becomes a Lender under
this Agreement (and from time to time thereafter upon the reasonable request of
the Lead Borrower or the Agent), executed originals of IRS Form W-9 certifying
that such Lender is exempt from U.S. federal backup withholding tax;
(B)    any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Lead Borrower and the Agent (in such number of copies as shall be
requested by the recipient) on or prior to the date on which such Foreign Lender
becomes a Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Lead Borrower or the Agent), whichever of the
following is applicable:
(1)    (x) with respect to payments of interest under any Loan Document,
executed originals of IRS Form W-8BEN-E establishing an exemption from, or
reduction of, U.S. federal withholding Tax pursuant to the “interest” article of
a tax treaty and (y) with respect to any other applicable payments under any
Loan Document, IRS Form W-8BEN-E establishing an exemption from, or reduction
of, U.S. federal withholding Tax pursuant to the “business profits” or “other
income” article of such tax treaty;
(2)    executed originals of IRS Form W-8ECI;
(3)    (x) a certificate substantially in the form of Exhibit F-1 to the effect
that such Foreign Lender is not a “bank” within the meaning of Section
881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the
meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign
corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax
Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN-E; or
(4)    executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI,
IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form
of Exhibit F-2 or Exhibit F-3, IRS Form W-9, and/or other certification
documents from each beneficial owner, as applicable; provided that if the
Foreign Lender is a partnership and one or more direct or indirect partners of
such Foreign Lender are claiming the portfolio interest exemption, such Foreign
Lender may provide a U.S. Tax Compliance Certificate substantially in the form
of Exhibit F-4 on behalf of each such direct and indirect partner;
(C)    any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Lead Borrower and the Agent (in such number of copies as shall be
requested by the recipient) on or prior to the date on which such Foreign Lender
becomes a Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Lead Borrower or the Agent), executed originals of any
other form prescribed by applicable Law as a basis for claiming exemption from
or a reduction in U.S. federal withholding Tax, duly completed, together with
such supplementary documentation as may be prescribed by applicable Law to
permit the Lead Borrower or the Agent to determine the withholding or deduction
required to be made; and
(D)    if a payment made to a Lender under any Loan Document would be subject to
U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Lead Borrower and the Agent at the time or times prescribed
by law and at such time or times reasonably requested by the Lead Borrower or
the Agent such documentation prescribed by applicable Law (including as
prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional
documentation reasonably requested by the Lead Borrower or the Agent as may be
necessary for the Lead Borrower and the Agent to comply with their obligations
under FATCA and to determine that such Lender has complied with such Lender’s
obligations under FATCA or to determine the amount to deduct and withhold from
such payment. Solely for purposes of this clause (D), “FATCA” shall include any
amendments made to FATCA after the date of this Agreement.
(iii)    Each Lender agrees that if any form or certification it previously
delivered pursuant to this Section 3.01 expires or becomes obsolete or
inaccurate in any respect, it shall update such form or certification or
promptly notify the Lead Borrower and the Agent in writing of its legal
inability to do so.
(f)    Treatment of Certain Refunds. Unless required by applicable Laws, at no
time shall the Agent have any obligation to file for or otherwise pursue on
behalf of a Lender, or have any obligation to pay to any Lender, any refund of
Taxes withheld or deducted from funds paid for the account of such Lender, as
the case may be. If any Recipient determines, in its sole discretion exercised
in good faith, that it has received a refund of any Taxes as to which it has
been indemnified by any Loan Party or with respect to which any Loan Party has
paid additional amounts pursuant to this Section 3.01, it shall pay to the Loan
Party an amount equal to such refund (but only to the extent of indemnity
payments made, or additional amounts paid, by a Loan Party under this Section
3.01 with respect to the Taxes giving rise to such refund), net of all
out-of-pocket expenses (including Taxes) incurred by such Recipient, and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund), provided that the Loan Party, upon the request of
the Recipient, agrees to repay the amount paid over to the Loan Party (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Recipient in the event the Recipient is required to repay such
refund to such Governmental Authority. Notwithstanding anything to the contrary
in this subsection, in no event will the applicable Recipient be required to pay
any amount to the Loan Party pursuant to this subsection the payment of which
would place the Recipient in a less favorable net after-Tax position than such
Recipient would have been in if the indemnification payments or additional
amounts giving rise to such refund had never been paid. This subsection shall
not be construed to require any Recipient to make available its tax returns (or
any other information relating to its taxes that it deems confidential) to any
Loan Party or any other Person.
(g)    [Reserved].
(h)    Survival. Each party’s obligations under this Section 3.01 shall survive
the resignation or replacement of the Agent or any assignment of rights by, or
the replacement of, a Lender, the termination of the Commitments and the
repayment, satisfaction or discharge of all other Obligations.
3.02    Illegality. If any Lender determines that any Law has made it unlawful,
or that any Governmental Authority has asserted that it is unlawful, for any
Lender or its applicable Lending Office to determine or charge interest rates
based upon the LIBOR Rate, then, on notice thereof by such Lender to the Lead
Borrower through the Agent and subject to the last sentence of the definition of
“LIBOR Rate”, the interest rate shall, if necessary to avoid such illegality, be
determined by the Agent solely by reference to the Base Rate component of the
Applicable Reference Rate, until such Lender notifies the Agent and the Lead
Borrower that the circumstances giving rise to such determination no longer
exist.
3.03    Inability to Determine Rates. If the Required Lenders determine that for
any reason adequate and reasonable means do not exist for determining the LIBOR
Rate, or the LIBOR Rate does not adequately and fairly reflect the cost to such
Lenders of funding such Term Loan, the Agent will promptly so notify the Lead
Borrower and each Lender. Thereafter, subject to the last sentence of the
definition of “LIBOR Rate”, the Applicable Reference Rate shall be determined
solely by reference to the Base Rate component thereof, until the Agent (upon
the instruction of the Required Lenders) revokes such notice.
3.04    Increased Costs; Reserves on LIBOR Rate Loans.
(a)    Increased Costs Generally. If any Change in Law occurring after the date
that such Lender first became a Lender, shall:
(i)    impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Lender;
(ii)    subject any Recipient to any Taxes (other than (A) Indemnified Taxes,
(B) Excluded Taxes and (C) Other Taxes) on its loans, loan principal, letters of
credit, commitments, or other obligations, or its deposits, reserves, other
liabilities or capital attributable thereto; or
(iii)    impose on any Lender or the London interbank market any other
condition, cost or expense affecting this Agreement or Term Loans made by such
Lender or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making, converting to, continuing or maintaining any Term Loan (or of
maintaining its obligation to make any such Term Loan), or to reduce the amount
of any sum received or receivable by such Lender hereunder (whether of
principal, interest or any other amount) then, upon request of such Lender, the
Borrowers will pay to such Lender, such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.
(b)    Capital Requirements. If any Lender determines that any Change in Law
occurring after the date that such Lender first became a Lender affecting such
Lender or any Lending Office of such Lender or such Lender’s holding company, if
any, regarding capital or liquidity requirements has or would have the effect of
reducing the rate of return on such Lender’s capital or on the capital or
liquidity of such Lender’s holding company, if any, as a consequence of this
Agreement, the Commitments of such Lender or the Term Loans made by such Lender
to a level below that which such Lender or such Lender’s holding company could
have achieved but for such Change in Law (taking into consideration such
Lender’s policies and the policies of such Lender’s holding company with respect
to capital adequacy), then from time to time the Borrowers will pay to such
Lender such additional amount or amounts as will compensate such Lender or such
Lender’s holding company for any such reduction suffered.
(c)    Certificates for Reimbursement. A certificate of a Lender setting forth
the amount or amounts necessary to compensate such Lender or its holding
company, as the case may be, as specified in subsection (a) or (b) of this
Section and delivered to the Lead Borrower shall include a written statement
setting forth in reasonable detail the basis for calculating such amount or
amounts and be conclusive absent manifest error. The Borrowers shall pay such
Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
(d)    Delay in Requests. Failure or delay on the part of any Lender to demand
compensation pursuant to the foregoing provisions of this Section 3.04 shall not
constitute a waiver of such Lender’s right to demand such compensation, provided
that the Borrowers shall not be required to compensate a Lender pursuant to the
foregoing provisions of this Section for any increased costs incurred or
reductions suffered more than six months prior to the date that such Lender
notifies the Lead Borrower of the Change in Law giving rise to such increased
costs or reductions and of such Lender’s intention to claim compensation
therefor (except that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the six-month period referred to above shall
be extended to include the period of retroactive effect thereof).
3.05    Compensation for Losses. Upon demand of any Lender (with a copy to the
Agent), which demand shall include a written statement, setting forth in
reasonable detail the basis for calculating amounts owed to such Lender pursuant
to this Section 3.05, from time to time, the Borrowers shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
actually incurred, without duplication of any amounts to which a Lender is
otherwise entitled pursuant to the other provisions of this Article III, by it
as a result of any failure by the Borrowers (for a reason other than the failure
of such Lender to make a Term Loan) to prepay or borrow any Term Loan on the
date or in the amount notified by the Lead Borrower, including any loss or
expense arising from the liquidation or reemployment of funds obtained by it to
maintain such Term Loan (but excluding any loss of anticipated profits).
3.06    Mitigation Obligations; Replacement of Lenders.
(a)    Designation of a Different Lending Office. If any Lender requests
compensation under Section 3.04, or requires the Borrowers to pay any additional
amounts to any Lender or any Governmental Authority for the account of any
Lender pursuant to Section 3.01, or if any Lender gives a notice pursuant to
Section 3.02, then such Lender shall use reasonable efforts to designate a
different Lending Office for funding or booking its Term Loans hereunder or to
assign its rights and obligations hereunder to another of its offices, branches
or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section
3.01 or 3.04, as the case may be, in the future, or eliminate the need for the
notice pursuant to Section 3.02, as applicable, and (ii) in each case, would not
subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender. The Borrowers hereby agree to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(b)    Replacement of Lenders. If any Lender (other than GBFC LLC) requests
compensation under Section 3.04, has invoked the provisions of Section 3.02, or
if the Borrowers are required to pay any additional amounts to any Lender (other
than GBFC LLC) or any Governmental Authority for the account of any Lender
(other than GBFC LLC) pursuant to Section 3.01 and, in each case, such Lender
has declined or is unable to designate a different Lending Office in accordance
with Section 3.06(a) that eliminates such increased compensation or other
additional amounts, the Borrowers may replace such Lender in accordance with
Section 10.13.
3.07    Survival. All of the Borrowers’ obligations under this Article III shall
survive termination of the Aggregate Commitments, repayment of all other
Obligations hereunder, and resignation of the Agent.
3.08    Designation of Lead Borrower as Borrowers’ Agent.
(a)    Each Borrower hereby irrevocably designates and appoints the Lead
Borrower as such Borrower’s agent to obtain Term Loans, the proceeds of which
shall be available to each Borrower for such uses as are permitted under this
Agreement. As the disclosed principal for its agent, each Borrower shall be
obligated to the Lender on account of the Term Loans so made as if made directly
by the applicable Lender to such Borrower, notwithstanding the manner by which
such Term Loans are recorded on the books and records of the Lead Borrower and
of any other Borrower. In addition, each Loan Party other than the Borrowers
hereby irrevocably designates and appoints the Lead Borrower as such Loan
Party’s agent to represent such Loan Party in all respects under this Agreement
and the other Loan Documents.
(b)    Each Borrower recognizes that credit available to it hereunder 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
facility contemplated herein with all other Borrowers.
(c)    The Lead Borrower shall act as a conduit for each Borrower (including
itself, as a “Borrower”) on whose behalf the Lead Borrower has requested a Term
Loan. Neither the Agent nor any other Credit Party shall have any obligation to
see to the application of such proceeds therefrom.
ARTICLE IV.    
CONDITIONS PRECEDENT
4.01    Conditions of Initial Term Loans. The effectiveness of this Agreement is
subject to satisfaction of the following conditions precedent:
(a)    The Agent’s receipt of the following, each of which shall be originals,
telecopies or other electronic image scan transmission (e.g., “pdf” or “tif “
via e-mail) (followed promptly by originals) unless otherwise specified, each
dated the Effective Date (or, in the case of certificates of governmental
officials, a recent date before the Effective Date):
(i)    counterparts of this Agreement each properly executed by a Responsible
Officer of the signing Loan Party, Agent and the Lenders in such number as the
Agent may request;
(ii)    the ABL Intercreditor Agreement properly executed by the Revolver Agent,
the Agent and acknowledged by the Loan Parties;
(iii)    the Sears Tri-Party Agreement properly executed by the Agent, the
Revolver Agent, the Loan Parties and SHC and certain Subsidiaries of SHC;
(iv)    a Note executed by the Borrowers in favor of each Lender requesting a
Note;
(v)    such certificates of resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers of each Loan Party as the
Agent may require evidencing (A) the authority of each Loan Party to enter into
this Agreement and the other Loan Documents to which such Loan Party is a party
or is to become a party and (B) the identity, authority and capacity of each
Responsible Officer thereof authorized to act as a Responsible Officer in
connection with this Agreement and the other Loan Documents to which such Loan
Party is a party or is to become a party and each in form and substance
reasonably satisfactory to the Agent;
(vi)    copies of each Loan Party’s Organization Documents and such other
documents and certifications as the Agent may reasonably require to evidence
that each Loan Party is duly organized or formed, and that each Loan Party is
validly existing, in good standing, and qualified to engage in business in each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification, except to the extent that
failure to so qualify in such jurisdiction could not reasonably be expected to
have a Material Adverse Effect;
(vii)    a favorable opinion of each of (A) Shearman & Sterling LLP, (B)
Richards, Layton & Finger, P.A. and (C) general counsel to the Loan Parties,
addressed to the Agent and each Lender, as to such matters concerning the Loan
Parties and the Loan Documents as the Agent may reasonably request, in form and
substance reasonably satisfactory to the Agent;
(viii)    a certificate of a Responsible Officer of the Lead Borrower
(A) certifying (w) that the conditions specified in Sections 4.01 and 4.02 have
been satisfied, (x) that there has been no event or circumstance since the date
of the Audited Financial Statements that has had or could be reasonably expected
to have, either individually or in the aggregate, a Material Adverse Effect, (y)
to the Solvency of the Loan Parties as of the Effective Date after giving effect
to the transactions contemplated hereby, and (z) to the knowledge of such
Responsible Officer, that all consents, licenses or approvals required in
connection with the execution, delivery and performance by the Loan Parties of
the Loan Documents to which they are party, if any, have been obtained and are
in full force and effect and (B) certifying and attaching, as true, complete and
correct, copies of each of (x) the material Revolver Loan Documents and (y) the
Separation Agreements (together with any material amendments thereto);
(ix)    Reserved;
(x)    evidence reasonably satisfactory to the Agent that all insurance required
to be maintained pursuant to the Loan Documents and all endorsements in favor of
the Agent required under the Loan Documents have been obtained and are in
effect;
(xi)    the Security Documents and copies of certificates delivered to the
Revolver Agent evidencing any stock required pledged thereunder, together with
undated stock powers executed in blank, each duly executed by the applicable
Loan Parties;
(xii)    all other Loan Documents (to the extent to be executed on the Effective
Date), each duly executed by the applicable Loan Parties;
(xiii)    (A)    an appraisal (based on net liquidation value) by a third party
appraiser acceptable to the Agent of all Inventory of the Loan Parties, the
results of which are reasonably satisfactory to the Agent, and (B) a written
report regarding the results of a commercial finance examination of the Loan
Parties, which shall be reasonably satisfactory to the Agent;
(xiv)    results of searches or other evidence reasonably satisfactory to the
Agent (in each case dated as of a date reasonably satisfactory to the Agent)
indicating the absence of Liens on the assets of the Loan Parties, except for
Liens permitted by Section 7.01 and Liens for which termination statements
satisfactory to the Agent are being tendered concurrently with such extension of
credit or other arrangements satisfactory to the Agent for the delivery of such
termination statements have been made;
(xv)    evidence that the Loan Parties have established DDAs in the name of the
Loan Parties into which amounts owed by Third Party Dealers and Third Party
Franchisees will be deposited;
(xvi)    (A)    all documents and instruments, including Uniform Commercial Code
financing statements reasonably requested by the Agent to be filed, registered
or recorded to create or perfect the Liens intended to be created under the Loan
Documents shall have been so filed, registered or recorded to the satisfaction
of the Agent, (B) the Credit Card Notifications and Blocked Account Agreements
to the extent required pursuant to Section 6.12 hereof shall have been obtained,
and (C) control agreements with respect to the Loan Parties’ securities and
investment accounts have been obtained to the extent required under the Security
Documents;
(xvii)    [reserved]; and
(xviii)    the Agent shall have received such other assurances, certificates,
documents, consents or opinions as the Agent reasonably may require.
(b)    After giving effect to transactions contemplated hereby and Term Loans to
be made on the Effective Date hereunder, Availability shall be not less than
$50,000,000.
(c)    The Agent shall have received a Borrowing Base Certificate dated the
Effective Date, relating to the month ended on February 3, 2018, and executed by
a Responsible Officer of the Lead Borrower.
(d)    The Agent shall be reasonably satisfied that any financial statements
delivered to it and the Lenders fairly present the business and financial
condition of the Loan Parties and that there has been no Material Adverse Effect
since the date of the Audited Financial Statements.
(e)    There shall not be pending any litigation or other proceeding, the result
of which, either individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.
(f)    There shall not have occurred any default of any Material Contract of any
Loan Party.
(g)    The consummation of the transactions contemplated hereby shall not
violate any Law or any Organization Document of any Loan Party.
(h)    All fees required to be paid to the Agent or the Arranger on or before
the Effective Date shall have been paid in full, and all fees required to be
paid to the Lenders on or before the Effective Date shall have been paid in
full.
(i)    The Borrowers shall have paid all fees, charges and disbursements of
counsel to the Agent to the extent invoiced at least one Business Day prior to
or on the Effective Date, plus such additional amounts of such fees, charges and
disbursements as shall constitute its reasonable estimate of such fees, charges
and disbursements incurred or to be incurred by it through the Effective Date
(provided that such estimate shall not thereafter preclude a final settling of
accounts between the Borrowers and the Agent).
(j)    To the extent requested in writing at least three (3) Business Days prior
to the Effective Date, the Agent and the Lenders shall have received all
documentation and other information required by regulatory authorities under
applicable “know your customer” and anti-money laundering rules and regulations,
including without limitation the USA PATRIOT Act.
Without limiting the generality of the provisions of Section 9.04, for purposes
of determining compliance with the conditions specified in this Section 4.01,
each Lender that has signed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Agent shall have received notice from such
Lender prior to the proposed Effective Date specifying its objection thereto.
4.02    Conditions to all Borrowings. The obligation of each Lender to honor any
Request for Credit Extension is subject to the following conditions precedent:
(a)    The Separation Agreements shall be in full force and effect, unless
terminated on a basis reasonably satisfactory to the Agent.
(b)    The representations and warranties of each Loan Party contained in
Article V or in any other Loan Document, shall be true and correct in all
material respects on and as of the date of such Borrowing, except (i) to the
extent that such representations and warranties specifically refer to an earlier
date, in which case they shall be true and correct in all material respects as
of such earlier date, (ii) in the case of any representation and warranty
qualified by materiality, in which case they shall be true and correct in all
respects and (iii) for purposes of this Section 4.02, the representations and
warranties contained in subsections (a), (b) and (c) of Section 5.05 shall be
deemed to refer to the most recent statements furnished pursuant to clauses (a)
and (b), respectively, of Section 6.01.
(c)    No Default or Event of Default shall exist, or would result from such
proposed Borrowing or from the application of the proceeds thereof.
(d)    The Agent shall have received a Request for Credit Extension in
accordance with the requirements hereof.
Each Request for Credit Extension submitted by the Lead Borrower shall be deemed
to be a representation and warranty by the Borrowers that the conditions
specified in Sections 4.02(a) and (b) have been satisfied on and as of the date
of the applicable Borrowing. The conditions set forth in this Section 4.02 are
for the sole benefit of the Agent.
ARTICLE V.    
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and to make and
maintain Term Loans hereunder, the Parent and the Borrowers, on behalf of each
Loan Party, represent and warrant to the Agent and the Lenders that:
5.01    Existence, Qualification and Power. Each Loan Party (a) is a
corporation, limited liability company, partnership or limited partnership, duly
incorporated, organized or formed, validly existing and, where applicable, in
good standing under the Laws of the jurisdiction of its incorporation,
organization or formation, (b) has all requisite power and authority and all
requisite governmental licenses, permits, authorizations, consents and approvals
to (i) own or lease its assets and carry on its business and (ii) execute,
deliver and perform its obligations under the Loan Documents to which it is a
party, and (c) is duly qualified and is licensed and, where applicable, in good
standing under the Laws of each jurisdiction where its ownership, lease or
operation of properties or the conduct of its business requires such
qualification or license; except in each case referred to in clause (c), to the
extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect. The Perfection Certificate sets forth, as of the Effective Date,
each Loan Party’s name as it appears in official filings in its state of
incorporation or organization, its state of incorporation or organization,
organization type, organization number, if any, issued by its state of
incorporation or organization, and its federal employer identification number.
5.02    Authorization; No Contravention. The execution, delivery and performance
by each Loan Party of each Loan Document to which such Person is or is to be a
party, has been duly authorized by all necessary corporate or other
organizational action, and does not and will not (a) contravene the terms of any
of such Person's Organization Documents; (b) conflict with or result in any
breach, termination, or contravention of, or constitute a default under (i) any
Material Contract or any Material Indebtedness to which such Person is a party
or (ii) any order, injunction, writ or decree of any Governmental Authority or
any arbitral award to which such Person or its property is subject; (c) result
in or require the creation of any Lien upon any asset of any Loan Party (other
than Liens in favor of the Agent under the Security Documents and Liens
permitted by Section 7.01); or (d) violate any Law, except in each case referred
to in clauses (b) and (d), to the extent that any such conflict, breach,
termination, contravention or violation could not reasonably be expected to have
a Material Adverse Effect.
5.03    Governmental Authorization; Other Consents. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, any Loan Party of
this Agreement or any other Loan Document, except for (a) the perfection or
maintenance of the Liens created under the Security Documents or (b) such as
have been obtained or made and are in full force and effect.
5.04    Binding Effect. This Agreement has been, and each other Loan Document,
when delivered, will have been, duly executed and delivered by each Loan Party
that is party thereto. This Agreement constitutes, and each other Loan Document
when so delivered will constitute, a legal, valid and binding obligation of such
Loan Party, enforceable against each Loan Party that is party thereto in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.
5.05    Financial Statements; No Material Adverse Effect.
(a)    The Audited Financial Statements (i) were prepared in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein and (ii) fairly present the financial
condition of the Parent and its Subsidiaries as of the date thereof and their
results of operations for the period covered thereby in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein.
(b)    The unaudited Consolidated balance sheet of the Parent and its
Subsidiaries dated November 25, 2017, and the related Consolidated statements of
income or operations, Shareholders’ Equity and cash flows for the Fiscal Quarter
ended on that date (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein, and (ii) fairly present the financial condition of the Parent and
its Subsidiaries as of the date thereof and their results of operations for the
period covered thereby, subject, in the case of clauses (i) and (ii), to the
absence of footnotes and to normal year-end audit adjustments.
(c)    Since the date of the Audited Financial Statements, there has been no
event or circumstance, either individually or in the aggregate, that has had or
could reasonably be expected to have a Material Adverse Effect.
(d)    To the best knowledge of the Loan Parties, no Internal Control Event has
occurred and is continuing that could reasonably be expected to materially
impair the calculation of the Borrowing Base.
(e)    The Consolidated forecasted balance sheet and statements of income and
cash flows of the Parent and its Subsidiaries delivered pursuant to Section
6.01(d) were prepared in good faith on the basis of the assumptions stated
therein, which assumptions were reasonable in light of the conditions existing
at the time of delivery of such forecasts.
5.06    Litigation. There are no actions, suits, proceedings, claims or disputes
pending or, to the knowledge of the Loan Parties, threatened or contemplated, at
law, in equity, in arbitration or before any Governmental Authority, by or
against any Loan Party or any of its Subsidiaries or against any of its
properties or revenues that either individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
5.07    Reserved.
5.08    Ownership of Property; Liens.
(a)    Each of the Loan Parties has good record and marketable title in fee
simple to or valid leasehold interests in, all Real Estate necessary or used in
the ordinary conduct of its business, except as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. Each of
the Loan Parties has good and marketable title to, valid leasehold interests in,
or valid licenses to use all personal property and assets used in the conduct of
its business except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(b)    The Perfection Certificate sets forth the address of all Real Estate
(excluding Leases) that is owned by the Loan Parties, together with a list of
the holders of any mortgage or other Lien thereon as of the Effective Date. The
Perfection Certificate sets forth the address of all Leases of the Loan Parties,
together with the name of each lessor and its contact information with respect
to each such Lease as of the Effective Date. Each of such Leases is in full
force and effect and the Loan Parties are not in default of the terms thereof
except as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
5.09    Environmental Compliance.
(a)    No Loan Party (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability, except, in each case, as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(b)    Except, in each case, as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect: none of the properties
currently or formerly owned or operated by any Loan Party is listed or proposed
for listing on the NPL or on the CERCLIS or any analogous foreign, state or
local list or is adjacent to any such property; there are no and never have been
any underground or above-ground storage tanks or any surface impoundments,
septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or
have been treated, stored or disposed on any property currently owned or
operated by any Loan Party or, to the best of the knowledge of the Loan Parties,
on any property formerly owned or operated by any Loan Party; there is no
asbestos or asbestos-containing material on any property currently owned or
operated by any Loan Party; and Hazardous Materials have not been released,
discharged or disposed of on any property, including any currently or formerly
owned or operated property, by any Loan Party.
(c)    Except, in each case, as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, no Loan Party is
undertaking, and no Loan Party has completed, either individually or together
with other potentially responsible parties, any investigation or assessment or
remedial or response action relating to any actual or threatened release,
discharge or disposal of Hazardous Materials at any site, location or operation,
either voluntarily or pursuant to the order of any Governmental Authority or the
requirements of any Environmental Law. All Hazardous Materials generated, used,
treated, handled or stored at, or transported to or from, any property currently
or formerly owned or operated by any Loan Party have been disposed of in a
manner not reasonably expected to result in a Material Adverse Effect.
5.10    Insurance. The properties of the Loan Parties are insured with
financially sound and reputable insurance companies which are not Affiliates of
the Loan Parties, in such amounts (after giving effect to any self-insurance
compatible with the following standards), with such deductibles and covering
such risks (including, without limitation, worker’s compensation, commercial
general liability, insurance on real and personal property and directors and
officers liability insurance) as are reasonably determined by the Parent and
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Loan Parties operate. The Perfection
Certificate sets forth a description of all insurance maintained by or on behalf
of the Loan Parties as of the Effective Date. As of the Effective Date, each
insurance policy listed in the Perfection Certificate is in full force and
effect and all premiums in respect thereof that are due and payable have been
paid.
5.11    Taxes. The Loan Parties have filed all Federal, state and other material
tax returns and reports required to be filed, and have paid all Federal, state
and other material taxes, assessments, fees and other governmental charges
levied or imposed upon them or their properties, income or assets otherwise due
and payable, except those which are being contested in good faith by appropriate
proceedings being diligently conducted, for which adequate reserves have been
provided in accordance with GAAP. There is no proposed tax assessment against
any Loan Party that would, if made, have a Material Adverse Effect. No Loan
Party or any Subsidiary thereof is a party to any tax sharing agreement other
than in connection with the Separation Agreements.
5.12    ERISA Compliance.
(a)    Except as would not reasonably be expected to have a Material Adverse
Effect, (i) each Plan and, to the knowledge of the Loan Parties, any
Multiemployer Plan is in compliance with the applicable provisions of ERISA, the
Code and other Federal or state laws, and (ii) each Pension Plan that is
intended to be a qualified plan under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service to the effect
that the form of such Plan is qualified under Section 401(a) of the Code and the
trust related thereto has been determined by the Internal Revenue Service to be
exempt from federal income tax under Section 501(a) of the Code, or an
application for such a letter is currently being processed by the Internal
Revenue Service. To the best knowledge of the Loan Parties, nothing has occurred
that would prevent or cause the loss of such tax-qualified status.
(b)    There are no pending or, to the knowledge of the Loan Parties, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan and, to the knowledge of the Loan Parties, any Multiemployer
Plan that would reasonably be expected to have a Material Adverse Effect. There
has been no prohibited transaction or violation of the fiduciary responsibility
rules with respect to any Plan that has resulted or would reasonably be expected
to result in a Material Adverse Effect.
(c)    Except as would not reasonably be expected to have a Material Adverse
Effect, (i) no ERISA Event has occurred, and neither the Parent nor any ERISA
Affiliate is aware of any fact, event or circumstance that would reasonably be
expected to constitute or result in an ERISA Event with respect to any Pension
Plan; (ii) the Parent and each ERISA Affiliate meet all applicable requirements
under the Pension Funding Rules in respect of each Pension Plan, and no waiver
of the minimum funding standards under the Pension Funding Rules has been
applied for or obtained; (iii) as of the most recent valuation date for any
Pension Plan, the funding target attainment percentage (as defined in Section
430(d)(2) of the Code) is 80% or higher; (iv) neither the Parent nor any ERISA
Affiliate has incurred any unsatisfied liability to the PBGC other than for the
payment of premiums, and there are no premium payments which have become due
that are unpaid; (v) neither the Parent nor any ERISA Affiliate has engaged in a
transaction described in Section 4069 or Section 4212(c) of ERISA; and (vi) no
Pension Plan has been terminated by the plan administrator thereof nor by the
PBGC, and no event or circumstance has occurred or exists that would reasonably
be expected to cause the PBGC to institute proceedings under Title IV of ERISA
to terminate any Pension Plan.
5.13    Subsidiaries; Equity Interests. As of the Effective Date, the Loan
Parties have no Subsidiaries other than those disclosed in the Perfection
Certificate, which sets forth the legal name, jurisdiction of incorporation or
formation and authorized Equity Interests of each such Subsidiary. All of the
outstanding Equity Interests in the Loan Parties (other than the Parent) and
such Subsidiaries have been validly issued, are fully paid and non-assessable
and, as of the Effective Date, are owned by the Persons specified and in the
amounts specified in the Perfection Certificate free and clear of all Liens
other than Liens permitted by Section 7.01. Except as set forth in the
Perfection Certificate, there are no outstanding rights to purchase any Equity
Interests in any Subsidiary as of the Effective Date. As of the Effective Date,
the Loan Parties have no equity investments in any other corporation or entity
other than those specifically disclosed in the Perfection Certificate. The
copies of the Organization Documents of each Loan Party and each amendment
thereto provided pursuant to Section 4.01 are true and correct copies of each
such document as of the Effective Date, each of which was valid and in full
force and effect as of the Effective Date.
5.14    Margin Regulations; Investment Company Act.
(a)    No Loan Party is engaged or will be engaged, principally or as one of its
important activities, in the business of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the FRB), or extending credit for
the purpose of purchasing or carrying margin stock in violation of Regulations
T, U, or X issued by the FRB. None of the proceeds of the Term Loans shall be
used directly or indirectly for the purpose of purchasing or carrying any margin
stock, for the purpose of reducing or retiring any Indebtedness that was
originally incurred to purchase or carry any margin stock or for any other
purpose that might cause any of the Term Loans to be considered a “purpose
credit” within the meaning of Regulations T, U, or X issued by the FRB.
(b)    None of the Loan Parties is required to be registered as an “investment
company” under the Investment Company Act of 1940.
5.15    Disclosure. No report, financial statement, certificate or other written
information furnished by or on behalf of any Loan Party to the Agent or any
Lender in connection with the transactions contemplated hereby and the
negotiation of this Agreement or delivered hereunder or under any other Loan
Document (in each case, as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not materially misleading; provided
that, with respect to projected financial information, the Loan Parties
represent only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time.
5.16    Compliance with Laws. Each of the Loan Parties is in compliance in all
material respects with the requirements of all Laws and all orders, writs,
injunctions and decrees applicable to it or to its properties, except in such
instances in which (a) such requirement of Law or order, writ, injunction or
decree is being contested in good faith by appropriate proceedings diligently
conducted or (b) the failure to comply therewith, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
5.17    Intellectual Property; Licenses, Etc. Except as, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect,
the Loan Parties own, or possess the right to use, all of the Intellectual
Property, licenses, permits and other authorizations that are reasonably
necessary for the operation of their respective businesses, without, to the
knowledge of the Loan Parties, conflict with the rights of any other Person or
infringement upon any rights held by any other Person. No claim or litigation
regarding any of the foregoing is pending or, to the best knowledge of the Loan
Parties, threatened, which, either individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
5.18    Labor Matters. Except as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect, (i) there are no
strikes, lockouts, slowdowns or other material labor disputes against any Loan
Party pending or, to the knowledge of any Loan Party, threatened; (ii) the hours
worked by and payments made to employees of the Loan Parties comply with the
Fair Labor Standards Act and any other applicable federal, state, local or
foreign Law dealing with such matters; (iii) no Loan Party has incurred any
liability or obligation under the Worker Adjustment and Retraining Act or
similar state Law; and (iv) all payments due from any Loan Party, or for which
any claim may be made against any Loan Party, on account of wages and employee
health and welfare insurance and other benefits, have been paid or properly
accrued in accordance with GAAP as a liability on the books of such Loan Party.
Except as set forth on Schedule 5.18, as of the Effective Date, no Loan Party is
a party to or bound by any collective bargaining agreement. As of the Effective
Date, there are no representation proceedings pending or, to any Loan Party’s
knowledge, threatened to be filed with the National Labor Relations Board, and
no labor organization or group of employees of any Loan Party has made a pending
demand for recognition. There are no complaints, unfair labor practice charges,
grievances, arbitrations, unfair employment practices charges or any other
claims or complaints against any Loan Party pending or, to the knowledge of any
Loan Party, threatened to be filed with any Governmental Authority or arbitrator
based on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment of any employee of any Loan Party which
would individually or in the aggregate reasonably be expected to result in a
Material Adverse Effect. The consummation of the transactions contemplated by
the Loan Documents will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which any Loan Party is bound.
5.19    Security Documents. Subject to the ABL Intercreditor Agreement, the
Guaranty and Security Agreement creates in favor of the Agent, for the benefit
of the Secured Parties referred to therein, a legal, valid, continuing and
enforceable security interest in the Collateral (as defined in the Guaranty and
Security Agreement), the enforceability of which is subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law. Upon the
making of the filings contemplated in the Guaranty and Security Agreement and/or
the obtaining of “control” (as defined in the UCC) of the Collateral under the
Guaranty and Security Agreement, the Agent will have a perfected Lien on, and
security interest in, to and under all right, title and interest of the Loan
Parties thereunder in all Collateral that may be perfected under the UCC (in
effect on the date this representation is made) by filing, recording or
registering a financing statement or analogous document (including without
limitation the proceeds of such Collateral subject to the limitations relating
to such proceeds in the UCC) or by obtaining control, in each case prior and
superior in right to any other Person (other than Permitted Encumbrances having
priority to the Liens securing the Obligations).
5.20    Solvency. After giving effect to the transactions contemplated by this
Agreement, and before and after giving effect to each Borrowing, the Loan
Parties, on a Consolidated basis, are and will be Solvent.
5.21    Deposit Accounts; Credit Card Arrangements.
(a)    The Perfection Certificate sets forth a list of all DDAs maintained by
the Loan Parties as of the Effective Date, which Schedule includes, with respect
to each DDA (i) the name and address of the depository; (ii) the account
number(s) maintained with such depository; (iii) a contact person at such
depository, and (iv) the identification of each Blocked Account Bank.
(b)    The Perfection Certificate sets forth a list describing all arrangements
as of the Effective Date to which any Loan Party is a party with respect to the
processing and/or payment to such Loan Party of the proceeds of any credit card
charges and debit card charges for sales made by such Loan Party.
5.22    Brokers. No Loan Party or Affiliate thereof has any obligation to any
Person in respect of any finder’s or brokerage fees in connection with the entry
into this Agreement, other than as set forth in the Fee Letter.
5.23    Customer and Trade Relations. There exists no actual or, to the
knowledge of any Loan Party, threatened in writing, termination or cancellation
of, or any adverse modification or change in the business relationship of any
Loan Party with any supplier that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
5.24    Material Contracts. The Loan Parties have delivered to the Agent true,
correct and complete copies of the Material Contracts, as in effect on the
Effective Date. The Loan Parties are not in breach or in default in any material
respect of or under any Material Contract and have not received any notice of
material default under, or of the intention of any other party thereto to
terminate, any Material Contract.
5.25    Casualty. Neither the businesses nor the properties of the Loan Parties
or their Subsidiaries, considered as a whole, have been affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that, either individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
5.26    Separation Agreements. The Separation Agreements set forth the entire
agreement and understanding of the parties thereto relating to the subject
matter thereof, and there are no other agreements, arrangements or
understandings, written or oral, relating to the matters covered thereby, in
each case as of the Effective Date. The execution, delivery and performance of
each such Separation Agreement has been duly authorized by all necessary action
on the part of each such Person. No authorization or approval or other action
by, and no notice to filing with or license from, any Governmental Authority is
required for the consummation of the transactions contemplated by the Separation
Agreements other than such as have been obtained on or prior to the Effective
Date. Each Separation Agreement is the legal, valid and binding obligation of
each Loan Party party thereto and, to the best knowledge of any Loan Party, the
other parties thereto, enforceable against such parties in accordance with its
terms (other than (i) the Separation Agreement described in clause (g) of the
definition of such term or (ii) to the extent terminated on a basis reasonably
acceptable to the Agent.
5.27    EEA Financial Institution. None of the Borrowers is an EEA Financial
Institution.
5.28    Sanctions Concerns and Anti-Corruption Laws.
(a)    No Loan Party, nor any Subsidiary, nor, to the knowledge of the Loan
Parties, any director, officer, employee, agent, affiliate or representative
thereof, is an individual or entity that is, or is owned or controlled by any
individual or entity that is (i) currently the subject or target of any
Sanctions, (ii) included on OFAC’s List of Specially Designated Nationals, HMT’s
Consolidated List of Financial Sanctions Targets and the Investment Ban List, or
any similar list enforced by any other relevant sanctions authority or (iii)
located, organized or resident in a Designated Jurisdiction.
(b)    The Loan Parties and their Subsidiaries have conducted their business in
compliance with Anti-Corruption Laws, and have instituted and maintained
policies and procedures designed to promote and achieve compliance with such
laws and applicable Sanctions, and to the knowledge of each Borrower, the Loan
Parties and their Subsidiaries are in compliance with such Anti-Corruption Laws
and applicable Sanctions in all material respects.
ARTICLE VI.    
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Term Loan or
other Obligation hereunder shall remain unpaid or unsatisfied (other than
contingent indemnification claims for which a claim has not been asserted), the
Parent shall, and shall (except in the case of the covenants set forth in
Sections 6.01, 6.02, and 6.03) cause each of its Subsidiaries to:
6.01    Financial Statements. Deliver to the Agent and the Lenders (other than
GBFC LLC), in form and detail satisfactory to the Agent:
(a)    as soon as available, but in any event within 95 days after the end of
each Fiscal Year of the Parent, (i) a Consolidated balance sheet of the Parent
and its Subsidiaries as at the end of such Fiscal Year, and the related
consolidated statements of income or operations, Shareholders’ Equity and cash
flows for such Fiscal Year, setting forth in each case in comparative form the
figures for the previous Fiscal Year, all in reasonable detail and prepared in
accordance with GAAP, such consolidated statements to be audited and accompanied
by a report and unqualified opinion of a Registered Public Accounting Firm of
nationally recognized standing reasonably acceptable to the Agent, which report
and opinion shall be prepared in accordance with generally accepted auditing
standards and shall not be subject to any “going concern” or like qualification
or exception or any qualification or exception as to the scope of such audit;
and (ii) to the extent not otherwise included in the financial statements
delivered pursuant to clause (i), a reasonably detailed build-up of operating
income for each Operating Segment for such period, certified by a Responsible
Officer of the Parent as stating fairly in all material respects the financial
position of each Operating Segment;
(b)    as soon as available, but in any event within 50 days after the end of
each of the first three Fiscal Quarters of each Fiscal Year of the Parent, (i) a
Consolidated balance sheet of the Parent and its Subsidiaries as at the end of
such Fiscal Quarter, and the related consolidated statements of income or
operations, Shareholders’ Equity and cash flows for such Fiscal Quarter and for
the portion of the Parent’s Fiscal Year then ended, setting forth in each case
in comparative form the figures for (A) the corresponding Fiscal Quarter of the
previous Fiscal Year and (B) the corresponding portion of the previous Fiscal
Year, all in reasonable detail, such Consolidated statements to be certified by
a Responsible Officer of the Parent as fairly presenting the financial
condition, results of operations, Shareholders’ Equity and cash flows of the
Parent and its Subsidiaries as of the end of such Fiscal Quarter in accordance
with GAAP, subject only to normal year-end audit adjustments and the absence of
footnotes, and (ii) to the extent not otherwise included in the financial
statements delivered pursuant to clause (i), a reasonably detailed build-up of
operating income for each Operating Segment for such period, certified by a
Responsible Officer of the Parent as stating fairly in all material respects the
financial position of each Operating Segment;
(c)    as soon as available, but in any event within 30 days after the end of
each month, a Consolidated balance sheet of the Parent and its Subsidiaries as
at the end of such month, and the related Consolidated statements of income or
operations, Shareholders’ Equity and cash flows for such month, and for the
portion of the Parent’s Fiscal Year then ended, setting forth in each case in
comparative form the figures for (A) the corresponding month of the previous
Fiscal Year and (B) the corresponding portion of the previous Fiscal Year, all
in reasonable detail, such Consolidated statements to be certified by a
Responsible Officer of the Parent as, to its knowledge, fairly presenting the
financial condition, results of operations, Shareholders’ Equity and cash flows
of the Parent and its Subsidiaries as of the end of such month in accordance
with GAAP, subject only to normal year-end audit adjustments and the absence of
footnotes;
(d)    as soon as available, but in any event no more than 60 days after the end
of each Fiscal Year of the Parent, forecasts prepared by management of the
Parent, in form and detail reasonably satisfactory to the Agent, consisting of a
projected balance sheet, income statement, cash flows and Availability of the
Parent and its Subsidiaries on a monthly basis for the immediately following
Fiscal Year (including the Fiscal Year in which the Maturity Date occurs).
6.02    Certificates; Other Information. Deliver to the Agent and the Lenders
(other than GBFC LLC):
(a)    concurrently with the delivery of the financial statements referred to in
Sections 6.01(a), (b) and (c), a duly completed Compliance Certificate signed by
a Responsible Officer of the Lead Borrower, and in the event of any change in
generally accepted accounting principles used in the preparation of such
financial statements, a statement of reconciliation conforming such financial
statements to GAAP;
(b)    Within ten (10) Business Days after the end of each fiscal month, a
Borrowing Base Certificate showing the Borrowing Base as of the close of
business as of the last day of the immediately preceding month, each Borrowing
Base Certificate to be certified as complete and correct by a Responsible
Officer of the Lead Borrower; provided that at any time that an Accelerated
Borrowing Base Delivery Event has occurred and is continuing, such Borrowing
Base Certificate shall be delivered on Friday of each week (or, if Friday is not
a Business Day, on the next succeeding Business Day), as of the close of
business on the immediately preceding Saturday (it being understood that any
weekly Borrowing Base Certificate shall constitute the results of rolled forward
information regarding Eligible Inventory and other items, as applicable);
(c)    promptly upon receipt, copies of any report submitted to the board of
directors (or the audit committee of the board of directors) of any Loan Party
by its Registered Public Accounting Firm in connection with any Internal Control
Event or any other event that would reasonably be expected, individually or in
the aggregate with other events, to result in a Material Adverse Effect;
(d)    promptly after the same are available, copies of each annual report,
proxy or financial statement or other report or communication sent to the
stockholders of the Loan Parties, and copies of all annual, regular, periodic
and special reports and registration statements which any Loan Party may file or
be required to file with the SEC under Section 13 or 15(d) of the Securities
Exchange Act of 1934 or with any national securities exchange;
(e)    the financial and collateral reports described on Schedule 6.02 hereto,
at the times set forth in such Schedule;
(f)    promptly after the furnishing thereof, copies of any statement or report
furnished to any holder of debt securities of any Loan Party or any Subsidiary
thereof pursuant to the terms of any indenture, loan or credit or similar
agreement and not otherwise required to be furnished to the Lenders pursuant to
Section 6.01 or any other clause of this Section 6.02; (other than borrowing
notices or other routine communications thereunder)
(g)    as soon as available, but in any event within 30 days after the end of
each Fiscal Year of the Loan Parties, a report summarizing the insurance
coverage (specifying type, amount and carrier) in effect for each Loan Party and
its Subsidiaries and containing such additional information as the Agent, or any
Lender through the Agent, may reasonably specify;
(h)    promptly after the Agent’s request therefor, copies of all Material
Contracts and documents evidencing Material Indebtedness, and promptly after
receipt thereof by any Loan Party, copies of all notices (other than notices
delivered in the ordinary course) received from SHC and its Subsidiaries under
the Separation Agreements;
(i)    promptly, and in any event within five Business Days after receipt
thereof by any Loan Party or any Subsidiary thereof, copies of each notice or
other correspondence received from any Governmental Authority (including,
without limitation, the SEC (or comparable agency in any applicable non-U.S.
jurisdiction)) concerning any proceeding with, or investigation or possible
investigation or other inquiry by such Governmental Authority regarding
financial or other operational results of any Loan Party or any Subsidiary
thereof or any other matter which, if adversely determined, could reasonably
expected to have a Material Adverse Effect; and
(j)    promptly, such additional information regarding the business affairs,
financial condition or operations of any Loan Party or any Subsidiary, or
compliance with the terms of the Loan Documents, as the Agent or any Lender may
from time to time reasonably request.
Documents required to be delivered pursuant to Section 6.01 or Section 6.02 may
be delivered by electronic mail or by posting to a website and, if so delivered
by posting to a website, shall be deemed to have been delivered on the date (i)
on which the Lead Borrower posts such documents, or provides a link thereto on
the Lead Borrower’s website on the Internet at the website address listed on
Schedule 10.02; or (ii) on which such documents are posted on the Lead
Borrower’s behalf on an Internet or intranet website, if any, to which each
Lender and the Agent have access (whether a commercial, third-party website or
whether sponsored by the Agent and including, without limitation, the website of
the SEC). The Agent shall have no obligation to request the delivery or to
maintain copies of the documents referred to above, and in any event shall have
no responsibility to monitor compliance by the Loan Parties with any such
request for delivery, and each Lender shall be solely responsible for requesting
delivery to it or maintaining its copies of such documents.
The Loan Parties hereby acknowledge that (a) the Agent and/or the Arranger may
make available to the Lenders materials and/or information provided by or on
behalf of the Loan Parties hereunder (collectively, “Borrower Materials”) by
electronic mail or by posting the Borrower Materials on Debt Domain, IntraLinks,
Syndtrak or another similar electronic system (the “Platform”) and (b) certain
of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to
receive material non-public information with respect to the Loan Parties or
their securities) (each, a “Public Lender”). The Loan Parties hereby agree that
so long as any Loan Party is the issuer of any outstanding debt or equity
securities that are registered or issued pursuant to a private offering or is
actively contemplating issuing any such securities they will use commercially
reasonable efforts to identify that portion of the Borrower Materials that may
be distributed to the Public Lenders and that (w) all such Borrower Materials
shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall
mean that the word “PUBLIC” shall appear prominently on the first page thereof;
(x) by marking Borrower Materials “PUBLIC,” the Loan Parties shall be deemed to
have authorized the Agent, the Arranger and the Lenders to treat such Borrower
Materials as not containing any material non-public information (although it may
be sensitive and proprietary) with respect to the Loan Parties or their
securities for purposes of the Securities Laws (provided, however, that to the
extent such Borrower Materials constitute Information, they shall be treated as
set forth in Section 10.07); (y) all Borrower Materials marked “PUBLIC” are
permitted to be made available through any portion of a Platform designated
“Public Investor” or electronic emails distributed to Public Lenders; and (z)
the Agent and the Arranger shall be entitled to treat any Borrower Materials
that are not marked “PUBLIC” as being suitable only for electronic mail
distributions that do not have any Public Lenders (other than any individual at
or on behalf of such Public Lender designated to receive “Private Side
Information” or similar designation) or for posting on a portion of any Platform
not designated “Public Investor.”
6.03    Notices. Promptly notify the Agent and the Lenders (other than GBFC LLC)
upon obtaining knowledge:
(a)    of the occurrence of any Default or Event of Default;
(b)    of any matter that has resulted or would reasonably be expected to result
in a Material Adverse Effect,
(c)    of any breach or non-performance of, or any default under, a Material
Contract or with respect to Material Indebtedness of any Loan Party or any
Subsidiary thereof;
(d)    of any material breach or non-performance of, or any material default
under, any agreements with any Third Party Dealer or Third Party Franchisee, or
of any material failure of SHC or any of its Subsidiaries to make rent payments
due with respect to any location operated by a Third Party Franchisee, that, in
either case, would materially and adversely impact the Borrowing Base or
materially and adversely impact the ability of the Agent to realize upon the ABL
Collateral;
(e)    of any dispute, litigation, investigation, proceeding or suspension
between any Loan Party or any Subsidiary thereof and any Governmental Authority;
or the commencement of, or any material development in, any litigation or
proceeding affecting any Loan Party or any Subsidiary thereof, including
pursuant to any applicable Environmental Laws, in each case which would be
reasonably expected to result in a Material Adverse Effect;
(f)    of the occurrence of any ERISA Event;
(g)    of any material change in accounting policies or financial reporting
practices by any Loan Party or any Subsidiary thereof;
(h)    of any change in any Loan Party’s senior executive officers;
(i)    of the discharge by any Loan Party of its present Registered Public
Accounting Firm or any withdrawal or resignation by such Registered Public
Accounting Firm;
(j)    of the filing of any Lien for unpaid Taxes against any Loan Party in
excess of $5,000,000;
(k)    of any casualty or other insured damage to any material portion of the
Collateral or the commencement of any action or proceeding for the taking of any
interest in a material portion of the Collateral under power of eminent domain
or by condemnation or similar proceeding or if any material portion of the
Collateral is damaged or destroyed;
(l)    of any failure by any Loan Party to pay rent at (i) any of the Loan
Parties’ distribution centers or warehouses; or (ii) any of such Loan Party’s
other locations if such failure would reasonably be expected to result in a
Material Adverse Effect; and
(m)    to the extent written notice of such failure is received by any Loan
Party, of any failure by any Third Party Dealer to pay rent at any of such Third
Party Dealer location if such failure by Third Party Dealer location or such
failure by a number of other Third Party Dealer locations would reasonably be
expected to result in a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Lead Borrower setting forth details of the occurrence
referred to therein and stating what action the Lead Borrower has taken and
proposes to take with respect thereto.
6.04    Payment of Taxes. Pay and discharge before the same shall become
delinquent, (i) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property (ii) all payments required to be made to
any Pension Plan, and (iii) all lawful claims that, if unpaid, might by law
become a Lien upon its property; provided that neither Parent, the Borrowers nor
any of their Subsidiaries shall be required to pay or discharge any such tax,
assessment, charge or claim (x) that is being contested in good faith and by
proper proceedings and as to which appropriate reserves are being maintained,
unless and until any Lien resulting therefrom attaches to its property and
becomes enforceable against its other creditors or (y) if such non-payments,
either individually or in the aggregate, would not be reasonably expected to
have a Material Adverse Effect.
6.05    Preservation of Existence, Etc. (a) Preserve, renew and maintain in full
force and effect its legal existence and good standing under the Laws of the
jurisdiction of its organization or formation except in a transaction permitted
by Section 7.04 or 7.05; (b) take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to do so would
not reasonably be expected to have a Material Adverse Effect; and (c) preserve
or renew all of its Intellectual Property, except to the extent the failure to
do so would not reasonably be expected to have a Material Adverse Effect.
6.06    Maintenance of Properties. Except, in each case, where the failure to do
so would not reasonably be expected to have a Material Adverse Effect: (a)
maintain, preserve and protect all of its material properties and equipment
necessary in the operation of its business in good working order and condition,
ordinary wear and tear excepted; and (b) make all necessary repairs thereto and
renewals and replacements thereof.
6.07    Maintenance of Insurance.
(a)    Maintain or cause to be maintained with financially sound and reputable
insurance companies and not Affiliates of the Loan Parties, insurance with
respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business
and operating in the same or similar locations or as is required by Law, of such
types and in such amounts (after giving effect to any self-insurance compatible
with the following standards) as are customarily carried under similar
circumstances by such other Persons.
(b)    Maintain for themselves and their Subsidiaries, a Directors and Officers
insurance policy, and a “Blanket Crime” policy with responsible companies in
such amounts as are customarily carried by business entities engaged in similar
businesses similarly situated, and will upon request by the Agent furnish the
Agent certificates evidencing renewal of each such policy.
(c)    Cause fire and extended coverage policies maintained with respect to any
ABL Collateral to be endorsed or otherwise amended to include (i) a lenders’
loss payable clause (regarding personal property), in form and substance
reasonably satisfactory to the Agent, which endorsements or amendments shall
provide that the insurer shall pay all proceeds otherwise payable to the Loan
Parties under the policies directly to the Agent and (ii) a provision to the
effect that none of the Loan Parties, Credit Parties or any other Person shall
be a co-insurer.
(d)    Cause commercial general liability policies to be endorsed to name the
Agent as an additional insured.
(e)    Cause business interruption policies, if any, to name the Agent as a loss
payee and to be endorsed or amended to include (i) a provision that, from and
after the Effective Date, the insurer shall pay all proceeds otherwise payable
to the Loan Parties under the policies directly to the Agent or, as applicable,
the Revolver Agent, and (ii) a provision to the effect that none of the Loan
Parties, the Agent, the Agent or any other party shall be a co‑insurer.
(f)    Cause each such policy referred to in this Section 6.07 to also provide
that it shall not be canceled, modified or non-renewed (i) by reason of
nonpayment of premium except upon not less than ten (10) days’ prior written
notice thereof by the insurer to the Agent (giving the Agent the right to cure
defaults in the payment of premiums) or (ii) for any other reason except upon
not less than thirty (30) days’ prior written notice thereof by the insurer to
the Agent.
(g)    Deliver to the Agent, prior to the cancellation or non-renewal of any
such policy of insurance, evidence of a renewal or replacement policy, including
an insurance binder therefor, together with evidence satisfactory to the Agent
of payment of the premium therefor.
None of the Credit Parties, or their agents or employees shall be liable for any
loss or damage insured by the insurance policies required to be maintained under
this Section 6.07. Each Loan Party shall look solely to its insurance companies
or any other parties other than the Credit Parties for the recovery of such loss
or damage and such insurance companies shall have no rights of subrogation
against any Credit Party or its agents or employees. If, however, the insurance
policies do not provide waiver of subrogation rights against such parties, as
required above, then the Loan Parties hereby agree, to the extent permitted by
law, to waive their right of recovery, if any, against the Credit Parties and
their agents and employees. The designation of any form, type or amount of
insurance coverage by any Credit Party under this Section 6.07 shall in no event
be deemed a representation, warranty or advice by such Credit Party that such
insurance is adequate for the purposes of the business of the Loan Parties or
the protection of their properties.
6.08    Compliance with Laws. Comply in all material respects with the
requirements of all Laws (including all Environmental Laws) and all orders,
writs, injunctions and decrees applicable to it or to its business or property,
except in such instances in which (a) such requirement of Law or order, writ,
injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves have been set
aside and maintained by the Loan Parties in accordance with GAAP; and (b) the
failure to comply therewith could not reasonably be expected to have a Material
Adverse Effect.
6.09    Books and Records; Accountants.
(a)    Maintain proper books of record and account, in which full, true and
correct entries in conformity with GAAP consistently applied shall be made of
all financial transactions and matters involving the assets and business of the
Loan Parties or such Subsidiary, as the case may be; and (ii) maintain such
books of record and account in material conformity with all applicable
requirements of any Governmental Authority having regulatory jurisdiction over
the Loan Parties or such Subsidiary, as the case may be.
(b)    at all times retain a Registered Public Accounting Firm which is
reasonably satisfactory to the Agent and instruct such Registered Public
Accounting Firm to cooperate with, and be available to, the Agent or its
representatives to discuss the Loan Parties’ financial performance, financial
condition, operating results, controls, and such other matters, within the scope
of the retention of such Registered Public Accounting Firm, as may be raised by
the Agent.
6.10    Inspection Rights.
(a)    Permit representatives and independent contractors of the Agent to visit
and inspect any of its properties, to examine its corporate, financial and
operating records, the insurance policies maintained by or on behalf of the Loan
Parties and make copies thereof or abstracts therefrom, and to discuss its
affairs, finances and accounts with its directors, officers, and Registered
Public Accounting Firm, all at the expense of the Loan Parties and at such
reasonable times during normal business hours and as often as may be reasonably
desired, upon reasonable advance notice to the Lead Borrower; provided, however,
that when a Default or an Event of Default exists the Agent (or any of its
representatives or independent contractors) may do any of the foregoing at the
expense of the Loan Parties at any time during normal business hours and without
advance notice.
(b)    Upon the request of the Agent after reasonable prior notice, permit the
Agent or professionals (including investment bankers, consultants, accountants,
and lawyers) retained by the Agent to conduct commercial finance examinations
and other evaluations, including, without limitation, of (i) the Lead Borrower’s
practices in the computation of the Borrowing Base (ii) the assets included in
the Borrowing Base and related financial information such as, but not limited
to, sales, gross margins, payables, accruals and reserves, and (iii) the Loan
Parties’ business plan, forecasts and cash flows. The Loan Parties shall pay the
reasonable fees and expenses of the Agent and such professionals with respect to
two (2) commercial finance examination during each twelve month period;
provided, however, that the Agent agrees that the Agent shall not undertake any
such commercial finance examinations to the extent that the Revolver Agent shall
have conducted such commercial finance examinations in accordance with the
requirements of the ABL Intercreditor Agreement. Notwithstanding the foregoing,
the Agent may cause additional commercial finance examinations to be undertaken
(i) as it in its discretion deems necessary or appropriate, at the Credit
Parties’ expense or, (ii) if a Default or Event of Default shall have occurred
and be continuing, at the expense of the Loan Parties.
(c)    Upon the request of the Agent after reasonable prior notice, permit the
Agent or professionals (including appraisers) retained by the Agent to conduct
appraisals of the ABL Collateral, including, without limitation, the assets
included in the Borrowing Base. The Loan Parties shall pay the reasonable fees
and expenses of the Agent and such professionals with respect to two (2)
inventory appraisals in each twelve month period; provided, however, that the
Agent agrees that the Agent shall not undertake any such appraisals to the
extent that the Revolver Agent shall have conducted such appraisals in
accordance with the requirements of the ABL Intercreditor Agreement.
Notwithstanding the foregoing, the Agent may cause additional appraisals to be
undertaken (i) as it in its discretion deems necessary or appropriate, at the
Credit Parties’ expense or, (ii) if a Default or Event of Default shall have
occurred and be continuing, at the expense of the Loan Parties.
6.11    Additional Loan Parties. Notify the Agent at the time that any Person
becomes a Subsidiary, and promptly thereafter (and in any event within thirty
(30) days or such later date as the Agent may agree), cause any such Person that
is a wholly-owned domestic Subsidiary (other than any wholly-owned domestic
Subsidiary that is an Immaterial Subsidiary or that is owned by a CFC or that is
a Foreign Subsidiary Holding Company), or cause any wholly-owned domestic
Subsidiary (other than any such Subsidiary that is owned by a CFC or that is a
Foreign Subsidiary Holding Company) previously designated as an Immaterial
Subsidiary that thereafter becomes a Material Subsidiary, to (a) become a Loan
Party by executing and delivering to the Agent a Joinder Agreement or such other
documents as the Agent shall deem appropriate for such purpose, (b) grant a Lien
to the Agent on such Person’s assets of the same type that constitute Collateral
to secure the Obligations, and (c) deliver to the Agent documents of the types
referred to in clauses (v) and (vi) of Section 4.01(a) and, if requested by the
Agent, customary favorable opinions of counsel to such Person (which shall
cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to in clause (a)), in each case in
form, content and scope reasonably satisfactory to the Agent; provided that, if
any such wholly-owned domestic Subsidiary owns assets of the type which would be
included in the Borrowing Base, such Subsidiary shall join the Loan Documents as
a Borrower thereunder. In no event shall compliance with this Section 6.11 waive
or be deemed a waiver or consent to any transaction giving rise to the need to
comply with this Section 6.11 if such transaction was not otherwise expressly
permitted by this Agreement or constitute or be deemed to constitute, with
respect to any Subsidiary, an approval of such Person as a Borrower or permit
the inclusion of any acquired assets in the computation of the Borrowing Base.
6.12    Cash Management.
(a)    To the extent not previously delivered prior to the Effective Date,
(i) deliver to the Agent copies of notifications in the form of Exhibit G hereto
(each, a “Credit Card Notification”), or otherwise reasonably satisfactory in
form and substance to the Agent which have been executed by the applicable Loan
Parties and delivered to such Loan Party’s Credit Card Issuers and Credit Card
Processors listed in the Perfection Certificate with respect to which the Loan
Parties have established credit card processing arrangements independent of SHC
and its Subsidiaries, and (ii) enter into a Blocked Account Agreement with each
Blocked Account Bank set forth on Schedule 6.12.
(b)    ACH or wire transfer no less frequently than daily (and whether or not
there are then any outstanding Obligations) to a Blocked Account all amounts on
deposit in each DDA (net of any minimum balance as may be required to be kept in
the subject DDA by the depository institution at which such DDA is maintained)
and all payments received from all Credit Card Issuers and Credit Card
Processors and from SHC and its Subsidiaries pursuant to the Separation
Agreements.
(c)    After the occurrence and during the continuance of a Cash Dominion Event,
cause the ACH or wire transfer to the collection account maintained by the
Revolver Agent at Bank of America (for application to the Revolver Outstandings)
(the “Revolver Collection Account”) (provided that, at any time after the
repayment of all Revolver Outstandings pursuant to Section 2.05(d) of the
Revolver Credit Agreement and to the extent an Event of Default has occurred and
is continuing, the Loan Parties shall cause any remaining amounts to be
transferred from the Revolver Collection Account or the Loan Parties’ operating
account to such other account as directed by the Agent in its sole discretion
(the “Term Collection Account” and, together with the Revolver Collection
Account, the “Collection Accounts”), no less frequently than daily (and whether
or not there are then any Revolver Outstanding or any outstanding Obligations),
all cash receipts and collections received by each Loan Party from all sources,
including, without limitation, the following:
(i)    all available cash receipts from the sale of Inventory (including without
limitation, proceeds of credit card charges) and other assets (whether or not
constituting Collateral);
(ii)    all proceeds of collections of Accounts;
(iii)    all Net Proceeds received by a Loan Party from any Person or from any
source or on account of any Disposition or other transaction or event;
(iv)    the then contents of each DDA (net of any minimum balance, not to exceed
$2,500.00, as may be required to be kept in the subject DDA by the depository
institution at which such DDA is maintained); and
(v)    the then entire ledger balance of each Blocked Account (net of any
minimum balance, not to exceed $50,000.00, as may be required to be kept in the
subject Blocked Account by the Blocked Account Bank);
All funds in each DDA and each Blocked Account shall be conclusively presumed to
be Collateral and proceeds of Collateral and the Agent and the Lenders shall
have no duty to inquire as to the source of the amounts on deposit in any DDA or
Blocked Account.
(d)    The Revolver Collection Account shall at all times during the continuance
of a Cash Dominion Event be under the sole dominion and control of the Revolver
Agent and, after the after the occurrence and during the continuation of an
Event of Default, the Term Collection Account shall be under the sole dominion
and control of the Revolver Agent. The Loan Parties hereby acknowledge and agree
that (i) during the continuance of a Cash Dominion Event, the Loan Parties shall
have no right of withdrawal from the Revolver Collection Account (or, at any
time after the occurrence and during the continuation of an Event of Default,
the Term Collection Account), (ii) the funds on deposit in each Collection
Account shall at all times be collateral security for all of the Obligations and
(iii) after the occurrence and during the continuance of an Event of Default,
(A) unless the Obligations have been accelerated pursuant to Section 8.02
hereof, the funds on deposit in each Collection Account shall be applied to the
Obligations as provided in Section 2.05(d) hereof, and (B) if the Obligations
have been accelerated pursuant to Section 8.02 hereof, the funds on deposit in
each Collection Account shall be applied to the Obligations as provided in
Section 8.03 hereof. In the event that, notwithstanding the provisions of this
Section 6.12, any Loan Party receives or otherwise has dominion and control of
any such cash receipts or collections, such receipts and collections shall be
held in trust by such Loan Party for the Agent, shall not be commingled with any
of such Loan Party’s other funds or deposited in any account of such Loan Party
and shall, not later than the Business Day after receipt thereof, be deposited
into the applicable Collection Account or dealt with in such other fashion as
such Loan Party may be instructed by the Agent or, as applicable, the Revolver
Agent.
(e)    Upon entering into any agreements with any new Credit Card Issuer or
Credit Card Processor, the Loan Parties shall deliver to the Agent a Credit Card
Notification as set forth in Section 6.12(a) hereof.
(f)    The Agent agrees that (1) it shall not direct any Credit Card Issuer or
Credit Card Processor to transfer any proceeds pursuant to any Credit Card
Notification unless an Event of Default has occurred and is continuing and (2)
if any Loan Party shall so request, unless an Event of Default has occurred and
is continuing, the Agent shall countersign any notification, request, order or
direction from such Loan Party to any Credit Card Issuer or Credit Card
Processor directing payments from such Credit Card Issuer or Credit Card
Processor to be made to a new or different DDA, provided such DDA is a Blocked
Account.
(g)    Upon the request of the Agent, cause bank statements and/or other reports
to be delivered to the Agent not less often than monthly, accurately setting
forth all amounts deposited in each Blocked Account to ensure the proper
transfer of funds as set forth above.
6.13    Information Regarding the Collateral. Furnish to the Agent at least ten
(10) days prior written notice of any change in: (i) any Loan Party’s name or in
any trade name used to identify it in the conduct of its business or in the
ownership of its properties; (ii) the location of any Loan Party’s chief
executive office, its principal place of business, any office in which it
maintains books or records relating to Collateral (including the establishment
of any such new office); (iii) any Loan Party’s organizational structure or
jurisdiction of incorporation or formation; or (iv) any Loan Party’s Federal
Taxpayer Identification Number or organizational identification number assigned
to it by its state of organization.
6.14    Physical Inventories.
(a)    Cause not less than one physical inventory to be undertaken, at the
expense of the Loan Parties, in each Fiscal Year and periodic cycle counts, in
each case consistent with past practices, conducted by such inventory takers as
are reasonably satisfactory to the Agent and following such methodology as is
consistent with past practice or as otherwise may be reasonably satisfactory to
the Agent. The Agent, at the expense of the Loan Parties, may participate in
and/or observe each scheduled physical count of Inventory which is undertaken on
behalf of any Loan Party. The Lead Borrower, within 45 days following the
completion of such inventory, shall provide the Agent with a reconciliation of
the results of such inventory (as well as of any other physical inventory or
cycle counts undertaken by a Loan Party) and shall post such results to the Loan
Parties’ stock ledgers and general ledgers, as applicable.
(b)    Permit the Agent, in its discretion, if any Default or Event of Default
exists, to cause additional such inventories to be taken as the Agent reasonably
requests (each, at the expense of the Loan Parties).
6.15    Term Loan Push-Down Reserve. At any time the Total Outstandings exceed
the Borrowing Base, the Loan Parties shall cause the Term Loan Push-Down Reserve
to be maintained against the Revolver Borrowing Base (as and when required under
the ABL Intercreditor Agreement).
6.16    Further Assurances.
(a)    Subject to the ABL Intercreditor Agreement, execute any and all further
documents, financing statements, agreements and instruments, and take all such
further actions (including the filing and recording of financing statements and
other documents), that may be required under any Law, or which the Agent may
reasonably request, to grant, preserve, protect or perfect the Liens created or
intended to be created by the Security Documents or the validity or priority of
any such Lien, all at the expense of the Loan Parties.
(b)    If any material assets of the type which constitute Collateral under the
Security Documents are acquired by any Loan Party after the Effective Date
(other than assets constituting Collateral under the Security Documents that
become subject to the perfected first priority Lien (subject to the Revolver
Agent’s Liens and Permitted Encumbrances having priority by operation of
applicable Law) under the Security Documents upon acquisition thereof), notify
the Agent thereof, and the Loan Parties will, subject to the ABL Intercreditor
Agreement, cause such assets to be subjected to a Lien securing the Obligations
and will take such actions as shall be necessary or shall be reasonably
requested by the Agent to grant and perfect such Liens, including actions
described in paragraph (a) of this Section 6.16, all at the expense of the Loan
Parties. In no event shall compliance with this Section 6.16(b) waive or be
deemed a waiver or consent to any transaction giving rise to the need to comply
with this Section 6.16(b) if such transaction was not otherwise expressly
permitted by this Agreement or constitute or be deemed to constitute consent to
the inclusion of any acquired assets in the computation of the Borrowing Base.
(c)    Upon the reasonable request of the Agent, use commercially reasonable
efforts to cause each of its customs brokers, freight forwarders, consolidators
and/or carriers to deliver an agreement to the Agent providing for a customary
lien waiver and an acknowledgement of Agent’s Lien in the Collateral.
6.17    Compliance with Terms of Leaseholds. Except as otherwise expressly
permitted hereunder, (a) make all payments and otherwise perform all obligations
in respect of all Leases to which any Loan Party or any of its Subsidiaries is a
party, to the extent necessary to keep such Leases in full force and effect (b)
not allow such Leases to lapse or be terminated or any rights to renew such
Leases to be forfeited or cancelled except in the ordinary course of business,
consistent with past practices, (c) notify the Agent of any default by any party
with respect to such Leases and cooperate with the Agent in all respects to cure
any such default, and (d) cause each of its Subsidiaries to do the foregoing,
except, in any case, where the failure to do so, either individually or in the
aggregate, could not be reasonably likely to have a Material Adverse Effect.
6.18    Material Contracts. (a) Perform and observe all the terms and provisions
of each Material Contract to be performed or observed by it to the extent
required to maintain each such Material Contract in full force and effect and
enforce each such Material Contract in accordance with its terms, except (i) in
each case to the extent such Material Contract is no longer used or useful in
the conduct of the business of the Loan Parties in the ordinary course of
business or (ii) other than with respect to the Separation Agreements, where the
failure to do so, either individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.
ARTICLE VII.    
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Term Loan or
other Obligation hereunder shall remain unpaid or unsatisfied (other than
contingent indemnification claims for which a claim has not been asserted),
Parent shall not, nor shall it permit any of its Subsidiaries to, directly or
indirectly:
7.01    Liens. Create, incur, assume or suffer to exist any Lien upon any
Collateral, whether now owned or hereafter acquired, or on any Related
Intellectual Property, other than, as to all of the above, Permitted
Encumbrances.
7.02    Investments. Make any Investments, except Permitted Investments;
provided that, after the occurrence and during the continuance of a Cash
Dominion Event, no further Permitted Investments of the types specified in
clauses (a), (o), and (p) of the definition thereof shall be permitted to be
made unless (i) no Term Loans are then outstanding, and (ii) such Investments
shall be pledged to the Agent as additional collateral for the Obligations
pursuant to such agreements as may be reasonably required by the Agent.
7.03    Indebtedness; Equity Issuances.
(a)    Create, incur, assume, guarantee, suffer to exist or otherwise become or
remain liable with respect to, any Indebtedness, except Permitted Indebtedness;
or (b) issue and sell any other Equity Interests of the Borrowers unless such
Equity Interests are issued only to the Parent or another Borrower.
7.04    Fundamental Changes. Merge, dissolve, liquidate, consolidate with or
into another Person, except that, so long as no Default or Event of Default
shall have occurred and be continuing prior to or immediately after giving
effect to any action described below or would result therefrom:
(a)    any Subsidiary which is not a Loan Party may merge or consolidate with
(i) a Loan Party, provided that the Loan Party shall be the continuing or
surviving Person, or (ii) any one or more other Subsidiaries which are not Loan
Parties, provided that when any wholly-owned Subsidiary is merging with another
Subsidiary, the continuing or surviving Person shall be a wholly-owned
Subsidiary;
(b)    any Subsidiary which is a Loan Party may merge into or consolidate with
any Subsidiary which is a Loan Party; provided that in any merger involving a
Borrower, a Borrower shall be the continuing or surviving Person;
(c)    in connection with a Permitted Acquisition, any Subsidiary of a Loan
Party may merge with or into or consolidate with any other Person or permit any
other Person to merge with or into or consolidate with it; provided that (i) the
Person surviving such merger shall be a wholly-owned Subsidiary of a Loan Party
and such Person shall become a Loan Party to the extent required in accordance
with the provisions of Section 6.11 hereof, and (ii) in the case of any such
merger to which any Loan Party is a party, such Loan Party is the surviving
Person;
(d)    any Subsidiary may liquidate or dissolve into its parent entity to the
extent the Lead Borrower reasonably determines that the continued existence of
such Subsidiary is no longer in the best interests of the Parent and its
Subsidiaries; and
(e)    in connection with a Permitted Disposition of a Subsidiary, such
Subsidiary may merge or consolidate into any Person that is not a Subsidiary.
7.05    Dispositions. Make any Disposition, except Permitted Dispositions.
7.06    Restricted Payments. Declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except the following:
(a)    each Subsidiary of a Loan Party, and each Loan Party other than the
Parent, may make Restricted Payments to the holder of its Equity Interests,
provided that any such Restricted Payment to a Person that is not a Loan Party
shall not exceed such Person’s ratable share of the Restricted Payments so made;
(b)    the Loan Parties and each Subsidiary may declare and make dividend
payments or other distributions payable solely in the common stock or other
common Equity Interests of such Person; and
(c)    if the Restricted Payment Conditions are satisfied, the Parent may (i)
purchase, redeem or otherwise acquire Equity Interests issued by it and (ii)
declare or pay cash dividends to its stockholders; provided that in no event
shall such distributions or repurchases exceed $37,500,000 in any Fiscal Year or
$75,000,000 in the aggregate.
7.07    Prepayments of Indebtedness. Prepay, redeem, purchase, defease or
otherwise satisfy prior to the scheduled maturity thereof in any manner any
Indebtedness for borrowed money, except (a) as long as no Default or Event of
Default then exists, regularly scheduled or mandatory repayments, repurchases,
redemptions or defeasances of Permitted Indebtedness, (b) as long as the Payment
Conditions are satisfied, voluntary prepayments, repurchases, redemptions or
defeasances of Permitted Indebtedness, (c) Permitted Refinancings of any such
Indebtedness, (d) payments of the Obligations and (e) payments of Revolver
Obligations that are permitted or required to be made pursuant to the Revolver
Loan Documents.
7.08    Change in Nature of Business.
(a)    In the case of the Parent, engage in any business or activity other than
(i) the direct or indirect ownership of all outstanding Equity Interests in its
Subsidiaries, including the other Loan Parties, (ii) maintaining its corporate
existence and complying with its obligations as a public company, (iii)
participating in tax, accounting and other administrative activities as the
parent of the consolidated group of companies, including the Loan Parties, (iv)
the execution and delivery of the Separation Agreements, the Revolver Loan
Documents and the Loan Documents to which it is a party and the performance of
its obligations thereunder, and (v) activities incidental to the businesses or
activities described in clauses (i) through (iv) of this Section 7.08(a).
(b)    In the case of each of the Loan Parties, engage in any line of business
substantially different from the business conducted by the Loan Parties and
their Subsidiaries on the Effective Date or any business substantially related
or incidental thereto.
7.09    Transactions with Affiliates. Enter into, renew, extend or be a party to
any transaction of any kind with any Affiliate of any Loan Party, whether or not
in the ordinary course of business, other than on fair and reasonable terms
substantially as favorable to the Loan Parties or such Subsidiary as would be
obtainable by the Loan Parties or such Subsidiary at the time in a comparable
arm’s length transaction with a Person other than an Affiliate, provided that
the foregoing restriction shall not apply to (a) transactions between or among
the Loan Parties, (b) transactions described in the Separation Agreements, (c)
transactions described in the Parent’s Form S-1 under the Section titled
“Certain Relationships and Related Party Transactions”, (d) advances for
commissions, travel and other similar purposes in the ordinary course of
business to directors, officers and employees, (e) the payment of reasonable
fees and out-of-pocket costs to directors, and compensation and employee benefit
arrangements paid to, and indemnities provided for the benefit of, directors,
officers or employees of the Parent or any of its Subsidiaries, (f) the
provision of ordinary course administrative services to the Subsidiaries that
are not Loan Parties, (g) transactions permitted under Sections 7.01, 7.02,
7.03, 7.04 and 7.06, and (h) as long as no Change of Control results therefrom,
any issuances of securities of the Parent (other than Disqualified Stock) or
other payments, awards or grants in cash, securities or otherwise pursuant to,
or the funding of, employment agreements, stock options and stock ownership
plans (in each case in respect of Equity Interests in the Parent) of the Parent
or any of its Subsidiaries.
7.10    Burdensome Agreements. Enter into or permit to exist any Contractual
Obligation (other than this Agreement or any other Loan Document) that (a)
limits the ability (i) of any Subsidiary to make Restricted Payments or other
distributions to any Loan Party or to otherwise transfer property to or invest
in a Loan Party, (ii) of any Subsidiary to Guarantee the Obligations or (iii) of
the Loan Parties or any Subsidiary to create, incur, assume or suffer to exist
Liens on property of such Person in favor of the Agent except for encumbrances
and restrictions under Contractual Obligations existing under or by reason of
(i) this Agreement and the other Loan Documents and the Revolver Loan Documents;
(ii) any restrictions with respect to a Subsidiary imposed pursuant to an
agreement that has been entered into in connection with the disposition of all
or any portion of the equity interests or assets of such Subsidiary; (iii) the
provisions contained in any Permitted Indebtedness (and in any refinancing of
such indebtedness so long as no more restrictive than those contained in the
respective Indebtedness so refinanced); (iv) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of any
Borrower or a Subsidiary of any Borrower entered into in the ordinary course of
business; (v) customary provisions restricting assignment of any contract
entered into by any Borrower or any Subsidiary of any Borrower in the ordinary
course of business; (vi) any agreement or instrument governing acquired
Indebtedness permitted hereunder, which restriction is not applicable to any
Person or the properties or assets of any Person, other than the Person or the
properties or assets of the Person acquired pursuant to the respective
acquisition and so long as the respective encumbrances or restrictions were not
created (or made more restrictive) in connection with or in anticipation of the
respective acquisition; (vii) customary provisions restricting the assignment of
licensing agreements, management agreements or franchise agreements entered into
by any Borrower or any of its Subsidiaries in the ordinary course of business;
(viii) restrictions on the transfer of assets securing purchase money
obligations and capitalized lease obligations which are permitted hereunder; and
(ix) customary net worth provisions contained in real property leases entered
into by Subsidiaries of any Borrower, so long as the applicable Borrower has
determined in good faith that such net worth provisions could not reasonably be
expected to impair the ability of the Borrowers and their Subsidiaries to meet
their ongoing obligations.
7.11    Use of Proceeds. Use the proceeds of any Term Loan, whether directly or
indirectly, and whether immediately, incidentally or ultimately, (a) to purchase
or carry margin stock (within the meaning of Regulation U of the FRB) or to
extend credit to others for the purpose of purchasing or carrying margin stock
or to refund Indebtedness originally incurred for such purpose, in each case in
a manner that violates the provisions of Regulations T, U, or X issued by the
FRB, or (b) for any purposes other than (i) to refinance certain of the
Indebtedness under the Revolver Credit Agreement, (ii) the acquisition of
working capital assets in the ordinary course of business, (iii) to finance
Capital Expenditures of the Loan Parties, and (iv) for general corporate
purposes, in each case to the extent expressly permitted under Law and the Loan
Documents.
7.12    Amendment of Organization Documents and Material Indebtedness. Amend,
modify or waive any of a Loan Party’s rights under (a) its Organization
Documents in a manner materially adverse to the Agent and the Lenders, or (b)
any Material Indebtedness if such amendment, modification or waiver would be in
violation of any intercreditor agreement among the Agent and the holder of such
Material Indebtedness.
7.13    Fiscal Year. Change the Fiscal Year of any Loan Party, or the accounting
policies or reporting practices of the Loan Parties, except as required by GAAP
or to coincide with the calendar year.
7.14    Minimum Availability. The Borrowers shall not, at any time, permit
Availability to be less than ten percent (10%) of the Combined Loan Cap.
7.15    Sanctions. Directly or indirectly, use any Term Loan or the proceeds of
any Term Loan, or lend, contribute or otherwise make available such Term Loan or
the proceeds of any Term Loan to any Person, to fund any activities of or
business with any Person, or in any Designated Jurisdiction, that, at the time
of such funding, is the subject of Sanctions, or in any other manner that will
result in a violation by any Person (including any Person participating in the
transaction, whether as Lender, Arranger, Agent, or otherwise) of Sanctions.
7.16    Anti-Corruption Laws. Directly or indirectly, use any Term Loan or the
proceeds of any Term Loan for any purpose which would breach any Anti-Corruption
Laws.
ARTICLE VIII.    
EVENTS OF DEFAULT AND REMEDIES
8.01    Events of Default. Any of the following shall constitute an Event of
Default:
(a)    Non-Payment. The Borrowers or any other Loan Party fails to pay when and
as required to be paid, (i) any amount of principal of, any Term Loan, or (ii)
within three (3) days after the same is due, any amount of interest due on any
Term Loan, or any fee due hereunder, or any other amount payable hereunder or
under any other Loan Document; or
(b)    Specific Covenants. Any Loan Party fails to perform or observe any term,
covenant or agreement contained in any of Sections 6.01, 6.02, 6.03(a), 6.05,
6.07 (with respect to property of the type included in the Borrowing Base),
6.10, 6.11, 6.12, 6.15, 6.18 (with respect to the Separation Agreements) or 6.19
or Article VII; or
(c)    Other Defaults. Any Loan Party fails to perform or observe (i) any term,
covenant or agreement contained in any of Sections 6.03 (other than Section
6.03(a)), 6.13 or 6.18 (other than with respect to the Separation Agreements,
and such failure continues for 15 days, or (ii) any other covenant or agreement
(not specified in subsection (a), (b) or (c)(i) above) contained in any Loan
Document on its part to be performed or observed and such failure continues for
30 days; or
(d)    Representations and Warranties. Any representation, warranty, or
certification made or deemed made by or on behalf of any Loan Party herein, in
any other Loan Document, or in any document delivered in connection herewith or
therewith (including, without limitation, any Borrowing Base Certificate) shall
be incorrect or misleading in any material respect when made or deemed made; or
(e)    Cross-Default. Any Loan Party (A) fails to make any payment when due
(whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise) in respect of any Material Indebtedness, or (B) fails to observe or
perform any other agreement or condition relating to any such Material
Indebtedness or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event occurs, the effect of which default or
other event is to cause, or to permit the holder or holders of such Material
Indebtedness or the beneficiary or beneficiaries of any Guarantee thereof (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to be demanded or to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), or an offer to repurchase,
prepay, defease or redeem such Indebtedness to be made, prior to its stated
maturity or such Guarantee to become payable or cash collateral in respect
thereof to be demanded; provided, that this clause (e)(B) shall not apply to
secured Indebtedness that becomes due as a result of a voluntary sale or
transfer of the property or assets securing such Indebtedness, if such sale or
transfer is permitted hereunder and under the document providing for such
Indebtedness; or
(f)    Insolvency Proceedings, Etc. Any Loan Party or any Subsidiary thereof
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer for it or for all or any material
part of its property; or a proceeding shall be commenced or a petition filed,
without the application or consent of such Person, seeking or requesting the
appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed and the appointment continues
undischarged, undismissed or unstayed for 45 calendar days or an order or decree
approving or ordering any of the foregoing shall be entered; or any proceeding
under any Debtor Relief Law relating to any such Person or to all or any
material part of its property is instituted without the consent of such Person
and continues undismissed or unstayed for 45 calendar days, or an order for
relief is entered in any such proceeding; or
(g)    Judgments. There is entered against any Loan Party or any Subsidiary
thereof one or more judgments or orders for the payment of money in an aggregate
amount (as to all such judgments and orders) exceeding $25,000,000 (to the
extent not covered by independent third-party insurance as to which the insurer
is rated at least “A” by A.M. Best Company, has been notified of the potential
claim and does not dispute coverage), and (i) enforcement proceedings are
commenced by any creditor upon such judgment or order, or (ii) there is a period
of 20 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, is not in effect; or
(h)    ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which would reasonably be expected to result in a Material
Adverse Effect, or (ii) a Loan Party or any ERISA Affiliate fails to pay when
due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multiemployer Plan which would reasonably be expected to result in a
Material Adverse Effect; or
(i)    Invalidity of Loan Documents. (i) Any material provision of any Loan
Document, at any time after its execution and delivery and for any reason,
ceases to be in full force and effect; or any Loan Party or any Affiliate
contests in any manner the validity or enforceability of any provision of any
Loan Document; or any Loan Party denies in writing that it has any or further
liability or obligation under any provision of any Loan Document, or purports to
revoke, terminate or rescind any provision of any Loan Document or seeks in
writing to avoid, limit or otherwise adversely affect any Lien purported to be
created under any Security Document; or (ii) any Lien on a significant portion
of the Collateral purported to be created under any Security Document shall
cease to be, or shall be asserted by any Loan Party or any other Person not to
be, a valid and perfected Lien on any significant portion of the Collateral,
with the priority required by the applicable Security Document; or
(j)    Change of Control. There occurs any Change of Control; or
(k)    Cessation of Business. Except as otherwise expressly permitted hereunder,
the Loan Parties, taken as a whole, shall take any action to suspend the
operation of their business in the ordinary course, liquidate all or
substantially all of their assets or Store locations, or employ an agent or
other third party to conduct a program of closings, liquidations or
“Going-Out-Of-Business” sales of substantially all of their business; or
(l)    Separation Agreements. The Separation Agreements are terminated, whether
by rejection as part of any insolvency proceeding of SHC and its Subsidiaries
under any Debtor Relief Law or otherwise, by SHC and its Subsidiaries, unless
terminated on a basis reasonably satisfactory to the Agent; or
(m)    Indictment. Any Loan Party is (A) criminally indicted or convicted of a
felony for fraud or dishonesty in connection with the Loan Parties’ business, or
(B) charged by a Governmental Authority under any law that would reasonably be
expected to lead to forfeiture of any material portion of Collateral, or (B)
charged by a Governmental Authority under any law that would reasonably be
expected to lead to forfeiture of any material portion of Collateral; or
(n)    Guaranty. The termination of any guaranty set forth in the Guaranty and
Security Agreement or any Joinder Agreement except as expressly permitted
hereunder or under any other Loan Document.
8.02    Remedies Upon Event of Default. If any Event of Default occurs and is
continuing, subject to the ABL Intercreditor Agreement the Agent may, or, at the
request of the Required Lenders shall, take any or all of the following actions:
(a)    declare the Commitments (if any) of each Lender to make Term Loans to be
terminated, whereupon such Commitments and obligations shall be terminated;
(b)    declare the unpaid principal amount of all outstanding Term Loans, all
interest accrued and unpaid thereon, the Term Loan Prepayment Fee (if
applicable) with respect thereto, and all other Obligations to be immediately
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived by the Loan Parties; and
(c)    whether or not the maturity of the Obligations shall have been
accelerated pursuant hereto, proceed to protect, enforce and exercise all rights
and remedies of the Agent under this Agreement, any of the other Loan Documents
or Law, including, but not limited to, by suit in equity, action at law or other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in this Agreement and the other Loan Documents or any
instrument pursuant to which the Obligations are evidenced, and, if such amount
shall have become due, by declaration or otherwise, proceed to enforce the
payment thereof or any other legal or equitable right of the Agent;
provided, however, that upon the occurrence of any Default or Event of Default
with respect to any Loan Party or any Subsidiary thereof under Section 8.01(f),
the obligation (if any) of each Lender to make Term Loans shall automatically
terminate, the unpaid principal amount of all outstanding Term Loans, all
interest accrued thereon, the Term Loan Prepayment Fee (if applicable), and all
other Obligations shall automatically become due and payable, in each case
without further act of the Agent or any Lender.
No remedy herein is intended to be exclusive of any other remedy and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or any other provision of Law.
8.03    Application of Funds. After the exercise of remedies provided for in
Section 8.02 (or after the Obligations have automatically become immediately due
and payable as set forth in the proviso to Section 8.02), any amounts received
on account of the Obligations shall, subject to the provisions of Section 2.16
and the ABL Intercreditor Agreement, be applied by the Agent in the following
order:
First, to payment of that portion of the Obligations constituting fees,
indemnities, Credit Party Expenses and other amounts (including fees, charges
and disbursements of counsel to the Agent and amounts payable under Article III)
payable to the Agent;
Second, to payment of that portion of the Obligations constituting indemnities
(including indemnities due under Section 10.03 hereof), Credit Party Expenses,
and other amounts (other than principal, interest and fees) payable to the
Lenders (including Credit Party Expenses to the respective Lenders and amounts
payable under Article III), ratably among them in proportion to the amounts
described in this clause Second payable to them;
Third, to the extent not previously reimbursed by the Lenders, to payment to the
Agent of that portion of the Obligations constituting principal and accrued and
unpaid interest on any Permitted Overadvances;
Fourth, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Term Loans and other Obligations, and fees (including the
Term Loan Prepayment Fee), ratably among the Lenders in proportion to the
respective amounts described in this clause Fourth payable to them;
Fifth, to payment of that portion of the Obligations constituting unpaid
principal of the Term Loans, ratably among the Lenders in proportion to the
respective amounts described in this clause Fifth held by them;
Sixth, to payment of all other Obligations (including without limitation the
cash collateralization of unliquidated indemnification obligations), ratably
among the Credit Parties in proportion to the respective amounts described in
this clause Sixth held by them; and
Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the Loan Parties or as otherwise required by Law.
ARTICLE IX.    
THE AGENT
9.01    Appointment and Authority. Each of the Lenders (in its capacity as a
Lender) hereby irrevocably appoints GBFC to act on its behalf as the
administrative agent and collateral agent hereunder and under the other Loan
Documents and authorizes the Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Agent by the terms hereof or
thereof (including, without limitation, acquiring, holding and enforcing any and
all Liens on Collateral granted by any of the Loan Parties to secure any of the
Obligations), together with such actions and powers as are reasonably incidental
thereto. The provisions of this Article are solely for the benefit of the Agent
and the other Credit Parties, and no Loan Party or any Subsidiary thereof shall
have rights as a third party beneficiary of any of such provisions. It is
understood and agreed that the use of the term “agent” herein or in any other
Loan Documents (or any other similar term) with reference to the Agent is not
intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable Law. Instead such term is used
as a matter of market custom, and is intended to create or reflect only an
administrative relationship between contracting parties.
9.02    Rights as a Lender. The Person serving as the Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not the Agent and the term “Lender” or
“Lenders” shall, unless otherwise expressly indicated or unless the context
otherwise requires, include the Person serving as the Agent hereunder in its
individual capacity. Such Person and its Affiliates may accept deposits from,
lend money to, act as the financial advisor or in any other advisory capacity
for and generally engage in any kind of business with the Loan Parties or any
Subsidiary or other Affiliate thereof as if such Person were not the Agent
hereunder and without any duty to account therefor to the Lenders.
9.03    Exculpatory Provisions. The Agent shall not have any duties or
obligations except those expressly set forth herein and in the other Loan
Documents. Without limiting the generality of the foregoing, the Agent:
(a)    shall not be subject to any fiduciary or other implied duties, regardless
of whether a Default or Event of Default has occurred and is continuing;
(b)    shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Agent is required to
exercise as directed in writing by the Applicable Lenders, provided that the
Agent shall not be required to take any action that, in its opinion or the
opinion of its counsel, may expose the Agent to liability or that is contrary to
any Loan Document or Law, including for the avoidance of doubt any action that
may be in violation of the automatic stay under any Debtor Relief Law or that
may affect a forfeiture, modification or termination of property of a Defaulting
Lender in violation of any Debtor Relief Law; and
(c)    shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Loan Parties or any of its Affiliates
that is communicated to or obtained by the Person serving as the Agent or any of
its Affiliates in any capacity.
The Agent shall not be liable for any action taken or not taken by it (i) with
the consent or at the request of the Applicable Lenders (as the Agent shall
believe in good faith shall be necessary under the circumstances as provided in
Sections 10.01 and 8.02) or (ii) in the absence of its own gross negligence or
willful misconduct as determined by a final and non-appealable judgment of a
court of competent jurisdiction.
The Agent shall not be deemed to have knowledge of any Default or Event of
Default unless and until notice describing such Default or Event of Default is
given to the Agent by a Loan Party or a Lender. In the event that the Agent
obtains such actual knowledge or receives such a notice, the Agent shall give
prompt notice thereof to the Lenders. Upon the occurrence of a Default or an
Event of Default, the Agent shall take such action with respect to such Default
or Event of Default as shall be reasonably directed by the Applicable Lenders.
Unless and until the Agent shall have received such direction, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to any such Default or Event of Default as it shall deem
advisable in the best interest of the Credit Parties. In no event shall the
Agent be required to comply with any such directions to the extent that the
Agent believes that its compliance with such directions would be unlawful.
The Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with
this Agreement or any other Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or thereunder or in connection
herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or therein
or the occurrence of any Default or Event of Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or the creation,
perfection or priority of any Lien purported to be created by the Security
Documents, (v) the value or the sufficiency of any Collateral, or (vi) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Agent.
9.04    Reliance by Agent. The Agent shall be entitled to rely upon, and shall
not incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing (including, but not
limited to, any electronic message, Internet or intranet website posting or
other distribution) believed by it to be genuine and to have been signed, sent
or otherwise authenticated by the proper Person. The Agent also may rely upon
any statement made to it orally or by telephone and believed by it to have been
made by the proper Person, and shall not incur any liability for relying
thereon. In determining compliance with any condition hereunder to the making of
a Term Loan that by its terms must be fulfilled to the satisfaction of a Lender,
the Agent may presume that such condition is satisfactory to such Lender unless
the Agent shall have received written notice to the contrary from such Lender
prior to the making of such Term Loan. The Agent may consult with legal counsel
(who may be counsel for any Loan Party), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel, accountants or
experts.
9.05    Delegation of Duties. The Agent may perform any and all of its duties
and exercise its rights and powers hereunder or under any other Loan Document by
or through any one or more sub‑agents appointed by the Agent. The Agent and any
such sub‑agent may perform any and all of its duties and exercise its rights and
powers by or through their respective Related Parties. The exculpatory
provisions of this Article shall apply to any such sub‑agent and to the Related
Parties of the Agent and any such sub‑agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as the Agent. The Agent shall not be
responsible for the negligence or misconduct of any sub-agents except to the
extent that a court of competent jurisdiction determines in a final and
non-appealable judgment that the Agent acted with gross negligence or willful
misconduct in the selection of such sub-agents.
9.06    Resignation of Agent. The Agent may at any time give written notice of
its resignation to the Lenders and the Lead Borrower. Upon receipt of any such
notice of resignation, the Required Lenders shall have the right, in
consultation with the Lead Borrower, to appoint a successor, which shall be a
financial institution with an office in the United States, or an Affiliate of
any such financial institution with an office in the United States. If no such
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Agent gives notice
of its resignation, then the retiring Agent may on behalf of the Lenders,
appoint a successor Agent meeting the qualifications set forth above; provided
that if the Agent shall notify the Lead Borrower and the Lenders that no
qualifying Person has accepted such appointment, then such resignation shall
nonetheless become effective in accordance with such notice and (1) the retiring
Agent shall be discharged from its duties and obligations hereunder and under
the other Loan Documents (except that in the case of any Collateral held by the
Agent on behalf of the Lenders under any of the Loan Documents, the retiring
Agent shall continue to hold such collateral security until such time as a
successor Agent is appointed) and (2) all payments, communications and
determinations provided to be made by, to or through the Agent shall instead be
made by or to each Lender directly, until such time as the Required Lenders
appoint a successor Agent as provided for above in this Section. Upon the
acceptance of a successor’s appointment as Agent hereunder, such successor shall
succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring (or retired) Agent, and the retiring Agent shall be
discharged from all of its duties and obligations hereunder or under the other
Loan Documents (if not already discharged therefrom as provided above in this
Section). The fees payable by the Borrowers to a successor Agent shall be the
same as those payable to its predecessor unless otherwise agreed between the
Lead Borrower and such successor. After the retiring Agent’s resignation
hereunder and under the other Loan Documents, the provisions of this Article and
Section 10.04 shall continue in effect for the benefit of such retiring Agent,
its sub‑agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while the retiring Agent was acting
as Agent hereunder.
9.07    Non-Reliance on Agent and Other Lenders. Each Lender acknowledges that
it has, independently and without reliance upon the Agent or any other Lender or
any of their Related Parties and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent or any other Lender or any of their Related
Parties and based on such documents and information as it shall from time to
time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document or any
related agreement or any document furnished hereunder or thereunder. Except as
provided in Section 9.12, the Agent shall not have any duty or responsibility to
provide any Credit Party with any other credit or other information concerning
the affairs, financial condition or business of any Loan Party that may come
into the possession of the Agent.
9.08    No Other Duties, Etc. Anything herein to the contrary notwithstanding,
none of the Bookrunners or Arrangers listed on the cover page hereof shall have
any powers, duties or responsibilities under this Agreement or any of the other
Loan Documents, except in its capacity as the Agent or a Lender.
9.09    Agent May File Proofs of Claim. In case of the pendency of any
proceeding under any Debtor Relief Law or any other judicial proceeding relative
to any Loan Party, the Agent (irrespective of whether the principal of any Term
Loan shall then be due and payable as herein expressed or by declaration or
otherwise and irrespective of whether the Agent shall have made any demand on
the Loan Parties) shall be entitled and empowered, by intervention in such
proceeding or otherwise
(a)    to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Term Loans and all other Obligations
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders, the Agent and the other
Credit Parties (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders, the Agent, such Credit Parties and
their respective agents and counsel and all other amounts due the Lenders, the
Agent and such Credit Parties under Sections 2.09 and 10.04) allowed in such
judicial proceeding; and
(b)    to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Agent and to pay to the Agent any
amount due for the reasonable compensation, expenses, disbursements and advances
of the Agent and its agents and counsel, and any other amounts due the Agent
under Sections 2.09 and 10.04.
Nothing contained herein shall be deemed to authorize the Agent to authorize or
consent to or accept or adopt on behalf of any Credit Party any plan of
reorganization, arrangement, adjustment or composition affecting the Obligations
or the rights of any Credit Party or to authorize the Agent to vote in respect
of the claim of any Credit Party in any such proceeding.
9.10    Collateral and Guaranty Matters. The Credit Parties irrevocably
authorize the Agent, at its option and in its discretion,
(a)    to release any Lien on any property granted to or held by the Agent under
any Loan Document (i) upon termination of the Aggregate Commitments and payment
in full of all Obligations (other than contingent indemnification obligations
for which no claim has been asserted), (ii) that is sold or otherwise disposed
of or to be sold or otherwise disposed of as part of or in connection with any
sale or other disposition permitted hereunder or under any other Loan Document
or in connection with the release of a Guarantor permitted pursuant to Section
9.10(c), or (iii) if approved, authorized or ratified in writing by the
Applicable Lenders in accordance with Section 10.01;
(b)    to subordinate any Lien on any Other Property granted to or held by the
Agent as Collateral under any Loan Document to the holder of any Lien on such
property, as contemplated by clause (r) of the definition of Permitted
Encumbrances or otherwise under this Agreement and to enter into the
intercreditor agreements contemplated under clause (r) of the definition of
Permitted Encumbrances or otherwise under this Agreement;
(c)    to release any Guarantor from its obligations under the Loan Documents if
such Person becomes an Immaterial Subsidiary or ceases to be a Subsidiary as a
result of a transaction permitted hereunder and to release any Loan Party from
its obligations under the Loan Documents in the event that such Loan Party shall
dispose of all or substantially all of its assets and shall cease to own any
Collateral in a transaction permitted hereunder; and
(d)    to release any Lien on any Other Property that is granted to or held by
the Agent under any Loan Document if such Other Property is no longer subject to
a Lien in favor of the lenders of Permitted Indebtedness under clause (j) or (k)
of the definition thereof (or any Permitted Refinancings of such Indebtedness).
Upon request by the Agent at any time, the Applicable Lenders will confirm in
writing the Agent’s authority to release or subordinate its interest in
particular types or items of property, or to release any Guarantor from its
obligations under the Guaranty and Security Agreement pursuant to this Section
9.10 and its authority to give the releases set forth in Section 10.21.
9.11    Notice of Transfer. The Agent may deem and treat a Lender party to this
Agreement as the owner of such Lender’s portion of the Obligations for all
purposes, unless and until, and except to the extent, an Assignment and
Acceptance shall have become effective as set forth in Section 10.06.
9.12    Reports and Financial Statements.
By signing this Agreement, each Lender:
(a)    [Reserved];
(b)    is deemed to have requested that the Agent furnish, and the Agent agrees
to furnish, such Lender, promptly after they become available, copies of all
Borrowing Base Certificates and financial statements required to be delivered by
the Lead Borrower hereunder;
(c)    is deemed to have requested that the Agent furnish, and the Agent agrees
to furnish, such Lender, promptly after they become available, copies of all
commercial finance examinations and appraisals of the Collateral received by the
Agent (collectively, the “Reports”);
(d)    expressly agrees and acknowledges that the Agent makes no representation
or warranty as to the accuracy of the Borrowing Base Certificates, financial
statements or Reports, and shall not be liable for any information contained in
any Borrowing Base Certificate, financial statement or Report;
(e)    expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that the Agent or any other party performing any audit
or examination will inspect only specific information regarding the Loan Parties
and will rely significantly upon the Loan Parties' books and records, as well as
on representations of the Loan Parties' personnel;
(f)    agrees to keep all Borrowing Base Certificates, financial statements and
Reports confidential in accordance with the provisions of Section 10.07 hereof;
and
(g)    without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold the Agent and any such other
Person preparing a Report harmless from any action the indemnifying Lender may
take or conclusion the indemnifying Lender may reach or draw from any Report in
connection with any Term Loan that the indemnifying Lender has made or may make
to the Borrowers, or the indemnifying Lender's participation in, or the
indemnifying Lender's purchase of, a Term Loan or Term Loans; and (ii) to pay
and protect, and indemnify, defend, and hold the Agent and any such other Person
preparing a Report harmless from and against, the claims, actions, proceedings,
damages, costs, expenses, and other amounts (including attorney costs) incurred
by the Agent and any such other Person preparing a Report as the direct or
indirect result of any third parties who might obtain all or part of any Report
through the indemnifying Lender.
9.13    Agency for Perfection. Each Credit Party hereby appoints each other
Credit Party as agent for the purpose of perfecting Liens for the benefit of the
Credit Parties, in assets which, in accordance with Article 9 of the UCC or any
other Law of the United States can be perfected only by possession or control.
Should any Credit Party (other than the Agent) obtain possession or control of
any such Collateral, such Credit Party shall notify the Agent thereof, and,
promptly upon the Agent's request therefor shall deliver such Collateral to the
Agent or otherwise deal with such Collateral in accordance with the Agent's
instructions.
9.14    Indemnification of Agent. Without limiting the obligations of Loan
Parties hereunder, to the extent that the Loan Parties for any reason fails to
indefeasibly pay any amount required under Section 10.04 to be paid by them to
the Agent (or any sub-agent thereof), the Lenders shall indemnify the Agent, any
sub-agent thereof and any Related Party, as the case may be ratably according to
their Applicable Percentages, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against the Agent, any sub-agent thereof and their
Related Parties in any way relating to or arising out of this Agreement or any
other Loan Document or any action taken or omitted to be taken by the Agent, any
sub-agent thereof and their Related Parties in connection therewith; provided,
that, no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent’s, any sub-agent’s, and their
Related Parties’ gross negligence or willful misconduct as determined by a final
and nonappealable judgment of a court of competent jurisdiction.
9.15    Relation among Lenders. The Lenders are not partners or co-venturers,
and no Lender shall be liable for the acts or omissions of, or (except as
otherwise set forth herein in case of the Agent) authorized to act for, any
other Lender.
9.16    ABL Intercreditor Agreement. Each Lender that has signed this Agreement
shall be deemed to have consented to and hereby irrevocably authorizes the Agent
to enter into the ABL Intercreditor Agreement (including any and all amendments,
amendments and restatements, modification, supplements and acknowledgements
thereto) from time to time, and agree to be bound by the provisions thereof.
ARTICLE X.    
MISCELLANEOUS
10.01    Amendments, Etc. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by any
Loan Party therefrom, shall be effective unless in writing signed by the
Required Lenders or by the Agent, with the consent of the Required Lenders, and
the Lead Borrower or the applicable Loan Party, as the case may be, and each
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no such amendment,
waiver or consent shall:
(i)    increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 8.02 or otherwise) without the written consent of
such Lender;
(ii)    as to any Lender, postpone any date fixed by this Agreement or any other
Loan Document for (i) any scheduled payment (including on the Maturity Date) of
principal, interest, fees or other amounts due hereunder or under any of the
other Loan Documents without the written consent of such Lender, or (ii) any
scheduled or mandatory reduction or termination of the Aggregate Commitments
hereunder or under any other Loan Document, without the written consent of such
Lender;
(iii)    as to any Lender, reduce the principal of, or the rate of interest
specified herein on, any Term Loan held by such Lender, or (subject to clause
(iv) of the second proviso to this Section 10.01) any fees or other amounts
payable hereunder or under any other Loan Document to or for the account of such
Lender, without the written consent of such Lender; provided, however, that only
the consent of the Required Lenders shall be necessary to amend the definition
of “Default Rate” or to waive any obligation of the Borrowers to pay interest at
the Default Rate;
(iv)    as to any Lender, change Section 2.13 or Section 8.03 in a manner that
would alter the priorities set forth therein or the pro rata sharing of payments
required thereby without the written consent of such Lender;
(v)    change any provision of this Section 10.01 or the definition of “Required
Lenders”, or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender;
(vi)    except as expressly permitted hereunder or under any other Loan
Document, release, or limit the liability of, any Loan Party without the written
consent of each Lender;
(vii)    except for Permitted Dispositions or as provided in Section 9.10,
release any material portion of the Collateral from the Liens of the Security
Documents without the written consent of each Lender;
(viii)    change the definition of the term “Borrowing Base” or any component
definition thereof if, as a result thereof, the amounts available to be borrowed
by the Borrowers would be increased without the written consent of each Lender;
(ix)    modify the definition of Permitted Overadvance so as to increase the
amount thereof or, except as otherwise provided in such definition, the time
period for which a Permitted Overadvance may remain outstanding without the
written consent of each Lender;
(x)    modify Section 7.14 so as to decrease the minimum amount of Availability
required thereunder without the written consent of each Lender; and
(xi)    except as expressly permitted herein or in any other Loan Document,
subordinate the Obligations hereunder or the Liens granted hereunder or under
the other Loan Documents, to any other Indebtedness or Lien, as the case may be
without the written consent of each Lender;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Lenders required above,
affect the rights or duties of any Agent under this Agreement or any other Loan
Document; and (ii) the Fee Letter may be amended, or rights or privileges
thereunder waived, in a writing executed only by the parties thereto.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have
any right to approve or disapprove any amendment, waiver or consent hereunder
(and any amendment, waiver or consent which by its terms requires the consent of
all Lenders or each affected Lender may be effected with the consent of the
applicable Lenders other than Defaulting Lenders), except that (x) the
Commitment of any Defaulting Lender may not be increased or extended without the
consent of such Lender and (y) any waiver, amendment or modification requiring
the consent of all Lenders or each affected Lender that by its terms affects any
Defaulting Lender disproportionately adversely relative to other affected
Lenders shall require the consent of such Defaulting Lender.
(b)    Notwithstanding anything to the contrary in this Agreement or any other
Loan Document, any Loan Document may be amended and waived with the consent of
the Agent at the request of the Lead Borrower without the need to obtain the
consent of any other Lender if such amendment or waiver is delivered in order
(i) to comply with local Law or advice of local counsel, (ii) to cure
ambiguities or defects or (iii) to cause any Loan Document to be consistent with
this Agreement and the other Loan Documents.
(c)    If any Lender does not consent (a “Non-Consenting Lender”) to a proposed
amendment, waiver, consent or release with respect to any Loan Document that
requires the consent of each Lender or each affected Lender, as applicable, and
that has been approved by the Required Lenders, the Lead Borrower may replace
such Non-Consenting Lender in accordance with Section 10.13; provided that such
amendment, waiver, consent or release can be effected as a result of the
assignment contemplated by such Section (together with all other such
assignments required by the Lead Borrower to be made pursuant to this
paragraph).
(d)    Notwithstanding any provision herein to the contrary, this Agreement may
be amended with the written consent of the Required Lenders, the Agent and the
Borrowers (i) to add one or more additional term loan facilities to this
Agreement, and to permit the extensions of credit and all related obligations
and liabilities arising in connection therewith from time to time outstanding to
share (on a basis subordinated to the existing facilities hereunder) in the
benefits of this Agreement and the other Loan Documents with the obligations and
liabilities from time to time outstanding in respect of the existing facilities
hereunder, and (ii) in connection with the foregoing, to permit, as deemed
appropriate by the Agent and approved by the Lenders, the Lenders providing such
additional credit facilities to participate in any required vote or action
required to be approved by the Required Lenders or by any other number,
percentage or class of Lenders hereunder.
(e)    Notwithstanding and in addition to the foregoing, the Agent may, with the
consent of Lead Borrower only, amend, modify or supplement any Loan Document to
cure any ambiguity, omission, defect or inconsistency therein, so long as such
amendment, modification or supplement does not adversely affect the rights of
any Credit Party.
10.02    Notices; Effectiveness; Electronic Communications.
(a)    Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in
subsection (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopier or electronic mail
as follows, and all notices and other communications expressly permitted
hereunder to be given by telephone shall be made to the applicable telephone
number, as follows:
(i)    if to a Loan Party or the Agent, to the address, telecopier number,
electronic mail address or telephone number specified for such Person on
Schedule 10.02; and
(ii)    if to any other Lender, to the address, telecopier number, electronic
mail address or telephone number specified in its Administrative Questionnaire.
Notices and other communications sent by hand or overnight courier service, or
mailed by certified or registered mail, shall be deemed to have been given when
received; notices and other communications sent by facsimile shall be deemed to
have been given when sent (except that, if not given during normal business
hours for the recipient, shall be deemed to have been given at the opening of
business on the next Business Day for the recipient). Notices and other
communications delivered through electronic communications to the extent
provided in subsection (b) below, shall be effective as provided in such
subsection (b).
(b)    Electronic Communications. Notices and other communications to the
Lenders hereunder may be delivered or furnished by electronic communication
(including e‑mail and Internet or intranet websites) pursuant to procedures
approved by the Agent, provided that the foregoing shall not apply to notices to
any Lender pursuant to Article II if such Lender has notified the Agent that it
is incapable of receiving notices under such Article by electronic
communication. Each of the Agent and the Lead Borrower may, in its discretion,
agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it, provided that approval of
such procedures may be limited to particular notices or communications.
Unless the Agent otherwise prescribes, (i) notices and other communications sent
to an e-mail address shall be deemed received upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgement), and (ii) notices or communications posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in the foregoing clause
(i) of notification that such notice or communication is available and
identifying the website address therefor; provided that, for both clauses (i)
and (ii), if such notice, email or other communication is not sent during the
normal business hours of the recipient, such notice, email or communication
shall be deemed to have been sent at the opening of business on the next
business day for the recipient.
(c)    The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE
AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF
THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM
LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF
ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT
PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event
shall the Agent or any of its Related Parties (collectively, the “Agent
Parties”) have any liability to any Loan Party, any Lender, or any other Person
for losses, claims, damages, liabilities or expenses of any kind (whether in
tort, contract or otherwise) arising out of the Loan Parties’ or the Agent’s
transmission of Borrower Materials through the Internet.
(d)    Change of Address, Etc. Each of the Loan Parties and the Agent may change
its address, electronic mail address, telecopier or telephone number for notices
and other communications hereunder by written notice to the other parties
hereto. Each other Lender may change its address, electronic mail address,
telecopier or telephone number for notices and other communications hereunder by
written notice to the Lead Borrower and the Agent. In addition, each Lender
agrees to notify the Agent from time to time to ensure that the Agent has on
record (i) an effective address, contact name, telephone number, telecopier
number and electronic mail address to which notices and other communications may
be sent and (ii) accurate wire instructions for such Lender. Furthermore, each
Public Lender agrees to cause at least one individual at or on behalf of such
Public Lender to at all times have selected the “Private Side Information” or
similar designation on the content declaration screen of the Platform in order
to enable such Public Lender or its delegate, in accordance with such Public
Lender’s compliance procedures and applicable Law, including United States
Federal and state securities Laws, to receive electronic mail distributions
containing, and to make reference to Borrower Materials, that are not made
available through any “Public Side Information” portion of a Platform and that
may contain material non-public information with respect to the Borrowers or
their securities for purposes of the Securities Laws.
(e)    Reliance by Agent and Lenders. The Agent and the Lenders shall be
entitled to rely and act upon any notices (including Committed Loan Notices)
purportedly given by or on behalf of the Loan Parties even if (i) such notices
were not made in a manner specified herein, were incomplete or were not preceded
or followed by any other form of notice specified herein, or (ii) the terms
thereof, as understood by the recipient, varied from any confirmation thereof.
The Loan Parties shall indemnify the Agent, each Lender and the Related Parties
of each of them from all losses, costs, expenses and liabilities resulting from
the reliance by such Person on each notice purportedly given by or on behalf of
the Loan Parties. All telephonic notices to and other telephonic communications
with the Agent may be recorded by the Agent, and each of the parties hereto
hereby consents to such recording.
10.03    No Waiver; Cumulative Remedies. No failure by any Credit Party to
exercise, and no delay by any such Person in exercising, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder or
under any other Loan Document preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges provided herein and in the other Loan Documents
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law. Without limiting the generality of the foregoing, the making of
a Term Loan shall not be construed as a waiver of any Default or Event of
Default, regardless of whether any Credit Party may have had notice or knowledge
of such Default or Event of Default at the time.
Notwithstanding anything to the contrary contained herein or in any other Loan
Document, the authority to enforce rights and remedies hereunder and under the
other Loan Documents against the Loan Parties or any of them shall be vested
exclusively in, and all actions and proceedings at Law in connection with such
enforcement shall be instituted and maintained exclusively by, the Agent in
accordance with Section 8.02 for the benefit of all the Lenders; provided,
however, that the foregoing shall not prohibit (a) the Agent from exercising on
its own behalf the rights and remedies that inure to its benefit (solely in its
capacity as Agent) hereunder and under the other Loan Documents, or (b) any
Lender from exercising setoff rights in accordance with Section 10.08 (subject
to the terms of Section 2.13); and provided, further, that if at any time there
is no Person acting as Agent hereunder and under the other Loan Documents, then
(i) the Required Lenders shall have the rights otherwise ascribed to the Agent
pursuant to Section 8.02 and (ii) in addition to the matters set forth in
clauses (b) and (c) of the preceding proviso and subject to Section 2.13, any
Lender may, with the consent of the Required Lenders, enforce any rights and
remedies available to it and as authorized by the Required Lenders.
10.04    Expenses; Indemnity; Damage Waiver.
(a)    Costs and Expenses. The Borrowers shall pay all Credit Party Expenses.
(b)    Indemnification by the Loan Parties. The Loan Parties shall indemnify the
Agent (and any sub-agent thereof), the Lenders, and each Related Party of any of
the foregoing Persons (each such Person being called an “Indemnitee”) against,
and hold each Indemnitee harmless (on an after tax basis) from, any and all
losses, claims, causes of action, damages, liabilities, settlement payments,
costs, and related expenses (including the reasonable fees, charges and
out-of-pocket disbursements of any counsel for any Indemnitee), incurred by any
Indemnitee or asserted against any Indemnitee by any third party or by any
Borrower or any other Loan Party arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other Loan
Document, the performance by the parties hereto of their respective obligations
hereunder or thereunder, the consummation of the transactions contemplated
hereby or thereby, or the administration of this Agreement and the other Loan
Documents, (ii) any Term Loan or the use or proposed use of the proceeds
therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by any Loan Party or any of
its Subsidiaries, or any Environmental Liability related in any way to any Loan
Party or any of its Subsidiaries, (iv) any claims of, or amounts paid by any
Indemnitee to, a Blocked Account Bank or other Person in connection with or
arising under a control agreement entered into in connection with this Agreement
with any Indemnitee hereunder, or (v) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory, whether brought by a third
party or by any Borrower or any other Loan Party or any of the Loan Parties’
directors, shareholders or creditors, and regardless of whether any Indemnitee
is a party thereto, in all cases, whether or not caused by or arising, in whole
or in part, out of the comparative, contributory or sole negligence of the
Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and non-appealable judgment to have resulted from (1) the gross negligence, bad
faith, or willful misconduct of such Indemnitee, (2) a breach of such
Indemnitee’s material obligations under the Loan Documents (including, without
limitation, the obligation to fund a Borrowing under the credit facility
provided for hereunder to the extent that the conditions precedent to such
Borrowing have been satisfied) or (3) in respect of disputes solely among
Indemnitees that do not result from an act or omission of a Loan Party. Without
limiting the provisions of Section 3.01(c), this Section 10.4(b) shall not apply
with respect to Taxes other than any Taxes that represent losses, claims,
damages, etc. arising from any non-Tax claim.
(c)    Waiver of Consequential Damages, Etc. To the fullest extent permitted by
Law, the Loan Parties shall not assert, and hereby waive, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Loan Document, the
transactions contemplated hereby or thereby, any Term Loan or the use of the
proceeds thereof.
(d)    Payments. All amounts due under this Section shall be payable on demand
therefor.
(e)    Limitation of Liability. No Indemnitee shall be liable for any damages
arising from the use by unintended recipients of any information or other
materials distributed to such unintended recipients by such Indemnitee through
telecommunications, electronic or other information transmission systems in
connection with this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby other than for direct or actual damages resulting
from the gross negligence or willful misconduct of such Indemnitee as determined
by a final and nonappealable judgment of a court of competent jurisdiction.
(f)    Survival. The agreements in this Section and the indemnity provisions of
Section 10.02(e) shall survive the resignation of any Agent, the assignment of
any Commitment or Term Loan by any Lender, the replacement of any Lender, the
termination of the Aggregate Commitments and the repayment, satisfaction or
discharge of all the other Obligations.
10.05    Payments Set Aside. To the extent that any payment by or on behalf of
the Loan Parties is made to any Credit Party, or any Credit Party exercises its
right of setoff, and such payment or the proceeds of such setoff or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by such
Credit Party in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any proceeding under any Debtor Relief Law or
otherwise, then (a) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such setoff had
not occurred, and (b) each Lender severally agrees to pay to the Agent upon
demand its Applicable Percentage (without duplication) of any amount so
recovered from or repaid by the Agent, plus interest thereon from the date of
such demand to the date such payment is made at a rate per annum equal to the
Federal Funds Rate from time to time in effect. The obligations of the Lenders
under clause (b) of the preceding sentence shall survive the payment in full of
the Obligations and the termination of this Agreement.
10.06    Successors and Assigns.
(a)    Successors and Assigns Generally. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that no Loan Party
may assign or otherwise transfer any of its rights or obligations hereunder or
under any other Loan Document without the prior written consent of the Agent and
each Lender, and no Lender may assign or otherwise transfer any of its rights or
obligations hereunder except (i) to an Eligible Assignee in accordance with the
provisions of Section 10.06(b), (ii) by way of participation in accordance with
the provisions of subsection Section 10.06(d), or (iii) by way of pledge or
assignment of a security interest subject to the restrictions of Section
10.06(f) (and any other attempted assignment or transfer by any party hereto
shall be null and void). Nothing in this Agreement, expressed or implied, shall
be construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants to the extent
provided in subsection (d) of this Section and, to the extent expressly
contemplated hereby, the Related Parties of each of the Credit Parties) any
legal or equitable right, remedy or claim under or by reason of this Agreement.
(b)    Assignments by Lenders. Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment(s) and the Term Loans;
provided that (i) the consent of the Agent, (such consent not to be unreasonably
withheld or delayed) shall be required and (ii) the consent of the Lead Borrower
(such consent not to be unreasonably withheld or delayed) shall be required
unless (1) a Default or Event of Default has occurred and is continuing at the
time of such assignment or (2) such assignment is to a Lender, an Affiliate of a
Lender or an Approved Fund with respect to such Lender; provided that, to the
extent the consent of the Lead Borrower is required, it shall be reasonable for
the Borrower to withhold consent based on the nature of the proposed assignee’s
business; and provided further that, to the extent the consent of the Lead
Borrower is required, the Lead Borrower shall be deemed to have consented to
such assignment if the Lead Borrower has been given five (5) Business Days’
prior notice of such assignment and has not objected to such assignment within
such period.
(i)    Assignment and Assumption. The parties to each assignment shall execute
and deliver to the Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500, provided, however, that the Agent may,
in its sole discretion, elect to waive such processing and recordation fee in
the case of any assignment. The assignee, if it shall not be a Lender, shall
deliver to the Agent an Administrative Questionnaire.
(ii)    No Assignment to Certain Persons. No such assignment shall be made (A)
to the Loan Parties or any of the Loan Parties’ Subsidiaries or Affiliates
(including any Permitted Holder), (B) to any Defaulting Lender or any of its
Subsidiaries or Affiliates, or any Person who, upon becoming a Lender hereunder,
would constitute any of the foregoing Persons described in this clause (B), or
(C) to a natural Person.
(iii)    Certain Additional Payments. In connection with any assignment of
rights and obligations of any Defaulting Lender hereunder, no such assignment
shall be effective unless and until, in addition to the other conditions thereto
set forth herein, the parties to the assignment shall make such additional
payments to the Agent in an aggregate amount sufficient, upon distribution
thereof as appropriate (which may be outright payment, purchases by the assignee
of participations or subparticipations, or other compensating actions, including
funding, with the consent of the Lead Borrower and the Agent, the applicable pro
rata share of Term Loans previously requested but not funded by the Defaulting
Lender, to each of which the applicable assignee and assignor hereby irrevocably
consent), to (x) pay and satisfy in full all payment liabilities then owed by
such Defaulting Lender to the Agent or any Lender hereunder (and interest
accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata
share of all Term Loans in accordance with its Applicable Percentage.
Notwithstanding the foregoing, in the event that any assignment of rights and
obligations of any Defaulting Lender hereunder shall become effective under
applicable Law without compliance with the provisions of this paragraph, then
the assignee of such interest shall be deemed to be a Defaulting Lender for all
purposes of this Agreement until such compliance occurs.
Subject to acceptance and recording thereof by the Agent pursuant to subsection
(c) of this Section, from and after the effective date specified in each
Assignment and Assumption, the Eligible Assignee thereunder shall be a party to
this Agreement and, to the extent of the interest assigned by such Assignment
and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04 with
respect to facts and circumstances occurring prior to the effective date of such
assignment; provided, that except to the extent otherwise expressly agreed by
the affected parties, no assignment by a Defaulting Lender will constitute a
waiver or release of any claim of any party hereunder arising from that Lender’s
having been a Defaulting Lender. Upon request, the Borrowers (at their expense)
shall execute and deliver a Note to the assignee Lender. Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does not
comply with this subsection shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in
accordance with Section 10.06(d).
(c)    Register. The Agent, acting solely for this purpose as an agent of the
Borrowers (and such agency being solely for tax purposes), shall maintain at the
Agent’s Office a copy of each Assignment and Assumption delivered to it (or the
equivalent thereof in electronic form) and a register for the recordation of the
names and addresses of the Lenders, and the Commitments of, and principal
amounts (and stated interest) of the Term Loans owing to, each Lender pursuant
to the terms hereof from time to time (the “Register”). The entries in the
Register shall be conclusive, absent manifest error, and the Loan Parties, the
Agent and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Lead Borrower and any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(d)    Participations. (i) Any Lender may at any time, without the consent of,
or notice to, the Loan Parties or the Agent, sell participations to any Person
(other than a Defaulting Lender, a natural person or the Loan Parties or any of
the Loan Parties’ Affiliates or Subsidiaries (including any Permitted Holder))
(each, a “Participant”) in all or a portion of such Lender's rights and/or
obligations under this Agreement (including all or a portion of its Commitment
and the Term Loans owing to it); provided that (i) such Lender's obligations
under this Agreement shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations and (iii) the Loan Parties, the Agent and the Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any Participant shall agree in
writing to comply with all confidentiality obligations set forth in Section
10.07 as if such Participant was a Lender hereunder.
(i)    Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in clauses (i) through
(iv) of the first proviso to Section 10.01 that affects such Participant.
Subject to subsection (e) of this Section, the Loan Parties agree that each
Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to Section 10.06(b). To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 10.08 as though it
were a Lender, provided such Participant agrees to be subject to Section 2.13 as
though it were a Lender.
(ii)    Each Lender that sells a participation shall, acting solely for this
purpose as a non-fiduciary agent of the Borrowers, maintain a register on which
it enters the name and address of each Participant and the principal amounts
(and stated interest) of each Participant’s interest in the Term Loans or other
obligations under the Loan Documents (the “Participant Register”); provided that
no Lender shall have any obligation to disclose all or any portion of the
Participant Register (including the identity of any Participant or any
information relating to a Participant's interest in any Commitments, Loans, or
its other Obligations under any Loan Document) to any Person except to the
extent that such disclosure is necessary to establish that such Commitment,
Loan, or other Obligation is in registered form under Section 5f.103-1(c) of the
United States Treasury Regulations. The entries in the Participant Register
shall be conclusive absent manifest error, and such Lender shall treat each
Person whose name is recorded in the Participant Register as the owner of such
participation for all purposes of this Agreement notwithstanding any notice to
the contrary. For the avoidance of doubt, the Agent (in its capacity as Agent)
shall have no responsibility for maintaining a Participant Register.
(e)    Limitations upon Participant Rights. A Participant shall not be entitled
to receive any greater payment under Section 3.01 or 3.04 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Lead Borrower's prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 3.01 unless the Lead Borrower is notified of
the participation sold to such Participant and such Participant agrees, for the
benefit of the Loan Parties, to comply with Section 3.01(e) as though it were a
Lender.
(f)    Certain Pledges. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement (including
under its Note, if any) to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve Bank; provided
that no such pledge or assignment shall release such Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
10.07    Treatment of Certain Information; Confidentiality. Each of the Credit
Parties agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its Affiliates, Approved
Funds, and to its and its Affiliates’ and Approved Funds’ respective partners,
directors, officers, employees, agents, funding sources, attorneys, advisors and
representatives (it being understood that the Persons to whom such disclosure is
made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority purporting to have jurisdiction over it (including
any self-regulatory authority), (c) to the extent required by Laws or
regulations or by any subpoena or similar legal process; provided that any
Person that discloses any Information pursuant to this clause (c) shall notify
the Lead Borrower in advance of such disclosure (if permitted by Law) or shall
provide the Lead Borrower with prompt written notice of such disclosure, (d) to
any other party hereto or any party to the Revolver Credit Agreement, (e) in
connection with the exercise of any remedies hereunder or under any other Loan
Document or any action or proceeding relating to this Agreement or any other
Loan Document or the enforcement of rights hereunder or thereunder, (f) subject
to an agreement (including any electronic agreement contained in any Platform)
containing provisions substantially the same as those of this Section, to (i)
any assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement or (ii) any actual or
prospective counterparty (or its advisors) to any Swap Contract relating to any
Loan Party and its obligations, (g) with the consent of the Lead Borrower or (h)
to the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section or (ii) becomes available to any Credit Party
or any of their respective Affiliates on a non-confidential basis from a source
other than the Loan Parties not known by such source to be in breach of any duty
of confidentiality with respect to such Information.
For purposes of this Section, “Information” means all information received from
the Loan Parties or any Subsidiary thereof relating to the Loan Parties or any
Subsidiary thereof or their respective businesses, other than any such
information that is available to any Credit Party on a non-confidential basis
prior to disclosure by the Loan Parties or any Subsidiary thereof. Any Person
required to maintain the confidentiality of Information as provided in this
Section shall be considered to have complied with its obligation to do so if
such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
Each of the Credit Parties acknowledges that (a) the Information may include
material non-public information concerning the Loan Parties or a Subsidiary, as
the case may be, (b) it has developed compliance procedures regarding the use of
material non-public information and (c) it will handle such material non-public
information in accordance with Law, including Federal and state securities Laws.
10.08    Right of Setoff. If an Event of Default shall have occurred and be
continuing or if any Lender shall have been served with a trustee process or
similar attachment relating to property of a Loan Party, each Lender, and each
of their respective Affiliates is hereby authorized at any time and from time to
time, after obtaining the prior written consent of the Agent or the Required
Lenders, to the fullest extent permitted by Law and subject to the ABL
Intercreditor Agreement, to set off and apply any and all deposits (general or
special, time or demand, provisional or final, in whatever currency) or other
property at any time held and other obligations (in whatever currency) at any
time owing by such Lender, or any such Affiliate to or for the credit or the
account of the Borrowers or any other Loan Party against any and all of the
Obligations now or hereafter existing under this Agreement or any other Loan
Document to such Lender, regardless of the adequacy of the Collateral, and
irrespective of whether or not such Lender shall have made any demand under this
Agreement or any other Loan Document and although such obligations of the
Borrowers or such Loan Party may be contingent or unmatured or are owed to a
branch or office of such Lender different from the branch or office holding such
deposit or obligated on such indebtedness; provided, that in the event that any
Defaulting Lender shall exercise any such right of setoff, (x) all amounts so
set off shall be paid over immediately to the Agent for further application in
accordance with the provisions of Section 2.16 and, pending such payment, shall
be segregated by such Defaulting Lender from its other funds and deemed held in
trust for the benefit of the Agent and the Lenders, and (y) the Defaulting
Lender shall provide promptly to the Agent a statement describing in reasonable
detail the Obligations owing to such Defaulting Lender as to which it exercised
such right of setoff. The rights of each Lender and their respective Affiliates
under this Section are in addition to other rights and remedies (including other
rights of setoff) that such Lender or their respective Affiliates may have. Each
Lender agrees to notify the Lead Borrower and the Agent promptly after any such
setoff and application, provided that the failure to give such notice shall not
affect the validity of such setoff and application.
10.09    Interest Rate Limitation. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by Law (the “Maximum Rate”). If the Agent or any Lender shall receive
interest in an amount that exceeds the Maximum Rate, the excess interest shall
be applied to the principal of the Term Loans and other Obligations or, if it
exceeds such unpaid principal, refunded to the Borrowers. In determining whether
the interest contracted for, charged, or received by the Agent or a Lender
exceeds the Maximum Rate, such Person may, to the extent permitted by Law, (a)
characterize any payment that is not principal as an expense, fee, or premium
rather than interest, (b) exclude voluntary prepayments and the effects thereof,
and (c) amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the contemplated term of the Obligations
hereunder.
10.10    Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and the other
Loan Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Agent and when the Agent shall have received
counterparts hereof that, when taken together, bear the signatures of each of
the other parties hereto. Delivery of an executed counterpart of a signature
page of this Agreement by telecopy, pdf or other electronic transmission shall
be as effective as delivery of a manually executed counterpart of this
Agreement.
10.11    Survival. All representations and warranties made hereunder and in any
other Loan Document or other document delivered pursuant hereto or thereto or in
connection herewith or therewith shall survive the execution and delivery hereof
and thereof. Such representations and warranties have been or will be relied
upon by the Credit Parties, regardless of any investigation made by any Credit
Party or on their behalf and notwithstanding that any Credit Party may have had
notice or knowledge of any Default or Event of Default at the time of any
Borrowing, and shall continue in full force and effect as long as any Term Loan
or any other Obligation hereunder shall remain unpaid or unsatisfied (it being
understood and agreed that the relevant provisions of this Agreement and the
other Loan Documents that require the Loan Parties to make representations and
warranties only require that the representations and warranties of the Loan
Parties be made (or deemed made) only on, and as of, a certain date, and the
provisions of this Section 10.11 shall not be deemed to change any provision in
this Agreement or any other Loan Document that requires that such
representations and warranties be made (or deemed made) only on, and as of, a
certain date). Further, the provisions of Sections 3.01, 3.04, 3.05 and 10.04
and Article IX shall survive and remain in full force and effect regardless of
the repayment of the Obligations, or the termination of the Commitments or the
termination of this Agreement or any provision hereof.
10.12    Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Without limiting the foregoing provisions of this Section
10.12, if and to the extent that the enforceability of any provisions in this
Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws,
as determined in good faith by the Agent, then such provisions shall be deemed
to be in effect only to the extent not so limited.
10.13    Replacement of Lenders. If the Borrower is entitled to replace a Lender
pursuant to the provisions of Section 3.06, or if any Lender is a Defaulting
Lender or a Non-Consenting Lender (other than GBFC LLC), then the Borrowers may,
at their sole expense and effort, upon notice to such Lender (if permitted by
Law) and the Agent, require such Lender to assign and delegate, without recourse
(in accordance with and subject to the restrictions contained in, and consents
required by, Section 10.06; provided that the consent of the assigned Lender
shall not be required in connection with any such assignment and delegation),
all of its interests, rights (other than its existing rights to payments
pursuant to Sections 3.01 and 3.04) and obligations under this Agreement and the
related Loan Documents to an assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment), provided
that:
(a)    the Borrowers shall have paid to the Agent the assignment fee specified
in Section 10.06(b);
(b)    such Lender shall have received payment of an amount equal to the
outstanding principal of its Term Loans, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Section 3.05) from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrowers (in
the case of all other amounts);
(c)    in the case of any such assignment resulting from a claim for
compensation under Section 3.04 or payments required to be made pursuant to
Section 3.01, such assignment will result in a reduction in such compensation or
payments thereafter;
(d)    such assignment does not conflict with Laws; and
(e)    in the case of an assignment resulting from a Lender becoming a
Non-Consenting Lender, the applicable assignee shall have consented to the
applicable amendment, waiver or consent.
A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrowers to require such assignment and delegation
cease to apply.
10.14    Governing Law; Jurisdiction; Etc.
(a)    GOVERNING LAW. THIS AGREEMENT AND (UNLESS EXPRESSLY INDICATING OTHERWISE)
EACH OTHER LOAN DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK.
(b)    SUBMISSION TO JURISDICTION. EACH LOAN PARTY IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR
PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN
CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE AGENT, ANY LENDER, OR ANY RELATED
PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN
THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED
STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE
COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY
LAW, IN SUCH FEDERAL COURT. EACH OF THE LOAN PARTIES HERETO AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT
SHALL AFFECT ANY RIGHT THAT ANY CREDIT PARTY MAY OTHERWISE HAVE TO BRING ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(c)    WAIVER OF VENUE. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED
TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE LOAN PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.
(d)    SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW.
10.15    Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.
10.16    No Advisory or Fiduciary Responsibility. In connection with all aspects
of each transaction contemplated hereby, the Loan Parties each acknowledge and
agree that: (i) the credit facility provided for hereunder and any related
arranging or other services in connection therewith (including in connection
with any amendment, waiver or other modification hereof or of any other Loan
Document) are an arm’s-length commercial transaction between the Loan Parties,
on the one hand, and the Credit Parties, on the other hand, and each of the Loan
Parties is capable of evaluating and understanding and understands and accepts
the terms, risks and conditions of the transactions contemplated hereby and by
the other Loan Documents (including any amendment, waiver or other modification
hereof or thereof); (ii) in connection with the process leading to such
transaction, each Credit Party is and has been acting solely as a principal and
is not the financial advisor, agent or fiduciary, for the Loan Parties or any of
their respective Affiliates, stockholders, creditors or employees or any other
Person; (iii) none of the Credit Parties has assumed or will assume an advisory,
agency or fiduciary responsibility in favor of the Loan Parties with respect to
any of the transactions contemplated hereby or the process leading thereto,
including with respect to any amendment, waiver or other modification hereof or
of any other Loan Document (irrespective of whether any of the Credit Parties
has advised or is currently advising any Loan Party or any of its Affiliates on
other matters) and none of the Credit Parties has any obligation to any Loan
Party or any of its Affiliates with respect to the transactions contemplated
hereby except those obligations expressly set forth herein and in the other Loan
Documents; (iv) the Credit Parties and their respective Affiliates may be
engaged in a broad range of transactions that involve interests that differ from
those of the Loan Parties and their respective Affiliates, and none of the
Credit Parties has any obligation to disclose any of such interests by virtue of
any advisory, agency or fiduciary relationship; and (v) the Credit Parties have
not provided and will not provide any legal, accounting, regulatory or tax
advice with respect to any of the transactions contemplated hereby (including
any amendment, waiver or other modification hereof or of any other Loan
Document) and each of the Loan Parties has consulted its own legal, accounting,
regulatory and tax advisors to the extent it has deemed appropriate. Each of the
Loan Parties hereby waives and releases, to the fullest extent permitted by law,
any claims that it may have against each of the Credit Parties with respect to
any breach or alleged breach of agency or fiduciary duty.
10.17    USA PATRIOT Act Notice. Each Lender that is subject to the Act (as
hereinafter defined) and the Agent (for itself and not on behalf of any Lender)
hereby notifies the Loan Parties 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 Loan Party, which information includes the name and address of
each Loan Party and other information that will allow such Lender or the Agent,
as applicable, to identify each Loan Party in accordance with the Act. Each Loan
Party is in compliance, in all material respects, with the Act. No part of the
proceeds of the Term Loans will be used by the Loan Parties, 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 an 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. The Loan Parties shall,
promptly following a request by the Agent or any Lender, provide all
documentation and other information that the Agent or such Lender requests in
order to comply with its ongoing obligations under applicable “know your
customer” and anti-money laundering rules and regulations, including the Act.
10.18    Foreign Asset Control Regulations. Neither of the advance of the Term
Loans nor the use of the proceeds of any thereof will directly or indirectly be
used (i) to fund or facilitate any activities of or business with any person
that, at the time of such funding or facilitation, is the target of Sanctions,
(ii) to fund or facilitate any activities of or business in any Designated
Jurisdiction or (iii) in any other manner that will result in a violation
Sanctions by the Borrowers or their Affiliates.
10.19    Time of the Essence. Time is of the essence of the Loan Documents.
10.20    Press Releases.
(a)    Each Credit Party executing this Agreement agrees that neither it nor its
Affiliates will in the future issue any press releases or other public
disclosure (other than periodic filings with the SEC) using the name of the
Agent or its Affiliates or referring to this Agreement or the other Loan
Documents without at least two (2) Business Days’ prior notice to the Agent and
without the prior written consent of the Agent unless (and only to the extent
that) such Credit Party or Affiliate is required to do so under Law and then, in
any event, such Credit Party or Affiliate will consult with the Agent before
issuing such press release or other public disclosure.
(b)    Each Loan Party consents to the publication by the Agent or any Lender of
advertising material relating to the financing transactions contemplated by this
Agreement using any Loan Party’s name, product photographs, logo or trademark.
The Agent or such Lender shall provide a draft reasonably in advance of any
advertising material to the Lead Borrower prior to the publication thereof. The
Agent reserves the right to provide to industry trade organizations information
necessary and customary for inclusion in league table measurements.
10.21    Releases.
(a)    Any Lien on any property granted to or held by the Agent under any Loan
Document shall terminate upon termination of the Aggregate Commitments and
payment in full in cash of all Obligations (other than contingent
indemnification obligations for which claims have not been asserted; provided,
however, that in connection with the termination of this Aggregate Commitments
and satisfaction and payment in full in cash of the Obligations as set forth
above, the Agent may require such indemnities or, in the case of the succeeding
clause (y) only, collateral security as they shall reasonably deem necessary or
appropriate to protect the Credit Parties against loss on account of credits
previously applied to the Obligations that may subsequently be reversed or
revoked; provided, further, that any such Liens granted pursuant to the Loan
Documents shall be reinstated if at any time payment, or any part thereof, of
any Obligation is rescinded or must otherwise be restored by any Credit Party
upon the bankruptcy or reorganization of any Loan Party. At the request and sole
expense of any Loan Party following any such termination, the Agent shall
deliver to such Loan Party any Collateral held by the Agent under any Loan
Document, and execute and deliver to such Loan Party such documents as such Loan
Party shall reasonably request to evidence such termination.
(b)    If any of the Collateral shall be sold, transferred or otherwise disposed
of by any Loan Party in a transaction permitted by this Agreement or any other
Loan Document, then such Collateral shall be automatically released from the
Liens created by the Loan Documents without delivery of any instrument or
performance of any act by any party, and all rights to the Collateral shall
revert to such Loan Party or its transferee, as the case may be, and the Agent,
at the request and sole expense of such Loan Party, shall execute and deliver to
such Loan Party all releases or other documents reasonably necessary or
desirable to evidence the release of the Liens created by the Loan Documents on
such Collateral. At the request and sole expense of the Borrowers, the Agent
shall release any Loan Party from its obligations under the Loan Documents,
including the Guaranty and Security Agreement, and shall execute and deliver to
the Loan Parties all releases or other documentation reasonably necessary or
desirable to evidence such release, in the event that all the equity interest of
such Loan Party shall be sold, transferred or otherwise disposed of in a
transaction permitted by this Agreement and/or in the event that such Loan Party
shall dispose of all or substantially all of its assets and shall cease to own
any Collateral.
10.22    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.
10.23    Attachments. The exhibits, schedules and annexes attached to this
Agreement are incorporated herein and shall be considered a part of this
Agreement for the purposes stated herein, except that in the event of any
conflict between any of the provisions of such exhibits and the provisions of
this Agreement, the provisions of this Agreement shall prevail.
10.24    Electronic Execution of Assignments and Certain Other Documents. The
words “execute,” “execution,” “signed,” “signature,” and words of like import in
any Assignment and Assumption or in any amendment or other modification hereof
(including waivers and consents) shall be deemed to include electronic
signatures, the electronic matching of assignment terms and contract formations
on electronic platforms approved by the Agent, or the keeping of records in
electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.
10.25    Intercreditor Agreement. Each of the Loan Parties, the Agent, the
Lenders and the other Credit Parties (i) consents to and ratifies the execution
by the Agent of the ABL Intercreditor Agreement and any amendments or
supplements contemplated thereby made in accordance with the terms of the ABL
Intercreditor Agreement, (ii) hereby agrees that it will be bound by (to the
extent applicable to it) and will take no actions contrary to the provisions of
the ABL Intercreditor Agreement and (iii) acknowledges that it has received a
copy of the ABL Intercreditor Agreement and that the exercise of certain of the
Agent’s rights and remedies hereunder may be subject to, and restricted by, the
provisions of the ABL Intercreditor Agreement. Except as specified herein,
nothing contained in the ABL Intercreditor Agreement shall be deemed to modify
any of the provisions of this Agreement and the other Loan Documents, which, as
among the Loan Parties, the Agent, the Lenders and the other Credit Parties
shall remain in full force and effect. The parties hereto acknowledge: (i) that
the exercise of certain of the Agent’s rights and remedies hereunder may be
subject to, and restricted by, the provisions of the ABL Intercreditor
Agreement, and (ii) to the extent any Loan Party is required to deliver any
Collateral to the Agent for purposes of possession and control and is unable to
do so as a result of having delivered such Collateral to the Revolver Agent in
accordance with the terms of the ABL Intercreditor Agreement, such Loan Party’s
obligations hereunder with respect to such delivery shall be deemed satisfied by
the delivery to the Revolver Agent, acting as agent for perfection of the Agent.
Each Lender hereby (i) agrees that this Agreement and the other Loan Documents,
and the rights and remedies of the Agent and the Lenders hereunder and
thereunder, are subject to the terms of the ABL Intercreditor Agreement (and to
the extent any term of this Agreement or any other Loan Document conflicts or is
inconsistent with the terms hereof, the terms of the ABL Intercreditor Agreement
shall control), (ii) agrees that it will be bound by and will take no actions
contrary to the provisions of the ABL Intercreditor Agreement and (iii) hereby
authorizes and instructs the Agent to enter into the ABL Intercreditor Agreement
and to subject the Liens securing the Obligations to the provisions thereof.
10.26    Reserved.
10.27    Acknowledgment and Consent to Bail-In of EEA Financial Institutions.
Notwithstanding anything to the contrary in any Loan Document or in any other
agreement, arrangement or understanding among any such parties, each party
hereto acknowledges that any liability of any Lender that is an EEA Financial
Institution arising under any Loan Document, to the extent such liability is
unsecured, may be subject to the write-down and conversion powers of an EEA
Resolution Authority and agrees and consents to, and acknowledges and agrees to
be bound by:
(a)    the application of any Write-Down and Conversion Powers by an EEA
Resolution Authority to any such liabilities arising hereunder which may be
payable to it by any Lender that is an EEA Financial Institution; and
(b)    the effects of any Bail-In Action on any such liability, including, if
applicable:
(i)    a reduction in full or in part or cancellation of any such liability;
(ii)    a conversion of all, or a portion of, such liability into shares or
other instruments of ownership in such EEA Financial Institution, its parent
undertaking, or a bridge institution that may be issued to it or otherwise
conferred on it, and that such shares or other instruments of ownership will be
accepted by it in lieu of any rights with respect to any such liability under
this Agreement or any other Loan Document; or
(iii)    the variation of the terms of such liability in connection with the
exercise of the write-down and conversion powers of any EEA Resolution
Authority.
[remainder of page intentionally left blank]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date first above
written.
BORROWERS:
SEARS AUTHORIZED HOMETOWN STORES, LLC, as Lead Borrower and as a Borrower
By: /S/ E. J. BIRD
Senior Vice President and Chief Financial Officer    

SEARS HOME APPLIANCE SHOWROOMS, LLC, as a Borrower
By: /S/ E. J. BIRD
Senior Vice President and Chief Financial Officer    

SEARS OUTLET STORES, L.L.C., as a Borrower
By: /S/ E. J. BIRD
Senior Vice President and Chief Financial Officer    

GUARANTORS:

SEARS HOMETOWN AND OUTLET STORES, INC., as Parent and as a Guarantor
By: /S/ E. J. BIRD
Senior Vice President and Chief Financial Officer    

GORDON BROTHERS FINANCE COMPANY, as Agent
By: /S/ FELICIA GALEOTA
Vice President

GORDON BROTHERS FINANCE COMPANY LLC, as Lender
By: /S/ FELICIA GALEOTA
Vice President

Schedule 1.01

Borrowers

1.
Sears Authorized Hometown Stores, LLC

2.
Sears Home Appliance Showrooms, LLC

3.
Sears Outlet Stores, L.L.C.

Schedule 1.03

Immaterial Subsidiaries

1.
Leasing Operations, LLC

2.
Outlet Merchandise, LLC

3.
Prayosha Easton LLC

4.
Prayosha Fairless Hills LLC

5.
Prayosha Huntington Valley LLC

6.
Prayosha Kennett Square LLC

7.
Prayosha Norristown LLC

8.
Prayosha Phoenixvile LLC

9.
Prayosha Quakertown LLC

10.
Prayosha Springfield LLC

11.
Prayosha Warrington LLC

Schedule 2.01

Commitments and Applicable Percentages

Lender
Commitment
Applicable Percentage
Gordon Brothers Finance Company, LLC
$40,000,000.00
100.000000000%
TOTAL
$40,000,000.00
100.000000000%

Schedule 5.18

Collective Bargaining Agreements

1.
Agreement, made and entered into on October 27, 2011, by and between Sears,
Roebuck and Company; local management; Livonia, Michigan; and Local Union No.
243, located at 39420 Schoolcraft, Plymouth Township, Michigan 48170, affiliated
with the International Brotherhood of Teamsters. Contract Term: 10/19/2011 –
10/18/2014. The rights and obligations of Sears, Roebuck and Company under the
foregoing agreement were transferred to Sears Outlet Stores, L.L.C. pursuant to
the General Conveyance, Bill of Sale, Assignment and Assumption dated as of
August 31, 2012.

This Collective Bargaining Agreement applies only to one classification
associates, the Merchandise Processors, at the Outlet Repair and Distribution
Center #4612 and Outlet Store #5230 located at 12001 Sears Street, Livonia,
Michigan. No other associates are subject to this agreement and there are no
other Collective Bargaining Agreements.
Schedule 6.02

Financial and Collateral Reporting

A. Within 10 business days after the end of each fiscal month
 
 
1. Borrowing Base Certificate
 
 
2. Summary Source document of Stock Ledger
 
 
3. Summary Source document of inventory ineligibles
 
 
4. Summary Source document showing Credit Card A/R
 
 
5. Summary Source document showing Credit Card A/R ineligibles
 
 
6. Gift Card Liability Report
 
 
7. Monthly Store Rent in WA, VA, PA
 
 
8. Report identifying Customer Deposits
 
 
9. Report with Dealer Commission Payable accrual
 
 
10. Report identifying A/P & A/R for Discover
 
 
11. Letter of Credit detail
 
 
 
 
 
B. Within 30 days after the end of each month
 
 
1. Consolidated Balance Sheet
 
 
2. Consolidated Statement of Income or Operations
 
 
3. Consolidated Statement of Cash Flows
 
 
4. Consolidated Statement of Shareholders' Equity
 
 
5. Compliance Certificate
 
 
 
 
 
C. Within 50 days after the end of the first three Fiscal Quarters
 
 
1. Consolidated Balance Sheet
 
 
2. Consolidated Statement of Income or Operations
 
 
3. Consolidated Statement of Cash Flows
 
 
4. Consolidated Statement of Shareholders' Equity
 
 
5. Compliance Certificate
 
 
6. Reasonably detailed build-up of operating income by Operating Segment
 
 
 
 
 
D. Within 60 days after the end of each Fiscal Year
 
 
1. Reasonably detailed forecast (including projected balance sheet, income
statement, cash flows and Availability model on a monthly basis) for the
succeeding Fiscal Year
 
 
 
 
 
E. Within 95 days after the end of each Fiscal Year
 
 
1. Annual Audited Consolidated Balance Sheet
 
 
2. Annual Audited Consolidated Statement of Income or Operations
 
 
3. Annual Audited Consolidated Statement of Cash Flows
 
 
4. Annual Audited Consolidated Statement of Shareholders' Equity
 
 
5. Compliance Certificate
 
 
6. Reasonably detailed build-up of operating income by Operating Segment
 
 

Schedule 6.12

Blocked Account Banks

1.
Banco Popular de Puerto Rico

2.
Bank of America, N.A.

3.
Capital One, National Association

4.
First Hawaiian Bank

5.
First Tennessee Bank National Association

6.
HSBC Bank USA National Association

7.
KeyBank National Association

8.
PNC Bank, National Association

9.
U.S. Bank National Association

10.
Wells Fargo Bank, National Association

Schedule 10.02

Agent’s Office; Certain Addresses for Notices

Agent
Gordon Brothers Finance Company
800 Boylston Street, 27th Floor
Boston, Massachusetts 02199
Attention:     Lisa Galeota
Telephone:     617-588-3313
E-mail:    lgaleota@gbfinco.com

with a copy to:

Choate, Hall & Stewart LLP
Two International Place
Boston, Massachusetts 02110
Attention:    Mark D. Silva
Telephone:    617-248-5127
Facsimile:     617-502-5127
E-mail:        msilva@choate.com     

The Lead Borrower and the Other Loan Parties
c/o Sears Authorized Hometown Stores, LLC
5500 Trillium Boulevard, Suite 501
Hoffman Estates, Illinois 60192
Attention:
Chief Financial Officer

Telephone:     847-286-8650
Facsimile:     847-286-0266
E-mail:    ebird1@shos.com

with a copy to:

Sears Hometown and Outlet Stores, Inc.
5500 Trillium Boulevard, Suite 501
Hoffman Estates, Illinois 60192
Attention:    General Counsel
Telephone:    847-286-7795
Facsimile:    847-286-0266
E-mail:        charles.hansen@shos.com

EXHIBIT A
FORM OF COMMITTED LOAN NOTICE

Date: ___________, _____
To:
Gordon Brothers Finance Company, as Agent

Ladies and Gentlemen:
Reference is made to the Term Loan Credit Agreement dated as of February 16,
2018 (as amended, modified, supplemented or restated hereafter, the “Credit
Agreement”) by and among (i) Sears Authorized Hometown Stores, LLC, a Delaware
limited liability company, for itself and as Lead Borrower (in such capacity,
the “Lead Borrower”) for the other Borrowers party thereto from time to time,
(ii) the other Borrowers and Guarantors party thereto from time to time, (iii)
Gordon Brothers Finance Company, as administrative agent and collateral agent
(in such capacities, the “Agent”) for the benefit of the Credit Parties referred
to therein, and (iv) the lenders from time to time party thereto (individually,
a “Lender” and, collectively, the “Lenders”). All capitalized terms used herein
and not otherwise defined shall have the same meaning herein as in the Credit
Agreement.
The Lead Borrower hereby requests a Borrowing of Term Loans.
On ____________ (a Business Day)
In the principal amount of $_____________________
The Lead Borrower hereby represents and warrants (for itself and on behalf of
the other Borrowers) that (a) the Borrowing requested herein complies with
Sections 2.02(b) of the Credit Agreement, and (b) the conditions specified in
Sections 4.01 and 4.02 of the Credit Agreement have been satisfied on and as of
the proposed borrowing date above.
The Lead Borrower hereby directs that the proceeds of the proposed Borrowing to
be made available to the Borrowers in accordance with the wire instruction
attached hereto as Exhibit A.
[Remainder of page intentionally left blank.]

SEARS AUTHORIZED HOMETOWN STORES, LLC, as Lead Borrower
By:_________________________________
Name:
Title:

EXHIBIT B

FORM OF TERM NOTE

$_______________        __________, ____

FOR VALUE RECEIVED, the undersigned (individually, a “Borrower” and,
collectively, the “Borrowers”), jointly and severally promise to pay to the
order of _____________________ (hereinafter, with any subsequent permitted
holders, the “Lender”), c/o Gordon Brothers Finance Company, Prudential Tower
800 Boylston Street, 27th Floor, Boston Massachusetts 02199, the principal sum
of ___________________ ($______________), or, if less, the aggregate unpaid
principal balance of Term Loans made by the Lender to or for the account of any
Borrower pursuant to the Term Loan Credit Agreement dated as of February 16,
2018 (as amended, modified, supplemented or restated and in effect from time to
time, the “Credit Agreement”) by and among (i) the Borrowers and Guarantors
party thereto, (ii) Gordon Brothers Finance Company, as administrative agent and
collateral agent (in such capacities, the “Agent”) for its own benefit and the
benefit of the other Credit Parties referred to therein, and (iii) the lenders
from time to time party thereto (individually, a “Lender” and, collectively, the
“Lenders”), with interest at the rate and payable in the manner stated therein.
This is a “Note” to which reference is made in the Credit Agreement and is
subject to all terms and provisions thereof. The principal of, and interest on,
this Note shall be payable at the times, in the manner, and in the amounts as
provided in the Credit Agreement and shall be subject to prepayment and
acceleration as provided therein. Capitalized terms used herein and not defined
herein shall have the meanings assigned to such terms in the Credit Agreement.
The Agent’s books and records concerning the Term Loans, the accrual of interest
thereon, and the repayment of such Term Loans, shall be conclusive, absent
manifest error, evidence of the indebtedness to the Lender hereunder.
No delay or omission by the Agent or the Lender in exercising or enforcing any
of the Agent’s or such Lender’s powers, rights, privileges, remedies, or
discretions hereunder shall operate as a waiver thereof on that occasion nor on
any other occasion. No waiver of any Event of Default shall operate as a waiver
of any other Event of Default.
Each Borrower waives presentment, demand, notice, and protest, and also waives
any delay on the part of the holder hereof.
This Note shall be binding upon each Borrower and upon their respective
successors, assigns, and representatives, and shall inure to the benefit of the
Lender and its successors, endorsees, and assigns.
Subject to the terms of the Loan Documents, the liabilities of each Borrower are
joint and several, provided, however, the release by the Agent or the Lender of
any one or more such Persons shall not release any other Person obligated on
account of this Note. Each reference in this Note to any Borrower is to such
Person individually and also to all such Persons jointly.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK SITTING IN NEW YORK COUNTY AND ANY FEDERAL COURT SITTING THEREIN, AND ANY
APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS NOTE OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE BORROWERS IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE
BORROWERS AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS NOTE OR IN ANY OTHER LOAN
DOCUMENT SHALL AFFECT ANY RIGHT THAT THE AGENT OR THE LENDER MAY OTHERWISE HAVE
TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS NOTE OR ANY OTHER LOAN
DOCUMENT AGAINST ANY OF THE BORROWERS OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.
EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS NOTE OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO ABOVE.
EACH OF THE BORROWERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
Each Borrower makes the following waiver knowingly, voluntarily, and
intentionally, and understands that the Agent and the Lender, in the
establishment and maintenance of their respective relationship with the
Borrowers contemplated by this Note, are each relying thereon. EACH BORROWER AND
THE LENDER, BY ITS ACCEPTANCE HEREOF, HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
NOTE OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH BORROWER
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT THE AGENT AND THE LENDER HAVE BEEN INDUCED TO ENTER INTO THE CREDIT
AGREEMENT AND THIS NOTE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS HEREIN.
[SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, the Borrowers have caused this Note to be duly executed as
of the date set forth above.
BORROWERS:

SEARS AUTHORIZED HOMETOWN STORES, LLC, as Lead Borrower and as a Borrower
By:    ________________________________
Name:    _________________________
Title:    _________________________

SEARS HOME APPLIANCE SHOWROOMS, LLC, as a Borrower
By:    ________________________________
Name:    _________________________
Title:    _________________________

SEARS OUTLET STORES, L.L.C., as a Borrower
By:    ________________________________
Name:    _________________________
Title:    _________________________

EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE

To:    Gordon Brothers Finance Company, as
Agent    Date:    _____________________
Prudential Tower
800 Boylston Street, 27th Floor
Boston, Massachusetts 02199
Attention: Lisa Galeota

Re:    Term Loan Credit Agreement dated as of February 16, 2018 (as amended,
modified, supplemented or restated hereafter, the “Credit Agreement”) by, among
others, Sears Authorized Hometown Stores, LLC, a Delaware limited liability
company, as the Lead Borrower (in such capacity, the “Lead Borrower”), the
Borrowers and Guarantors party thereto from time to time, the several banks and
other financial institutions or entities from time to time party thereto as
Lenders, and Gordon Brothers Finance Company, as administrative agent and
collateral agent (in such capacities, the “Agent”) for the benefit of the Credit
Parties referred to therein. All capitalized terms used herein and not otherwise
defined shall have the same meaning herein as in the Credit Agreement.
The undersigned, a duly authorized and acting Responsible Officer of the Lead
Borrower, hereby certifies to you as follows:
No Default.
To the knowledge of the undersigned Responsible Officer, since __________ (the
date of the last similar certification) and except as set forth in Appendix I,
no Default or Event of Default has occurred and is continuing.
If a Default or Event of Default has occurred and is continuing since __________
(the date of the last similar certification), the Borrowers propose to take
action as set forth in Appendix I with respect to such Default or Event of
Default.
Financial Calculations.
Attached hereto as Appendix II are reasonably detailed calculations necessary to
determine the Consolidated Fixed Charge Coverage Ratio.
Financial Statements.
[Use following paragraph (a) for fiscal month-end financial statements]
(a)    Attached hereto as Appendix III (or, if not attached, delivered to the
Agent in accordance with the penultimate paragraph of Section 6.02 of the Credit
Agreement) are the Consolidated balance sheet of the Parent and its Subsidiaries
as at the end of the fiscal month ended ____________, and the related
Consolidated statements of income or operations, Shareholders’ Equity and cash
flows for such month, and for the portion of the Parent’s Fiscal Year then
ended, setting forth in each case in comparative form the figures for (A) the
corresponding month of the previous Fiscal Year and (B) the corresponding
portion of the previous Fiscal Year, all in reasonable detail, which
Consolidated statements, to my knowledge, fairly present the financial
condition, results of operations, Shareholders’ Equity and cash flows of the
Parent and its Subsidiaries as of the end of such month in accordance with GAAP,
subject only to normal year-end audit adjustments and the absence of footnotes.
[Use following paragraph (b) for fiscal quarter-end financial statements]
(b)    Attached hereto as Appendix III (or, if not attached, delivered to the
Agent in accordance with the penultimate paragraph of Section 6.02 of the Credit
Agreement) are (i) a Consolidated balance sheet of the Parent and its
Subsidiaries as at the end of the Fiscal Quarter ended _________, and the
related consolidated statements of income or operations, Shareholders’ Equity
and cash flows for such Fiscal Quarter and for the portion of the Parent’s
Fiscal Year then ended, setting forth in each case in comparative form the
figures for (A) the corresponding Fiscal Quarter of the previous Fiscal Year and
(B) the corresponding portion of the previous Fiscal Year, all in reasonable
detail, which Consolidated statements fairly present the financial condition,
results of operations, Shareholders’ Equity and cash flows of the Parent and its
Subsidiaries as of the end of such Fiscal Quarter in accordance with GAAP,
subject to normal year-end audit adjustments and the absence of footnotes, and
(ii) to the extent not otherwise included in the financial statements delivered
pursuant to clause (i), a reasonably detailed build-up of operating income for
each Operating Segment for such period, which state fairly in all material
respects the financial position of each Operating Segment.
[Use following paragraph (c) for fiscal year-end financial statements]
(c)    Attached hereto as Appendix III (or, if not attached, delivered to the
Agent in accordance with the penultimate paragraph of Section 6.02 of the Credit
Agreement) are (i) a Consolidated balance sheet of the Parent and its
Subsidiaries as of the end of the Fiscal Year ended _________, and the related
consolidated statements of income or operations, Shareholders’ Equity and cash
flows for such Fiscal Year, setting forth in each case in comparative form the
figures for the previous Fiscal Year, all in reasonable detail and prepared in
accordance with GAAP, audited and accompanied by a report and unqualified
opinion of a Registered Public Accounting Firm of nationally recognized standing
reasonably acceptable to the Agent, which report and opinion have been prepared
in accordance with generally accepted auditing standards and are not be subject
to any “going concern” or like qualification or exception or any qualification
or exception as to the scope of such audit; and (ii) to the extent not otherwise
included in the financial statements delivered pursuant to clause (i), a
reasonably detailed build-up of operating income for each Operating Segment for
such period, which state fairly in all material respects the financial position
of each Operating Segment.
No Material Accounting Changes.
There has been no material change in GAAP or the application thereof since the
date of the audited financial statements furnished to the Agent for the Fiscal
Year ending [_____], other than as disclosed on Appendix IV hereto.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, I have executed this certificate as of the date first
written above.

By:_______________________________
Name:
Title: [Responsible Officer of Lead Borrower]
APPENDIX I
Except as set forth below, no Default or Event of Default presently exists. [If
a Default or Event of Default exists, describe the nature of the Default in
reasonable detail and the steps being taken or contemplated by the Borrowers to
be taken on account thereof.]
APPENDIX II

Calculation of Consolidated Fixed Charge Coverage Ratio

A.
Calculation of Consolidated Fixed Charge Coverage Ratio for trailing twelve
month period ending _________________:

1.    Consolidated EBITDA for such period
(see detailed calculation of Consolidated EBITDA
attached hereto):                            __________________

    
2.    Minus the following:

(a)    Capital Expenditures made during such period
(other than Financed Capital Expenditures):            __________________

(b)    the aggregate amount of Federal, state, local and
foreign income taxes paid in cash during such period
net of cash refunds of such Taxes received during such period
(but in no event shall the amounts calculated under this
clause (2)(b) be less than
zero):                                                                    __________________

3.    Line 1, minus the sum of Lines 2(a) and
2(b):                __________________

4.    The sum of the following:

(a)    Consolidated Interest Charges paid or required to be paid
in cash for such period:                        __________________

plus

(b)    scheduled principal payments made or required to be made
on account of Indebtedness (excluding the Revolver Obligations and any Synthetic
Lease Obligations but
including, without limitation, principal payments made in respect of
Capital Lease Obligations) for such period:            __________________

(c)    The sum of Lines 4(a) and 4(b):                    __________________

5.    CONSOLIDATED FIXED CHARGE COVERAGE RATIO AS OF
THE LAST TWELVE MONTH PERIOD ENDED ____________
(Line 3 divided by Line 4(c):                        __________________

APPENDIX III

[Attach financial statements.]
APPENDIX IV

[If material changes in GAAP or the application thereof have occurred since [the
date of the most recently delivered financial statements to the Agent prior to
the date of this Certificate], describe the nature of such changes in reasonable
detail and the effect, if any, of each such material change in GAAP or in
application thereof in the determination of the calculation of the financial
statements described in the Credit Agreement.]

EXHIBIT D
FORM OF ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (this “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between
[the][each] Assignor identified in item 1 below ([the][each, an] “Assignor”) and
[the][each] Assignee identified in item 2 below ([the][each, an] “Assignee”).
[It is understood and agreed that the rights and obligations of [the
Assignors][the Assignees] hereunder are several and not joint.] Capitalized
terms used but not defined herein shall have the meanings given to them in the
Term Loan Credit Agreement identified below (the “Credit Agreement”), receipt of
a copy of which is hereby acknowledged by [each, the] Assignee. The Standard
Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to
and incorporated herein by reference and made a part of this Assignment and
Assumption as if set forth herein in full.
For an agreed consideration, [the][each] Assignor hereby irrevocably sells and
assigns to [the Assignee][the respective Assignees], and [the][each] Assignee
hereby irrevocably purchases and assumes from [the Assignor][the respective
Assignors], subject to and in accordance with the Standard Terms and Conditions
and the Credit Agreement, as of the Effective Date inserted by the Agent as
contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights
and obligations in [its capacity as a Lender][their respective capacities
Lenders] under the Credit Agreement and any other documents or instruments
delivered pursuant thereto to the extent related to the amount and percentage
interest identified below of all of such outstanding rights and obligations of
[the Assignor][the respective Assignors] under the respective facilities
identified below and (ii) to the extent permitted to be assigned under
applicable Law, all claims, suits, causes of action and any other right of [the
Assignor (in its capacity as a Lender)][the respective Assignors (in their
respective capacities as Lenders)] against any Person, whether known or unknown,
arising under or in connection with the Credit Agreement, any other documents or
instruments delivered pursuant thereto or the loan transactions governed thereby
or in any way based on or related to any of the foregoing, including, but not
limited to, contract claims, tort claims, malpractice claims, statutory claims
and all other claims at law or in equity related to the rights and obligations
sold and assigned pursuant to clause (i) above (the rights and obligations sold
and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses
(i) and (ii) above being referred to herein collectively as [the][an] “Assigned
Interest”). Each such sale and assignment is without recourse to [the][any]
Assignor and, except as expressly provided in this Assignment and Assumption,
without representation or warranty by [the][any] Assignor.

1.    Assignor[s]:    ______________________________

______________________________

2.
Assignee[s]:    ______________________________

______________________________

3.
Borrowers:    Sears Authorized Hometown Stores, LLC, Sears Home Appliance
Showrooms, LLC and Sears Outlet Stores, L.L.C.

4.
Agent: Gordon Brothers Finance Company, as the Agent under the Credit Agreement.

5.
Credit Agreement:     Term Loan Credit Agreement dated as of February 16, 2018,
by and among (i) Sears Authorized Hometown Stores, LLC, a Delaware limited
liability company, the Borrowers and Guarantors party thereto from time to time,
(ii) Gordon Brothers Finance Company, as Agent for its own benefit and the
benefit of the other Credit Parties referred to therein, and (iii) the lenders
from time to time party thereto.

7.
Assigned Interest[s]:

Assignor[s]

Assignee[s]
Aggregate
Term Loans
for all Lenders
Amount of
Term Loans
Assigned
Percentage
Assigned of
Term Loans
 
 
$____________
$______
_________%
 
 
$____________
$______
_________%

[7.    Trade Date:    __________________]

Effective Date: __________________, 20__ [TO BE INSERTED BY AGENT AND WHICH
SHALL BE THE DATE OF DELIVERY OF THIS ASSIGNMENT AND ASSUMPTION FOR RECORDATION
OF TRANSFER IN THE REGISTER THEREFOR.]
The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR
[NAME OF ASSIGNOR]

By:     _____________________________
Name:    _____________________________
Title:    _____________________________

    

ASSIGNEE
[NAME OF ASSIGNEE]

By:     _____________________________
Name:    _____________________________
Title:    _____________________________

Consented to and Accepted:

Gordon Brothers Finance Company, as
Agent

By:     _____________________________
Name:    _____________________________
Title:    _____________________________

[Consented to:]

SEARS AUTHORIZED HOMETOWN STORES, LLC, as Lead Borrower

By:     _____________________________
Name:    _____________________________
Title:    _____________________________

ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

Reference is made to the Term Loan Credit Agreement dated as of February 16,
2018 (as amended, modified, supplemented or restated hereafter, the “Credit
Agreement”) by and among (i) Sears Authorized Hometown Stores, LLC, a Delaware
limited liability company, for itself and as Lead Borrower (in such capacity,
the “Lead Borrower”) for the other Borrowers party thereto from time to time
(individually, a “Borrower” and, collectively, the “Borrowers”), (ii) the
Borrowers and Guarantors party thereto from time to time, (iii) Gordon Brothers
Finance Company, as administrative agent and collateral agent (in such
capacities, the “Agent”) for its own benefit and the benefit of the other Credit
Parties referred to therein, and (iv) the lenders from time to time party
thereto (individually, a “Lender” and, collectively, the “Lenders”). All
capitalized terms used herein and not otherwise defined shall have the same
meaning herein as in the Credit Agreement.

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

1.    Representations and Warranties.
1.1.    Assignor. [The][Each] Assignor (a) represents and warrants that (i) it
is the legal and beneficial owner of [the][[the relevant] Assigned Interest,
(ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or
other adverse claim and (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Credit Parties or any other Person obligated in respect of any
Loan Document or (iv) the performance or observance by the Loan Parties or any
other Person of any of their respective obligations under any Loan Document.
1.2.    Assignee. [The][Each] Assignee (a) represents and warrants that (i) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
meets all the requirements to be an Eligible Assignee under the Credit Agreement
(subject to such consents, if any, as may be required by Section 10.06 of the
Credit Agreement), (iii) from and after the Effective Date, it shall be bound by
the provisions of the Credit Agreement as a Lender thereunder and, to the extent
of [the][the relevant] Assigned Interest, shall have the obligations of a Lender
thereunder, (iv) it is sophisticated with respect to decisions to acquire assets
of the type represented by [the][such] Assigned Interest and either it, or the
Person exercising discretion in making its decision to acquire [the][such]
Assigned Interest, is experienced in acquiring assets of such type, (v) it has
received a copy of the Credit Agreement, and has received or has been accorded
the opportunity to receive copies of the most recent financial statements
delivered pursuant to Section 6.01 thereof, as applicable, and such other
documents and information as it deems appropriate to make its own credit
analysis and decision to enter into this Assignment and Assumption and to
purchase [the][such] Assigned Interest, (vi) it has, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Assignment and Assumption and to purchase
[the][such] Assigned Interest, and (vii) attached hereto is any documentation
required to be delivered by it pursuant to the terms of Section 3.01 the Credit
Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees
that (i) it will, independently and without reliance upon the Agent, [the][any]
Assignor or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents, and (ii) it will perform
in accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.
2.    Payments. From and after the Effective Date, the Agent shall make all
payments in respect of [the][each] Assigned Interest (including payments of
principal, interest, fees and other amounts) to [the][the relevant] Assignor for
amounts which have accrued up to but excluding the Effective Date and to
[the][the relevant] Assignee for amounts which have accrued from and after the
Effective Date.
3.    General Provisions. This Assignment and Assumption shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of New York.
4.    Fees. Unless waived by the Agent in accordance with Section 10.06(b) of
the Credit Agreement, this Assignment and Assumption shall be delivered to the
Agent with a processing and recordation fee of $3,500.

EXHIBIT E

[On File with the Administrative Agent]

EXHIBIT F-1
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax
Purposes)
Reference is hereby made to the Term Loan Credit Agreement dated as of February
16, 2018 (as amended, modified, supplemented or restated hereafter, the “Credit
Agreement”) by and among (i) Sears Authorized Hometown Stores, LLC, a Delaware
limited liability company (the “Lead Borrower”), (ii) the other Borrowers and
Guarantors named therein, (iii) the Lenders party thereto from time to time, and
(iv) Gordon Brothers Finance Company, as administrative agent and collateral
agent (in such capacities, the “Agent”) for its own benefit and the benefit of
the other Credit Parties referred to therein. All capitalized terms used herein
and not otherwise defined shall have the same meaning herein as in the Credit
Agreement.
Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of
which it is providing this certificate, (ii) it is not a bank within the meaning
of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder
of the Lead Borrower or any other Borrower within the meaning of Section
871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation
related to the Lead Borrower or any other Borrower as described in Section
881(c)(3)(C) of the Code.
The undersigned has furnished the Agent and the Lead Borrower and any other
relevant Borrower with a certificate of its non-U.S. Person status on IRS Form
W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the
information provided on this certificate changes, the undersigned shall promptly
so inform the Lead Borrower, any other relevant Borrower and the Agent, and (2)
the undersigned shall have at all times furnished the Lead Borrower, any other
relevant Borrower and the Agent with a properly completed and currently
effective certificate in either the calendar year in which each payment is to be
made to the undersigned, or in either of the two calendar years preceding such
payments.
[NAME OF LENDER]
By: _______________________    
Name: ________________________
Title: ________________________
Date: ________ __, 20[ ]
 
EXHIBIT F-2
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax
Purposes)
Reference is hereby made to the Term Loan Credit Agreement dated as of February
16, 2018 (as amended, modified, supplemented or restated hereafter, the “Credit
Agreement”) by and among (i) Sears Authorized Hometown Stores, LLC, a Delaware
limited liability company (the “Lead Borrower”), (ii) the other Borrowers and
Guarantors named therein, (iii) the Lenders party thereto from time to time, and
(iv) Gordon Brothers Finance Company, as administrative agent and collateral
agent (in such capacities, the “Agent”) for its own benefit and the benefit of
the other Credit Parties referred to therein. All capitalized terms used herein
and not otherwise defined shall have the same meaning herein as in the Credit
Agreement.
Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the participation in respect of which it is providing this certificate, (ii)
it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii)
it is not a ten percent shareholder of the Lead Borrower or any other Borrower
within the meaning of Section 871(h)(3)(B) of the Code, and (iv) it is not a
controlled foreign corporation related to the Lead Borrower or any other
Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with a certificate of its
non-U.S. Person status on IRS Form W-8BEN-E. By executing this certificate, the
undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform such Lender in writing, and
(2) the undersigned shall have at all times furnished such Lender with a
properly completed and currently effective certificate in either the calendar
year in which each payment is to be made to the undersigned, or in either of the
two calendar years preceding such payments.
[NAME OF PARTICIPANT]
By: _______________________    
Name: ________________________
Title: ________________________
Date: ________ __, 20[ ]
 
EXHIBIT F-3

FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax
Purposes)
Reference is hereby made to the Term Loan Credit Agreement dated as of February
16, 2018 (as amended, modified, supplemented or restated hereafter, the “Credit
Agreement”) by and among (i) Sears Authorized Hometown Stores, LLC, a Delaware
limited liability company (the “Lead Borrower”), (ii) the other Borrowers and
Guarantors named therein, (iii) the Lenders party thereto from time to time, and
(iv) Gordon Brothers Finance Company, as administrative agent and collateral
agent (in such capacities, the “Agent”) for its own benefit and the benefit of
the other Credit Parties referred to therein. All capitalized terms used herein
and not otherwise defined shall have the same meaning herein as in the Credit
Agreement.
Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the
participation in respect of which it is providing this certificate, (ii) its
direct or indirect partners/members are the sole beneficial owners of such
participation, (iii) with respect such participation, neither the undersigned
nor any of its direct or indirect partners/members is a bank extending credit
pursuant to a loan agreement entered into in the ordinary course of its trade or
business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of
its direct or indirect partners/members is a ten percent shareholder of the Lead
Borrower or any other Borrower within the meaning of Section 871(h)(3)(B) of the
Code and (v) none of its direct or indirect partners/members is a controlled
foreign corporation related to the Lead Borrower or any other Borrower as
described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with IRS Form W-8IMY
accompanied by one of the following forms from each of its partners/members that
is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN-E or (ii)
an IRS Form W-8IMY accompanied by an IRS Form W-8BEN-E from each of such
partner’s/member’s beneficial owners that is claiming the portfolio interest
exemption. By executing this certificate, the undersigned agrees that (1) if the
information provided on this certificate changes, the undersigned shall promptly
so inform such Lender and (2) the undersigned shall have at all times furnished
such Lender with a properly completed and currently effective certificate in
either the calendar year in which each payment is to be made to the undersigned,
or in either of the two calendar years preceding such payments.
[NAME OF PARTICIPANT]
By: _______________________    
Name: _____________________
Title: ________________________
Date: ________ __, 20[ ]

EXHIBIT F-4
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Term Loan Credit Agreement dated as of February
16, 2018 (as amended, modified, supplemented or restated hereafter, the “Credit
Agreement”) by and among (i) Sears Authorized Hometown Stores, LLC, a Delaware
limited liability company (the “Lead Borrower”), (ii) the other Borrowers and
Guarantors named therein, (iii) the Lenders party thereto from time to time, and
(iv) Gordon Brothers Finance Company, as administrative agent and collateral
agent (in such capacities, the “Agent”) for its own benefit and the benefit of
the other Credit Parties referred to therein. All capitalized terms used herein
and not otherwise defined shall have the same meaning herein as in the Credit
Agreement.
Pursuant to the provisions of Section 3.01(e) of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the Loan(s)
(as well as any Note(s) evidencing such Loan(s)) in respect of which it is
providing this certificate, (ii) its direct or indirect partners/members are the
sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such
Loan(s)), (iii) with respect to the extension of credit pursuant to the Credit
Agreement or any other Loan Document, neither the undersigned nor any of its
direct or indirect partners/members is a bank extending credit pursuant to a
loan agreement entered into in the ordinary course of its trade or business
within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct
or indirect partners/members is a ten percent shareholder of the Lead Borrower
or any other Borrower within the meaning of Section 871(h)(3)(B) of the Code and
(v) none of its direct or indirect partners/members is a controlled foreign
corporation related to the Lead Borrower or any other Borrower as described in
Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Agent, the Lead Borrower and any other
relevant Borrower with IRS Form W-8IMY accompanied by one of the following forms
from each of its partners/members that is claiming the portfolio interest
exemption: (i) an IRS Form W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an
IRS Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is
claiming the portfolio interest exemption. By executing this certificate, the
undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform the Lead Borrower, any other
relevant Borrower and the Agent, and (2) the undersigned shall have at all times
furnished the Lead Borrower, any other relevant Borrower and the Agent with a
properly completed and currently effective certificate in either the calendar
year in which each payment is to be made to the undersigned, or in either of the
two calendar years preceding such payments.
[NAME OF LENDER]
By: _______________________    
Name: ________________________
Title: ________________________
Date: ________ __, 20[ ]

(v)