Exhibit 10.1

 

EXECUTION VERSION

 

 

 

 

Senior Secured Super Priority

 

Debtor-In-Possession Delayed Draw Term Loan Agreement

 

dated as of July 10, 2020,

 

among

 

TUESDAY MORNING CORPORATION,
as Holdings,

 

TUESDAY MORNING, INC.,
as Borrower,

 

THE GUARANTORS PARTY HERETO,

 

THE LENDERS PARTY HERETO,

 

and

 

FRANCHISE GROUP, INC.,
as Administrative Agent

 

 

 

 

 

 

TABLE OF CONTENTS

 

ARTICLE I        Definitions   2         Section 1.01     Defined Terms   2 
Section 1.02     Terms Generally   25  Section 1.03     Accounting Terms   26 
Section 1.04     Rounding   26  Section 1.05     Timing of Payment or
Performance   26  Section 1.06     Classification   26 
Section 1.07     References to Laws   27  Section 1.08     Interest Rates; LIBOR
Notification   27         ARTICLE II       The Commitments and Borrowings   27 
       Section 2.01     The Loans   27  Section 2.02     Loans and Borrowings 
 28  Section 2.03     Requests for Borrowings and Notices   28 
Section 2.04     [Reserved]   29  Section 2.05     Funding of Borrowings   29 
Section 2.06     Reserved   29  Section 2.07     Repayment of Loans; Termination
of Commitments   29  Section 2.08     Evidence of Debt   31 
Section 2.09     Fees   31  Section 2.10     Interest   31 
Section 2.11     Alternate Rate of Interest   32  Section 2.12     Extension
Option   32  Section 2.13     [Reserved]   33  Section 2.14     Taxes   33 
Section 2.15     Payments Generally; Pro Rata Treatment; Sharing of Set-offs 
 36  Section 2.16     Mitigation Obligations; Replacement of Lenders   38 
Section 2.17     Illegality   39  Section 2.18     Defaulting Lenders   39    
    ARTICLE III      Representations and Warranties   41        
Section 3.01     Organization; Powers   41  Section 3.02     Authorization   41 
Section 3.03     Enforceability   41  Section 3.04     Governmental Approvals 
 42  Section 3.05     Financial Condition   42  Section 3.06     No Material
Adverse Effect   42  Section 3.07     Properties   42 
Section 3.08     Capitalization and Subsidiaries   42 
Section 3.09     Litigation; Compliance with Laws   43 
Section 3.10     Investment Company Act   43 

 

i 

 

 

Section 3.11     Use of Proceeds   43  Section 3.12     Federal Reserve
Regulations   43  Section 3.13     Tax   43  Section 3.14     Disclosure   44 
Section 3.15     Employee Benefit Plans   44  Section 3.16     Environmental
Matters   45  Section 3.17     Security Documents   45 
Section 3.18     Affiliate Transactions   45  Section 3.19     Labor Matters 
 45  Section 3.20     Insurance   46  Section 3.21     USA PATRIOT Act and OFAC 
 47  Section 3.22     EEA Financial Institution. No Loan Party is an EEA
Financial Institution   47  Section 3.23     Plan Assets   47 
Section 3.24     Accounts   47  Section 3.25     Approved Budget   47 
Section 3.26     Material Agreements   47  Section 3.27     Chapter 11 Cases 
 47         ARTICLE IV     Conditions of Lending   47        
Section 4.01     Closing Date   47  Section 4.02     Conditions Precedent to
Delayed Draw Term Loans   51         ARTICLE V       Affirmative Covenants   52 
       Section 5.01     Existence; Conduct of Business   52 
Section 5.02     Insurance   53  Section 5.03     Taxes   53 
Section 5.04     Financial Statements, Reports and Other Information   53 
Section 5.05     Notices of Material Events   56  Section 5.06     Compliance
with Laws   57  Section 5.07     Maintaining Records; Access to Properties and
Inspections   57  Section 5.08     Compliance with Environmental Laws   58 
Section 5.09     Further Assurances; Mortgages   58  Section 5.10     Fiscal
Year; Accounting   59  Section 5.11     [Reserved]   59 
Section 5.12     Collateral Monitoring and Reporting   59  Section 5.13     Use
of Proceeds   59  Section 5.14     Approved Budget   59 
Section 5.15     [Reserved]   60  Section 5.16     Material Agreements   60 
Section 5.17     Status Calls   60  Section 5.18     Administrative Agent
Professionals   60  Section 5.19     [Reserved]   60 
Section 5.20     Debtor-In-Possession Obligations   61  Section 5.21     Payment
of Obligations   61 

 

ii 

 

 

Section 5.22     [Reserved]   61  Section 5.23     Post-Closing Obligations 
 61         ARTICLE VI      Negative Covenants   61        
Section 6.01     Indebtedness   61  Section 6.02     Liens   63 
Section 6.03     [Reserved]   66  Section 6.04     Investments, Loans and
Advances   66  Section 6.05     Mergers, Consolidations and Dispositions   67 
Section 6.06     Dividends and Distributions   69  Section 6.07     Transactions
with Affiliates   69  Section 6.08     Business of Holdings, the Borrower and
the Subsidiaries   69  Section 6.09     Limitation on Modification of
Indebtedness; Modification of Certificate of Incorporation, By-Laws and Certain
   Other Agreements; etc   70  Section 6.10     [Reserved]   71 
Section 6.11     Use of Proceeds   71  Section 6.12     [Reserved]   71 
Section 6.13     Prepayments of Other Debt   71  Section 6.14     [Reserved] 
 71  Section 6.15     Insolvency Proceeding Claims   71 
Section 6.16     Bankruptcy Actions   71  Section 6.17     Subrogation   72 
Section 6.18     [Reserved]   72         ARTICLE VII     Events of Default   72 
       Section 7.01     Events of Default   72  Section 7.02     Allocation 
 79         ARTICLE VIII    The Administrative Agent   79        
Section 8.01     Appointment, Authority and Duties of the Administrative Agent 
 79  Section 8.02     Agreements Regarding Collateral   81 
Section 8.03     Reliance By the Administrative Agent   81 
Section 8.04     Action Upon Default   81  Section 8.05     Payments Received by
Defaulting Lender   81  Section 8.06     Limitation on Responsibilities of the
Administrative Agent   81  Section 8.07     Successor Administrative Agent   82 
Section 8.08     Due Diligence and Non-Reliance   82 
Section 8.09     Remittance of Payments and Collections   83 
Section 8.10     The Administrative Agent in its Individual Capacity   83 
Section 8.11     Administrative Agent Titles   84  Section 8.12     [Reserved] 
 84  Section 8.13     Survival   84  Section 8.14     Withholding Tax   84 

 

iii 

 

 

Section 8.15   Indemnification   85  Section 8.16   Certain ERISA Matters   85 
Section 8.17   Flood Laws   86         ARTICLE IX      Miscellaneous   86    
    Section 9.01     Notices   86  Section 9.02     Survival of Agreement   87 
Section 9.03     Binding Effect   88  Section 9.04     Successors and Assigns 
 88  Section 9.05     Expenses; Indemnity   92  Section 9.06     Right of
Set-off   94  Section 9.07     Applicable Law   94  Section 9.08     Waivers;
Amendment   94  Section 9.09     Interest Rate Limitation   96 
Section 9.10     Entire Agreement   97  Section 9.11     WAIVER OF JURY TRIAL 
 97  Section 9.12     Severability   97  Section 9.13     Counterparts   97 
Section 9.14     Headings   98  Section 9.15     Jurisdiction; Consent to
Service of Process   98  Section 9.16     Confidentiality   99 
Section 9.17     [Reserved]   99  Section 9.18     USA PATRIOT Act   99 
Section 9.19     Marshalling; Payments Set Aside   99 
Section 9.20     Obligations Several; Independent Nature of Lenders’ Rights 
 100  Section 9.21     Electronic Execution of Assignments   100 
Section 9.22     Acknowledgements   100  Section 9.23     Lender Action   101 
Section 9.24     Judgment Currency   101  Section 9.25     Acknowledgement and
Consent to Bail-In of EEA Financial Institutions   102  Section 9.26     Force
Majeure   102  Section 9.27     Conforming Amendments   102        
ARTICLE X       [Reserved].   103         ARTICLE XI     Guaranty   103        
Section 11.01     Guaranty; Limitation of Liability   103 
Section 11.02     Guaranty Absolute   103  Section 11.03     Waivers and
Acknowledgments   104  Section 11.04     Subrogation   105 
Section 11.05     Continuing Guaranty; Assignments   106 

 

iv

 

 

EXHIBITS; SCHEDULES; ANNEX     Exhibit A Form of Assignment and Acceptance
Exhibit B [Reserved] Exhibit C Form of Borrowing Request Exhibit D [Reserved]
Exhibit E Joinder Agreement Exhibit F Form of Compliance Certificate Exhibit G-1
Form of U.S. Tax Compliance Certificate (Foreign Lenders that are not
Partnerships for U.S. Federal Income Tax Purposes) Exhibit G-2 Form of U.S. Tax
Compliance Certificate (Foreign Participants that are not Partnerships for U.S.
Federal Income Tax Purposes) Exhibit G-3 Form of U.S. Tax Compliance Certificate
(Foreign Participants that are Partnerships for U.S. Federal Income Tax
Purposes) Exhibit G-4 Form of U.S. Tax Compliance Certificate (Foreign Lenders
that are Partnerships for U.S. Federal Income Tax Purposes) Schedule 2.01
Commitments and Pro Rata Shares Schedule 3.07 Properties Schedule 3.08
Capitalization and Subsidiaries Schedule 3.20 Insurance Schedule 3.26 Material
Agreements Schedule 4.01(r) Mortgaged Properties Schedule 5.12 Deposit,
Securities, Commodities and Excluded Accounts Schedule 5.23 Post-Closing
Obligations Schedule 6.01 Indebtedness Schedule 6.02 Liens Schedule 6.04
Investments Schedule 6.07 Transactions with Affiliates     ANNEX A Approved
Budget

 

v

 

 

This Senior Secured Super Priority Debtor-In-Possession Delayed Draw Term Loan
Agreement dated as of July 10, 2020 (this “Agreement”), among TUESDAY MORNING,
INC., a Texas corporation (the “Borrower”), each of the Subsidiary Guarantors
(as hereinafter defined), TUESDAY MORNING CORPORATION, a Delaware corporation
(“Parent”), TMI HOLDINGS, INC., a Delaware corporation (“Intermediate
Holdings”), the LENDERS party hereto from time to time, FRANCHISE GROUP, INC.,
as administrative agent (in such capacity, the “Administrative Agent”).

 

RECITALS

 

WHEREAS, the Borrower and the Guarantors each commenced a voluntary case (the
“Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code (the
“Bankruptcy Code”), and the Chapter 11 Cases are being jointly administered in
the United States Bankruptcy Court for the Northern District of Texas, Dallas
Division (the “Court”) on May 27, 2020 (the “Petition Date”);

 

WHEREAS, from and after the Petition Date, the Borrower and the Guarantors
continue to operate their business and manage their property as debtors and
debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy
Code;

 

WHEREAS, prior to the Petition Date, certain lenders provided financing to the
Borrower pursuant to that certain Credit Agreement, dated as of August 18, 2015
by and among the Borrower, the other Loan Parties from time to time party
thereto, JPMorgan Chase Bank, N.A., as administrative agent, the lenders from
time to time party thereto (the “Pre-Petition ABL Lenders”), and the other
parties from time to time party thereto (as amended, restated, modified, waived
or supplemented through the date hereof, the “Pre-Petition ABL Credit
Agreement”);

 

WHEREAS, the Borrower has requested, and, upon the terms and conditions set
forth in this Agreement, the Lenders have agreed to make available to the
Borrower, a senior secured, super-priority delayed draw term loan facility of up
to $25,000,000 in the aggregate to fund the working capital requirements of the
Borrower and other transactions as more fully set forth in Section 5.13 herein
during the pendency of the Chapter 11 Cases;

 

WHEREAS, each Loan Party has agreed to secure all of the Obligations under the
Loan Documents by granting to the Administrative Agent, for the benefit of the
Administrative Agent and the other Secured Parties, a security interest in and
lien upon the Loan Parties’ Real Property (subject to the limitations and
priorities contained in the Loan Documents and the Final Order);

 

WHEREAS, each Loan Party’s business is a mutual and collective enterprise and
the Loan Parties believe that the loans and other financial accommodations to
the Borrower under this Agreement will enhance the aggregate borrowing power of
the Borrower and facilitate the administration of the Chapter 11 Cases and their
loan relationship with the Administrative Agent and the Lenders, all to the
mutual advantage of the Loan Parties;

 

WHEREAS, each Loan Party acknowledges that it will receive substantial direct
and indirect benefits by reason of the making of loans and other financial
accommodations to the Borrower as provided in this Agreement; and

 

1

 

 

WHEREAS, the Administrative Agent’s and the Lenders’ willingness to extend
financial accommodations to the Borrower as more fully set forth in this
Agreement and the other Loan Documents, is done solely as an accommodation to
the Loan Parties and at the Loan Parties’ request and in furtherance of the Loan
Parties’ mutual and collective enterprise.

 

NOW THEREFORE, In consideration of the mutual covenants and agreements herein
contained and of the loans, extensions of credit and commitments hereinafter
referred to, the parties hereto agree as follows:

 

ARTICLE I

 

Definitions

 

Section 1.01        Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:

 

“ABL DIP Agent” shall mean the “Administrative Agent” as defined in the ABL DIP
Credit Agreement.

 

“ABL DIP Credit Agreement” shall mean that certain Senior Secured Super Priority
Debtor-In-Possession Credit Agreement dated as of May 29, 2020 by and among the
Borrower, Holdings, the guarantors party thereto, the lenders party thereto and
JPMorgan Chase Bank, N.A., as administrative agent.

 

“ABL DIP Facility” shall mean the revolving credit commitments and the loans
made under the ABL DIP Credit Agreement.

 

“ABL Facilities” shall mean, collectively, the ABL DIP Facility and the
Pre-Petition ABL Facility.

 

“ABL DIP Lenders” shall mean, collectively, each “Lender” as defined in the ABL
DIP Credit Agreement.

 

“ABL Obligations” shall mean the “ABL Obligations” as defined in the
Intercreditor Agreement.

 

“Account” shall have the meaning as defined in the UCC, including all rights to
payment for goods sold or leased, or for services rendered.

 

“Account Debtor” shall mean a Person who is obligated under an Account, Chattel
Paper or General Intangible.

 

“Acquisition” shall mean, with respect to any Person, (a) an Investment in, or a
purchase of a Controlling interest in, the Equity Interests of any other Person
(whether by merger or consolidation of such Person with any other Person or
otherwise) or (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 (whether by merger or consolidation of such Person with any other Person
or otherwise).

 

2

 

 

“Administrative Agent” shall have the meaning assigned to such term in the
introductory paragraph of this Agreement.

 

“Administrative Questionnaire” shall mean an Administrative Questionnaire in
form and substance reasonably satisfactory to the Administrative Agent.

 

“Affected Lender” shall have the meaning assigned to such term in Section 2.17.

 

“Affiliate” shall mean, when used with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified;
provided, however, neither the Administrative Agent nor any Lender shall be
deemed to be an Affiliate of the Borrower or its Subsidiaries with respect to
transactions evidenced by any Loan Document.

 

“Agent Indemnitees” shall mean the Administrative Agent and its officers,
directors, employees, Affiliates, agents and attorneys.

 

“Agent Professionals” shall mean attorneys, accountants, appraisers, auditors,
environmental engineers or consultants, and other professionals and experts
retained by the Administrative Agent.

 

“Agreement” shall have the meaning assigned to such term in the introductory
paragraph of this Agreement, as the same may from time to time be amended,
modified, supplemented or restated.

 

“Agreement Currency” has the meaning assigned to such term in Section 9.24.

 

“Anti-Corruption Laws” shall mean all laws, rules, and regulations of any
jurisdiction applicable to the Borrower or its Subsidiaries from time to time
concerning or relating to bribery, corruption, money laundering, any predicate
crime to money laundering or any financial record keeping an reporting
requirements related thereto.

 

“Applicable Law” shall mean all applicable laws, rules, regulations and binding
governmental requirements having the force and effect of law applicable to the
Person in question or any of its property or assets, including all applicable
statutory law, common law and equitable principles, and all provisions of
constitutions, treaties, statutes, rules, regulations, orders and decrees of
Governmental Authorities.

 

“Applicable Margin” shall mean 5.00% per annum.

 

“Approved Budget” shall mean the budget prepared by the Borrower in the form of
Annex A and initially furnished to the Administrative Agent on the Closing Date
and which is approved by, and in form and substance satisfactory to, the ABL DIP
Agent in its sole discretion, as the same may be updated, modified or
supplemented from time to time as provided in the ABL DIP Credit Agreement.

 

“Assignment and Acceptance” shall mean an assignment and acceptance entered into
by a Lender and an assignee, and accepted by the Administrative Agent and the
Borrower (if the Borrower’s consent is required by this Agreement), in the form
of Exhibit A or such other form as shall be approved by the Administrative
Agent.

 

3

 

 

“Automatic Stay” shall mean the automatic stay provided under Section 362 of the
Bankruptcy Code.

 

“Availability” shall have the meaning assigned to such term in the ABL DIP
Credit Agreement.

 

“Bail-In Action” shall mean 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” shall mean, 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.

 

“Bankruptcy Code” has the meaning set forth in the recitals to this Agreement

 

“Bankruptcy Rules” shall mean the Federal Rules of Bankruptcy Procedure, as the
same may from time to time be in effect and applicable to the Chapter 11 Cases.

 

“Benefit Plan” shall mean any of (a) an “employee benefit plan” (as defined in
ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and
subject to Section 4975 of the Code or (c) any Person whose assets include (for
purposes of the Plan Asset Regulations or otherwise for purposes of Title I of
ERISA or Section 4975 of the Code) the assets of any such “employee benefit
plan” or “plan”.

 

“Beneficial Ownership Certification” shall mean a certification regarding
beneficial ownership as required by the Beneficial Ownership Regulation.

 

“Beneficial Ownership Regulation” shall mean 31 C.F.R. § 1010.230.

 

“Board” shall mean the Board of Governors of the Federal Reserve System of the
United States of America, or any successor thereto.

 

“Borrower” shall have the meaning assigned to such term in the introductory
paragraph of this Agreement.

 

“Borrower Financial Advisor” shall mean AlixPartners, LLP.

 

“Borrower Sale Advisor” shall mean, collectively, Miller Buckfire & Co., LLC and
its Affiliates.

 

“Borrowing” shall mean a group of Loans.

 

“Borrowing Base” shall mean the “Borrowing Base”, as such term is defined in the
ABL DIP Credit Agreement as in effect as of the date hereof.

 

“Borrowing Request” shall mean a written request by the Borrower in accordance
with the terms of Section 2.03 and, if written, substantially in the form of
Exhibit C.

 

4

 

 

“Budget Compliance Report” shall have the meaning assigned to such term in
Section 5.14(d).

 

“Business Day” shall mean any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law or
other governmental action to remain closed; provided that when used in
connection with a Loan, the term “Business Day” shall also exclude any day on
which banks are not open for dealings in deposits in Dollars in the London
interbank market.

 

“Capital Lease Obligations” shall mean the obligations of any 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 capital leases or financing
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.

 

“Case Milestones” shall have the meaning assigned to the term “Case Milestone”
under (and as defined in) the ABL DIP Credit Agreement.

 

“Casualty Event” shall mean any loss, casualty or other insured damage to, or
any nationalization, taking under power of eminent domain or by condemnation or
similar proceeding of, any Property of the Borrower or any of its Subsidiaries.

 

“Change in Law” shall mean (a) the adoption of any law, rule or regulation after
the Closing Date, (b) any change in law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
Closing Date or (c) compliance by any Lender (or, for purposes of
Section 2.12(b), by any Lending Office of such Lender or by such Lender’s
holding company, if any) with any written request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the Closing Date; provided that, notwithstanding anything herein to
the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act
and all requests, rules, guidelines, requirements or directives thereunder or
issued in connection therewith or in the implementation thereof, and (y) all
requests, rules, guidelines, requirements 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, issued or
implemented.

 

“Chapter 11 Cases” shall have the meaning assigned to such term in the recitals
to this Agreement.

 

“Charges” shall have the meaning assigned to such term in Section 9.09.

 

“Chattel Paper” shall have the meaning set forth in Article 9 of the UCC.

 

5

 

 

“Claims” shall mean all claims, liabilities, obligations, losses, damages,
penalties, judgments, proceedings, interests, costs and expenses of any kind
(including remedial response costs, reasonable attorneys’ fees) at any time
(including after Full Payment of the Obligations, resignation or replacement of
the Administrative Agent or replacement of any Lender) incurred by any
Indemnitee or asserted against any Indemnitee by any Loan Party or other Person,
in any way relating to (a) any Loans, Loan Documents, or the use thereof or
transactions relating thereto, (b) any action taken or omitted to be taken by an
Indemnitee in connection with any Loan Documents, (c) the existence or
perfection of any Liens, or realization upon any Collateral, (d) exercise of any
rights or remedies under any Loan Documents or Applicable Law, or (e) failure by
any Loan Party to perform or observe any terms of any Loan Document, in each
case including all costs and expenses relating to any investigation, litigation,
arbitration or other proceeding (including an Insolvency Proceeding or appellate
proceedings), whether or not the applicable Indemnitee is a party thereto.

 

“Closing Date” shall mean the date on which the conditions specified in Section
4.01 are satisfied.

 

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

 

“Collateral” shall mean owned land and improvements at the Loan Parties’
corporate headquarters and warehouse/distribution complex, each in Dallas
County, Texas at the following addresses: (i) 14601 Inwood Rd, Addison, Texas
75001; (ii) 14603 Inwood Rd, Addison, Texas 75001; (iii) 14621 Inwood Rd,
Addison, Texas 75001; (iv) 14639-14647 Inwood Rd, Addison, Texas 75001; (v) 4404
S. Beltwood Parkway, Farmers Branch, Texas 75244; (vi) 14303 Inwood Road,
Farmers Branch, Texas, 75244; and (vii) 6250 LBJ Freeway, Dallas, Texas, 75240,
and all real estate improvements thereto and all leases, rents, permits,
records, and proceeds thereof. For the avoidance of doubt, each Mortgaged
Property constitutes Collateral.

 

“Commitment” shall mean for any Lender, the commitment of such Lender to make
Loans hereunder, as such commitment may be reduced from time to time pursuant to
(a) Section 2.07 and (b) assignments by or to such Lender pursuant to Section
9.04. The initial amount of each Lender’s Commitment is set forth on Schedule
2.01, or in the Assignment and Acceptance pursuant to which such Lender shall
have assumed its Commitment, as applicable. “Commitments” shall mean the
aggregate amount of such commitments of all Lenders, which shall be $25,000,000
as of the Closing Date.

 

“Commodities Accounts” shall have the meaning assigned thereto in Article 9 of
the UCC.

 

“Compliance Certificate” shall mean a certificate of a Financial Officer in
substantially the form of Exhibit F.

 

“Conforming Amendment” has the meaning specified in Section 9.27(a).

 

“Control” shall mean 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 ownership of voting securities, by contract or otherwise, and
“Controlling” and “Controlled” shall have meanings correlative thereto.

 

6

 

 

“Copyrights” shall mean, with respect to any Person, all of such Person’s right,
title, and interest in and to the following: (a) all copyrights, rights and
interests in copyrights, works protectable by copyright, copyright
registrations, and copyright applications; (b) all renewals of any of the
foregoing; (c) all income, royalties, damages, and payments now or hereafter due
and/or payable under any of the foregoing, including, without limitation,
damages or payments for past or future infringements for any of the foregoing;
(d) the right to sue for past, present, and future infringements of any of the
foregoing; and (e) all rights corresponding to any of the foregoing throughout
the world.

 

“Court” has the meaning set forth in the recitals to this Agreement.

 

“Default” shall mean any event or condition that upon notice, lapse of time or
both would constitute an Event of Default.

 

“Default Rate” shall have the meaning assigned to such term in Section 2.10(b).

 

“Defaulting Lender” shall mean any Lender that (a) has failed to perform any
funding obligations hereunder, and such failure is not cured within two
(2) Business Days of the date of the funding obligation; (b) has notified the
Administrative Agent or the Borrower that such Lender does not intend to comply
with its funding obligations hereunder or generally under other agreements to
which it commits to extend credit or has made a public statement to that effect;
(c) has failed, within three (3) Business Days following written request by the
Administrative Agent or the Borrower, to confirm in a manner reasonably
satisfactory to the Administrative Agent and the Borrower that such Lender will
comply with its funding obligations hereunder (provided that such Lender shall
cease to be a Defaulting Lender pursuant to this clause (c) upon receipt by the
Administrative Agent of such confirmation); (d) has, or has a direct or indirect
parent company that has, become the subject of an Insolvency Proceeding or taken
any action in furtherance thereof, including, in the case of any Lender, the
Federal Deposit Insurance Corporation or any other state or federal regulatory
authority acting in such capacity; provided, however, that a Lender shall not be
a Defaulting Lender solely by virtue of a Governmental Authority’s ownership of
any equity interest in such Lender or parent company so long as such ownership
interest does not result in or provide such Lender with immunity from the
jurisdiction of the courts within the United States or from the enforcement of
judgments or writs of attachment on its assets or permit such Lender (or such
Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts
or agreements made with such Lender or (e) has become the subject of a Bail-in
Action.

 

“Delayed Draw Term Loan” shall have the meaning assigned to such term in Section
2.01(c).

 

“Delayed Draw Term Loan Conditions” shall have the meaning assigned to such term
in Section 2.01(c).

 

“Deposit Account” shall have the meaning assigned thereto in Article 9 of the
UCC.

 

“Documents” shall have the meaning set forth in Article 9 of the UCC.

 

“Disposition” shall mean any sale, transfer, lease or other disposition (whether
effected pursuant to a Division or otherwise) of assets. “Dispose” shall have a
meaning correlative thereto.

 

7

 

 

“Dividing Person” has the meaning assigned to it in the definition of
“Division”.

 

“Division” shall mean the division of the assets, liabilities and/or obligations
of a Person (the “Dividing Person”) among two or more Persons (whether pursuant
to a “plan of division” or similar arrangement), which may or may not include
the Dividing Person and pursuant to which the Dividing Person may or may not
survive.

 

“Division Successor” shall mean any Person that, upon the consummation of a
Division of a Dividing Person, holds all or any portion of the assets,
liabilities and/or obligations previously held by such Dividing Person
immediately prior to the consummation of such Division. A Dividing Person which
retains any of its assets, liabilities and/or obligations after a Division shall
be deemed a Division Successor upon the occurrence of such Division.

 

“Dollars” or “$” shall mean lawful money of the United States of America.

 

“EEA Financial Institution” shall mean (a) any institution 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
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” shall mean any of the member states of the European Union,
Iceland, Liechtenstein and Norway.

 

“EEA Resolution Authority” shall mean 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.

 

“Eligible Assignee” shall mean (i) any Lender, any Affiliate of any Lender and
any Related Fund (any two or more Related Funds being treated as a single
Eligible Assignee for all purposes hereof) and (ii) any commercial bank,
insurance company, investment or mutual fund or other entity that is an
“accredited investor” (as defined in Regulation D under the Securities Act) and
which extends credit or buys loans.

 

“Enforcement Action” shall mean any action to enforce any Obligations or Loan
Documents or to exercise any rights or remedies relating to any Collateral
(whether by judicial action, self-help, notification of Account Debtors,
exercise of setoff or recoupment, exercise of any right to vote or act in a Loan
Party’s Insolvency Proceeding, or otherwise), in each case solely to the extent
permitted by the Loan Documents.

 

“environment” shall mean ambient and indoor air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, natural resources such as flora and fauna, the workplace or
as otherwise defined in any Environmental Law.

 

8

 

 

“Environmental Laws” shall mean all laws (including common law), rules,
regulations, codes, ordinances, orders, decrees or judgments, promulgated or
entered into by or with any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the generation,
management, Release or threatened Release of, or actual or alleged exposure to,
any Hazardous Materials or to occupational health and safety (to the extent
relating to the environment or Hazardous Materials).

 

“Equity Interests” of any Person shall mean any and all shares, interests,
participations or other equivalents of or interests in (however designated)
equity of such Person, including any preferred stock, any limited or general
partnership interest and any limited liability company membership interest and
any and all warrants, rights or options to purchase or other rights to acquire
any of the foregoing, but excluding for the avoidance of doubt any Indebtedness
convertible into or exchangeable for any of the foregoing (until so converted or
exchanged).

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute and the rules and regulations promulgated
thereunder.

 

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated)
that, together with any Loan Party, is treated as a single employer under
Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 (m) or (o) of the Code.

 

“ERISA Event” shall mean (a) any Reportable Event; (b) the existence with
respect to any Loan Party, any ERISA Affiliate or any Plan of a non-exempt
Prohibited Transaction; (c) the failure by any Plan to satisfy the minimum
funding standards (within the meaning of Section 412 of the Code or Section 302
of ERISA), applicable to such Plan, whether or not waived; (d) the filing
pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan, the failure to make by its due date a required installment under
Section 430(j) of the Code with respect to any Plan or the failure to make any
required contribution to a Multiemployer Plan; (e) the receipt by any Loan Party
or any ERISA Affiliate from the PBGC or a plan administrator of any notice
relating to an intention to terminate any Plan or to appoint a trustee to
administer any Plan under Section 4042 of ERISA; (f) the receipt by any Loan
Party or any ERISA Affiliate of any notice, or the receipt by any Multiemployer
Plan from any Loan Party or any ERISA Affiliate of any notice, concerning the
imposition of Withdrawal Liability or a determination that a Multiemployer Plan
is, or is expected to be, Insolvent, in Reorganization, or terminated (within
the meaning of Section 4041A of ERISA); or (g) the failure by any Loan Party or
any ERISA Affiliate to pay when due (after expiration of any applicable grace
period) any installment payment with respect to Withdrawal Liability under
Section 4201 of ERISA.

 

“EU Bail-In Legislation Schedule” shall mean 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” shall have the meaning assigned to such term in Section 7.01.

 

“Excluded Accounts” shall mean any accounts used specifically, solely and
exclusively as payroll, trust, tax withholding and employee benefit accounts, or
accounts located outside of the U.S., in each case, maintained by Holdings or
any of its Subsidiaries in the ordinary course of business.

 

9

 

 

“Excluded Taxes” shall mean, with respect to the Administrative Agent, any
Lender, or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income taxes imposed on (or measured
by) its net income (or franchise taxes imposed in lieu of net income taxes) by
any jurisdiction under the laws of which such recipient is organized or in which
its principal office is located or, in the case of any Lender, in which its
applicable Lending Office is located or any other jurisdiction as a result of
such recipient engaging in a trade or business in such jurisdiction for tax
purposes (other than a trade or business arising from such recipient having
executed, delivered, become a party to, performed its obligations under,
received payments under, received or perfected a security interest under,
engaged in any other transaction pursuant to or enforced any Loan Document, or
sold or assigned an interest in any Loan or Loan Document), (b) any branch
profits tax or any similar tax that is imposed by any jurisdiction described in
clause (a) above, (c) in the case of a Lender making a Loan to the Borrower, any
U.S. federal withholding tax that (x) is in effect under Applicable Law and
would apply to amounts payable hereunder to such Lender at the time such Lender
becomes a party to such Loan to the Borrower (or designates a new Lending
Office) except to the extent that such Lender (or its assignor, if any) was
entitled, at the time of designation of a new Lending Office (or assignment), to
receive additional amounts from a Loan Party with respect to any U.S. federal
withholding tax pursuant to Section 2.14(a) or Section 2.14(c) or (y) is
attributable to such Lender’s failure to comply with Section 2.14(e) with
respect to such Loan unless such failure to comply with Section 2.14(e) is a
result of a change in law after the date such Lender becomes a party to such
Loan to the Borrower (or designates a new Lending Office), (d) any interest,
additions to taxes or penalties with respect to the foregoing and (e) any
withholding taxes imposed pursuant to FATCA.

 

“Extended Maturity Date” shall have the meaning ascribed to it in Section 2.12.

 

“Extension Fee” shall mean an amount equal to sixty five hundredths of one
percent (0.65%) of the Commitments.

 

“Extension Option” shall have the meaning as set forth in Section 2.12.

 

“FATCA” shall mean 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, any agreements entered
into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory
legislation, rules or practices adopted pursuant to any intergovernmental
agreement, treaty or convention among Governmental Authorities and implementing
such Sections of the Code.

 

“Federal Funds Effective Rate” shall mean, for any day, the rate calculated by
the NYFRB based on such day’s federal funds transactions by depositary
institutions, as determined in such manner as the NYFRB shall set forth on its
public website from time to time, and published on the next succeeding Business
Day by the NYFRB as the effective federal funds rate; provided that if the
Federal Funds Effective Rate as so determined would be less than zero, such rate
shall be deemed to be zero for the purposes of this Agreement.

 

10

 

 

 

“Fee Letter” shall mean that certain Fee Letter dated the Closing Date by and
among the Borrower and the Administrative Agent.

 

“Final Order” shall mean an order of the Court in the Chapter 11 Cases, in form
and substance satisfactory to the Administrative Agent in its sole discretion,
authorizing and approving on a final basis, among other things, the borrowings
by the Borrower under this Agreement.

 

“Financial Officer” of any Person shall mean the Chief Financial Officer,
principal accounting officer, Treasurer, Assistant Treasurer or Controller of
such Person.

 

“Flood Laws” has the meaning given thereto in Section 8.17.

 

“Foreign Benefit Arrangement” shall mean any employee benefit arrangement
mandated by non-U.S. law that is maintained or contributed to by any Loan Party
or any ERISA Affiliate.

 

“Foreign Lender” shall mean any Lender that is not a U.S. Person.

 

“Foreign Plan” shall mean each employee benefit plan (within the meaning of
Section 3(3) of ERISA, whether or not subject to ERISA) that is not subject to
U.S. law and is maintained or contributed to by any Loan Party or any ERISA
Affiliate.

 

“Foreign Plan Event” shall mean, with respect to any Foreign Benefit Arrangement
or Foreign Plan, (a) the failure to make or, if applicable, accrue in accordance
with normal accounting practices, any employer or employee contributions
required by Applicable Law or by the terms of such Foreign Benefit Arrangement
or Foreign Plan; (b) the failure to register or loss of good standing with
applicable regulatory authorities of any such Foreign Benefit Arrangement or
Foreign Plan required to be registered; or (c) the failure of any Foreign
Benefit Arrangement or Foreign Plan to comply with any material provisions of
Applicable Law and regulations or with the material terms of such Foreign
Benefit Arrangement or Foreign Plan.

 

“Foreign Subsidiary” shall mean any Subsidiary that is incorporated or organized
under the laws of any jurisdiction other than the United States of America, any
State thereof or the District of Columbia.

 

“Full Payment” shall mean with respect to any of the Obligations, the full cash
payment thereof (other than obligations for taxes, indemnification, charges and
other inchoate or contingent or reimbursable liabilities for which no claim or
demand for payment has been made or, in the case of indemnification, no notice
has been given (or, in each case, reasonably satisfactory arrangements have
otherwise been made)), including any interest, fees and other charges accruing
during an Insolvency Proceeding (whether or not allowed in such proceeding). No
Loans shall be deemed to have been paid in full until all Commitments related to
such Loans have expired or been terminated.

 

“GAAP” shall mean generally accepted accounting principles in effect from time
to time in the United States.

 

“General Intangibles” shall mean all “general intangibles” (as such term is
defined in the UCC) of the Loan Parties.

 

11

 

 

“Governmental Authority” shall mean any federal, state, local or foreign court
or governmental agency, authority, instrumentality or regulatory or legislative
body or any entity or officer exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to any government or any
court, in each case whether associated with a state of the United States, the
United States, or a foreign entity or government.

 

“Guarantee” of or by any Person (the “guarantor”) shall mean any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided that the term “Guarantee” shall not include endorsements
for collection or deposit in the ordinary course of business.

 

“Guaranteed Obligations” has the meaning assigned to such term in Section
11.01(a).

 

“guarantor” shall have the meaning assigned to such term in the definition of
the term “Guarantee.”

 

“Guarantors” shall mean, collectively, Parent, Intermediate Holdings, the
Subsidiary Guarantors and any other Loan Party (including the Borrower with
respect to any Obligations of another Loan Party).

 

“Hazardous Materials” shall mean all pollutants, contaminants, wastes,
chemicals, materials, substances and constituents of any nature which are
subject to regulation by any Governmental Authority or which would reasonably be
likely to give rise to liability under any Environmental Law, including, without
limitation, explosive or radioactive substances or petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated
biphenyls or radon gas.

 

“Holdings” shall mean a collective reference to Parent and Intermediate
Holdings, or, if Intermediate Holdings ceases to exist, shall mean Parent.

 

“IBA” shall have the meaning assigned to such term in Section 1.08.

 

12

 

 

“Indebtedness” of any Person shall mean, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments to the
extent the same would appear as a liability on a balance sheet prepared in
accordance with GAAP, (c) all obligations of such Person under conditional sale
or other title retention agreements relating to property or assets purchased by
such Person, (d) all obligations of such Person issued or assumed as the
deferred purchase price of property or services (other than current intercompany
liabilities (but not any refinancings, extensions, renewals or replacements
thereof) incurred in the ordinary course of business and maturing within three
hundred sixty-five (365) days after the incurrence thereof), to the extent that
the same would be required to be shown as a long term liability on a balance
sheet prepared in accordance with GAAP, (e) all Guarantees by such Person of
Indebtedness of others, (f) all Capital Lease Obligations of such Person,
(g)  the principal component of all obligations, contingent or otherwise, of
such Person as an account party in respect of letters of credit and (h) the
principal component of all obligations of such Person in respect of bankers’
acceptances. The Indebtedness of any Person shall include the Indebtedness of
any partnership in which such Person is a general partner, other than to the
extent that the instrument or agreement evidencing such Indebtedness expressly
limits the liability of such Person in respect thereof. The Indebtedness of the
Borrower and the Subsidiaries shall exclude (i) accrued expenses and accounts
and trade payables, (ii) liabilities under vendor agreements to the extent such
indebtedness may be satisfied through non-cash means such as purchase volume
earnings credits and (iii) reserves for deferred income taxes.

 

“Indemnified Taxes” shall mean all Taxes other than Excluded Taxes and Other
Taxes.

 

“Indemnitee” shall have the meaning assigned to such term in Section 9.05(b).

 

“Initial Maturity Date” shall mean April 10, 2021.

 

“Insolvency Proceeding” shall mean any case or proceeding commenced by or
against a Person under any state, federal, provincial, territorial or foreign
law for, or any agreement of such Person to, (a) the entry of an order for
relief under the Bankruptcy Code, or any other insolvency, bankruptcy, debtor
relief or debt adjustment law; (b) the appointment of a receiver, interim
receiver, monitor, trustee, liquidator, administrator, conservator, custodian or
other similar Person for such Person or any part of its Property, including, in
the case of any Lender, the Federal Deposit Insurance Corporation or any other
state or federal regulatory authority acting in such capacity; or (c) an
assignment for the benefit of creditors.

 

“Insolvent” with respect to any Multiemployer Plan, shall mean the condition
that such plan is insolvent within the meaning of Section 4245 of ERISA.

 

“Insurance” shall mean all insurance policies covering any or all of the
Collateral (regardless of whether the Administrative Agent is the loss payee
thereof).

 

“Intellectual Property” shall mean the collective reference to all rights,
priorities and privileges relating to intellectual property arising under United
States laws, including the Copyrights, the Patents, the Trademarks, and the
Licenses.

 

“Intercreditor Agreement” shall mean that certain Intercreditor Agreement, dated
as of the date hereof and effective as of the date of entry of the Final Order,
by and between the Administrative Agent, as the term administrative agent and
JPMorgan Chase Bank, N.A., as the ABL administrative agent and acknowledged by
the Loan Parties.

 

“Intermediate Holdings” shall have the meaning assigned to such term in the
introductory paragraph of this Agreement.

 

“Investment” shall have the meaning assigned to such term in Section 6.04.

 

13

 

 

“IRS” shall mean the United States Internal Revenue Service.

 

“Joinder Agreement” shall mean a Joinder Agreement in substantially the form of
Exhibit E.

 

“Judgment Currency” has the meaning assigned to such term in Section 9.24.

 

“Lender” shall mean each financial institution listed on Schedule 2.01 (other
than any such Person that has ceased to be a party hereto pursuant to an
Assignment and Acceptance in accordance with Section 9.04), as well as any
Person that becomes a “Lender” hereunder in accordance with Section 9.04.

 

“Lender Party” shall mean the Administrative Agent or any other Lender.

 

“Lending Office” shall mean, as to any Lender, the applicable branch, office or
Affiliate of such Lender designated by such Lender to make Loans.

 

“LIBO Rate” shall mean the greater of (a) one percent (1.00%), and (b) the
London interbank offered rate per annum for three-month deposits of Dollars
administered by ICE Benchmark Administration (or any other Person that takes
over the administration of such rate for Dollars for a three-month period as
displayed on such day and time on pages LIBOR01 or LIBOR02 of the Reuters screen
that displays such rate) at approximately 11:00 a.m., London time, two
(2) Business Days prior to the first day of such month or, in the event such
rate does not appear on a Reuters page or screen, on any successor or substitute
page on such screen that displays such rate, or on the appropriate page of such
other information service that publishes such rate from time to time as selected
by the Administrative Agent in its reasonable discretion. The LIBO Rate shall be
determined on a monthly basis.

 

“Licenses” shall mean, with respect to any Person, all of such Person’s right,
title, and interest in and to (a) any and all licensing agreements or similar
arrangements in and to its Patents, Copyrights, or Trademarks, (b) all income,
royalties, damages, claims, and payments now or hereafter due or payable under
and with respect thereto, including, without limitation, damages and payments
for past and future breaches thereof, and (c) all rights to sue for past,
present, and future breaches thereof.

 

“Lien” shall mean, with respect to any asset, (a) any mortgage, deed of trust,
lien, hypothecation, pledge, encumbrance, charge or security interest in or on
such asset and (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset.

 

“Loan Documents” shall mean, collectively, this Agreement, any promissory notes
issued pursuant to this Agreement, the Security Documents, the Intercreditor
Agreement, all Approved Budgets, all Budget Compliance Reports, Compliance
Certificates, and all other written matter whether heretofore, now or hereafter
executed by or on behalf of any Loan Party, or any employee of any Loan Party,
and delivered to the Administrative Agent or any Lender in connection with this
Agreement or the transactions contemplated hereby.

 

14

 

 

“Loan Guaranty” shall mean Article XI of this Agreement.

 

“Loan Parties” shall mean, collectively, the Borrower, the Guarantors, and any
other Person who becomes a party to this Agreement pursuant to a Joinder
Agreement and their successors and assigns, and the term “Loan Party” shall mean
any one of them or all of them individually, as the context may require.

 

“Loans” shall mean the loans and advances made by the Lenders pursuant to
Section 2.01 (including, for the avoidance of doubt, each Delayed Draw Term
Loan).

 

“Local Time” shall mean Dallas time.

 

“Margin Stock” shall mean margin stock within the meaning of Regulations T, U
and X, as applicable.

 

“Material Adverse Effect” shall mean a material adverse change in, or material
adverse effect on, (a) the business, operations, Property, or financial
condition of the Loan Parties, taken as a whole, other than any change, event,
effect, or occurrence, arising individually or in the aggregate, solely from (i)
events leading up to the commencement of the Chapter 11 Cases, (ii) events that
would reasonably be expected to result from the filing or commencement of the
Chapter 11 Cases or the announcement of the filing of the Chapter 11 Cases, or
(iii) the commencement of the Chapter 11 Cases, (b) the ability of the Loan
Parties to perform their obligations under the Loan Documents, taken as a whole,
(c) the validity or enforceability of any Loan Document or (d) the rights and
remedies of the Administrative Agent and the Lenders under the Loan Documents.

 

“Material Agreement” shall mean, any contract or agreement pursuant to which
Holdings or its Subsidiaries pays, receives or incurs liabilities (or could
reasonably be expected to pay, receive or incur liabilities during the term
thereof) in excess of $5,000,000 in any twelve consecutive month period and if
breached could reasonably be expected to cause a Material Adverse Effect.

 

“Material Indebtedness” shall mean, collectively, (i) the ABL Obligations and
(ii) any Indebtedness (other than the Loans), of any one or more of Holdings and
its Subsidiaries in an aggregate principal amount exceeding $20,000,000.

 

“Maturity Date” shall mean the Initial Maturity Date, subject to extension
pursuant to the Extension Option, in which case the Maturity Date shall mean the
Extended Maturity Date (as defined in Section 2.12 hereof).

 

“Maximum Rate” shall have the meaning assigned to such term in Section 9.09.

 

“Moody’s” shall mean Moody’s Investors Service, Inc.

 

“Mortgage” shall mean any mortgage, deed of trust or other agreement which
conveys or evidences a Lien in favor of the Administrative Agent, for the
benefit of the Administrative Agent and the other Secured Parties, on the Real
Property, including any amendment, restatement, modification or supplement
thereto.

 

15

 

 

“Mortgaged Property” and “Mortgaged Properties” shall have the meaning specified
in Section 4.01(r).

 

“Multiemployer Plan” shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA to which any Loan Party or any ERISA Affiliate
(other than one considered an ERISA Affiliate only pursuant to subsection (m) or
(o) of Code Section 414) is making or accruing an obligation to make
contributions, or has within any of the preceding six (6) plan years made or
accrued an obligation to make contributions.

 

“Net Proceeds” shall mean, with respect to any event, (a) the cash proceeds
received in respect of such event including (i) any cash received in respect of
any non-cash proceeds (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or purchase
price adjustment receivable or otherwise, but excluding any interest payments),
but only as and when received, (ii) in the case of a casualty, insurance
proceeds and (iii) in the case of a condemnation or similar event, condemnation
awards and similar payments, minus (b) the sum of (i) all reasonable fees and
out-of-pocket expenses paid to third parties (other than Affiliates) in
connection with such event, (ii) in the case of Disposition of an asset
(including pursuant to a casualty or a condemnation or similar proceeding), the
amount of all payments required to be made as a result of such event to repay
Indebtedness (other than Loans) secured by such asset or otherwise subject to
mandatory prepayment as a result of such event and (iii) the amount of all taxes
paid (or reasonably estimated to be payable) by any Loan Party and the amount of
any reserves established to fund contingent liabilities reasonably estimated to
be payable, in each case during the year that such event occurred or the next
succeeding year and that are directly attributable to such event (as determined
reasonably and in good faith by a Financial Officer).

 

“Non-Consenting Lender” shall have the meaning assigned to such term in
Section 2.16(c).

 

“NYFRB” shall mean the Federal Reserve Bank of New York.

 

“NYFRB Rate” shall mean, for any day, the greater of (a) the Federal Funds
Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in
effect on such day (or for any day that is not a Business Day, for the
immediately preceding Business Day); provided that if none of such rates are
published for any day that is a Business Day, the term “NYFRB Rate” shall mean
the rate for a federal funds transaction quoted at 11:00 a.m. on such day
received by the Administrative Agent from a federal funds broker of recognized
standing selected by it; provided, further, that if any of the aforesaid rates
shall be less than zero, such rate shall be deemed to be zero for purposes of
this Agreement.

 

“Obligations” shall mean for purposes of the Loan Documents, all obligations of
every nature of each Loan Party from time to time owed to the Administrative
Agent or the Lenders, under any Loan Document, whether for principal, interest,
fees, expenses, indemnification or otherwise.

 

“OFAC” shall mean the Office of Foreign Assets Control of the United States
Department of the Treasury.

 

16

 

 

“Other Facility Change” shall have the meaning specified in Section 9.27(a).

 

“Other Taxes” shall mean any and all present or future stamp, court, intangible,
recording, filing, documentary, excise, property or similar Taxes arising from
any payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, the Loan Documents, and any and all interest and
penalties related thereto.

 

“Overnight Bank Funding Rate” shall mean, for any day, the rate comprised of
both overnight federal funds and overnight eurodollar borrowings by U.S.-managed
banking offices of depository institutions, as such composite rate shall be
determined by the NYFRB as set forth on its public website from time to time,
and published on the next succeeding Business Day by the NYFRB as an overnight
bank funding rate.

 

“Parent” shall have the meaning assigned to such term in the introductory
paragraph of this Agreement.

 

“Parent Entity” shall mean any of (i) Holdings and (ii) any other Person of
which Holdings is a Subsidiary.

 

“Participant” shall have the meaning assigned to such term in Section 9.04(g).

 

“Participant Register” shall have the meaning assigned to such term in
Section 9.04(g).

 

“Patents” shall mean, with respect to any Person, all of such Person’s right,
title, and interest in and to: (a) any and all patents and patent applications;
(b) all inventions and improvements described and claimed therein; (c) all
reissues, divisions, continuations, renewals, extensions, and
continuations-in-part thereof; (d) all income, royalties, damages, claims, and
payments now or hereafter due or payable under and with respect thereto,
including, without limitation, damages and payments for past and future
infringements thereof; (e) all rights to sue for past, present, and future
infringements thereof; and (f) all rights corresponding to any of the foregoing
throughout the world.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.

 

“Permitted Discretion” shall mean a determination made in good faith and in the
exercise of reasonable (from the perspective of a secured asset based lender)
business judgment.

 

“Permitted Investments” shall mean:

 

(a)         direct obligations of the United States of America or any agency
thereof or obligations guaranteed by the United States of America or any agency
thereof, in each case with maturities not exceeding two (2) years;

 

(b)         time deposit accounts, certificates of deposit and money market
deposits maturing within one hundred eighty (180) days of the date of
acquisition thereof issued by a bank or trust company that is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America having capital, surplus and
undivided profits in excess of $250.0 million and whose long-term debt, or whose
parent holding company’s long-term debt, is rated A (or such similar equivalent
rating or higher by at least one (1) nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act));

 

17

 

 

(c)         repurchase obligations with a term of not more than one hundred
eighty (180) days for underlying securities of the types described in clause (a)
above entered into with a bank meeting the qualifications described in
clause (b) above;

 

(d)         commercial paper, maturing not more than one (1) year after the date
of acquisition, issued by a corporation organized and in existence under the
laws of the United States of America or any foreign country recognized by the
United States of America with a rating at the time as of which any investment
therein is made of P-2 (or higher) according to Moody’s, or A-1 (or higher)
according to S&P;

 

(e)         securities with maturities of two (2) years or less from the date of
acquisition issued or fully guaranteed by any State, commonwealth or territory
of the United States of America, or by any political subdivision or taxing
authority thereof, and rated at least A by S&P or A by Moody’s;

 

(f)          shares of mutual funds whose investment guidelines restrict 95% of
such funds’ investments to those satisfying the provisions of clauses (a)
through (e) above; and

 

(g)         money market funds that (i) comply with the criteria set forth in
Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P
and Aaa by Moody’s and (iii) have portfolio assets of at least $5.0 billion.

 

“Permitted Refinancing Indebtedness” shall mean 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 Permitted
Refinancing Indebtedness); provided that (a) the principal amount (or accreted
value, if applicable) of such Permitted Refinancing Indebtedness does not exceed
the principal amount (or accreted value, if applicable) of the Indebtedness so
Refinanced (plus unpaid accrued interest and premium thereon, any committed or
undrawn amounts and underwriting discounts, fees, commissions and expenses,
associated with such Permitted Refinancing Indebtedness), except as otherwise
permitted under Section 6.01, (b) other than with respect to Indebtedness
permitted pursuant to Section 6.01(g), such Permitted Refinancing Indebtedness
has a final maturity date equal to or later than the final maturity date of, and
has a Weighted Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of the Indebtedness being Refinanced, (c) if the
Indebtedness being Refinanced is by its terms subordinated in right of payment
to the Obligations under this Agreement, such Permitted Refinancing Indebtedness
shall be subordinated in right of payment to such Obligations on terms not
materially less favorable to the Lenders as those contained in the documentation
governing the Indebtedness being Refinanced, taken as a whole, (d) no Permitted
Refinancing Indebtedness shall have obligors or contingent obligors that were
not obligors or contingent obligors (or that would not have been required to
become obligors or contingent obligors) in respect of the Indebtedness being
Refinanced except to the extent otherwise permitted under Section 6.01 or
Section 6.04 and (e) if the Indebtedness being Refinanced is (or would have been
required to be) secured with any Collateral, such Permitted Refinancing
Indebtedness shall be secured on a junior basis with respect to the Collateral
pursuant to an intercreditor arrangement satisfactory to the Administrative
Agent.

 

18

 

 

“Person” shall mean any natural person, corporation, business trust, joint
venture, association, company, partnership, limited liability company,
individual or family trust, or other organization (whether or not a legal
entity), or any government or any agency or political subdivision thereof.

 

“Petition Date” shall have the meaning assigned to such term in the recitals to
this Agreement.

 

“Plan” shall mean any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which any Loan Party or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4062 or
Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5)
of ERISA.

 

“Plan Asset Regulations” shall mean 29 CFR § 2510.3-101 et seq., as modified by
Section 3(42) of ERISA, as amended from time to time.

 

“Plan of Reorganization” shall mean a plan of reorganization confirmed by an
order of the Court under the Chapter 11 Cases (i) containing a provision for
Full Payment of all of the Obligations on or before the effective date of such
plan and (ii) containing a release in favor of the Administrative Agent, the
Lenders, and each of their respective affiliates, and such Plan of
Reorganization shall be in full force and effect and shall not have been
modified, altered, amended, or otherwise changed or supplemented without the
prior written consent of the Administrative Agent and the Lenders.

 

“Pre-Petition ABL Agent” shall mean JPMorgan Chase Bank, N.A., in its capacity
as administrative agent under any of the Pre-Petition ABL Loan Documents.

 

“Pre-Petition ABL Credit Agreement” has the meaning specified in the recitals to
this Agreement.

 

“Pre-Petition ABL Facility” shall mean the revolving credit facility under the
Pre-Petition ABL Credit Agreement.

 

“Pre-Petition ABL Lenders” has the meaning specified in the recitals to this
Agreement.

 

“Pre-Petition ABL Loan Documents” shall mean the “Loan Documents” as defined in
the Pre-Petition ABL Credit Agreement.

 

“primary obligor” shall have the meaning assigned to such term in the definition
of “Guarantee.”

 

“Prime Rate” shall mean the prime rate of interest announced from time to time
by the Administrative Agent (which is not necessarily the lowest rate charged to
any customer), changing when and as said prime rate changes; provided that the
Prime Rate shall never be less than 2.0%.

 

19

 

 

“Pro Rata” shall mean with respect to any Lender, a percentage (rounded to the
ninth decimal place) determined (a) while Commitments are outstanding, by
dividing the amount of such Lender’s Commitment by the aggregate amount of all
Commitments; and (b) at any other time, by dividing the amount of such Lender’s
Loans by the aggregate amount of all outstanding Loans.

 

“Proceeds” shall mean all “proceeds” as such term is defined in Section
9-102(a)(64) of the UCC.

 

“Prohibited Transaction” shall have the meaning assigned to such term in
Section 406 of ERISA and/or Section 4975(c) of the Code.

 

“Property” shall mean any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible (including cash, securities,
accounts, contract rights and Equity Interests or other ownership interests of
any Person), whether now in existence or owned or hereafter acquired.

 

“PTE” shall mean a prohibited transaction class exemption issued by the U.S.
Department of Labor, as any such exemption may be amended from time to time.

 

“Qualified Capital Stock” shall mean any Equity Interest of any Person that does
not by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable or exercisable) or upon the happening of any
event (a) provide for scheduled payments of dividends in cash (other than at the
option of the issuer) prior to the date that is, at the time of issuance of such
Equity Interest, ninety-one (91) days after the Maturity Date, (b) become
mandatorily redeemable at the option of the holder thereof (other than for
Qualified Capital Stock or pursuant to customary provisions relating to
redemption upon a change of control or sale of assets) pursuant to a sinking
fund obligation or otherwise prior to the date that is, at the time of issuance
of such Equity Interest, ninety-one (91) days after the Maturity Date or
(c) become convertible or exchangeable at the option of the holder thereof for
Indebtedness or Equity Interests that are not Qualified Capital Stock; provided
further, that if any such Equity Interest is issued pursuant to a plan for the
benefit of the employees, directors, officers, managers or consultants of
Holdings (or any Parent Entity thereof), the Borrower or its Subsidiaries or by
any such plan to such Persons, such Equity Interest shall not be regarded as an
Equity Interest not constituting Qualified Capital Stock solely because it may
be required to be repurchased by Holdings (any Parent Entity), the Borrower or
its Subsidiaries in order to satisfy applicable regulatory obligations.

 

“Real Estate Sale” shall mean a sale, in one or a series of related
transactions, of all or substantially all of (or, if approved in writing by
Administrative Agent in its sole discretion, certain of) the Collateral under
Section 363 of the Bankruptcy Code

 

“Real Estate Sale Order” shall mean an order approving the proposed Real Estate
Sale.

 

“Real Property” shall have the meaning assigned to such term in Section 3.07.

 

“Refinance” shall have the meaning assigned to such term in the definition of
the term “Permitted Refinancing Indebtedness,” “Refinancing” and “Refinanced”
shall have meanings correlative thereto.

 

20

 

 

“Register” shall have the meaning assigned to such term in Section 9.04(e).

 

“Regulation D” shall mean Regulation D of the Board, as in effect from time to
time and all official rulings and interpretations thereunder or thereof.

 

“Regulation T” shall mean Regulation T of the Board, as in effect from time to
time and all official rulings and interpretations thereunder or thereof.

 

“Regulation U” shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

 

“Regulation X” shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

 

“Related Fund” shall mean, with respect to any Lender, any Person (other than a
natural person) that is engaged in making, purchasing, holding or otherwise
investing in commercial loans and similar extensions of credit in the ordinary
course of its activities and is administered, advised or managed by (i) such
Lender, (ii) an Affiliate of such Lender or (iii) an entity or an Affiliate of
an entity that administers, advises or manages such Lender.

 

“Related Parties” shall mean, with respect to any specified Person, such
Person’s Affiliates and the respective directors, trustees, officers, employees,
agents and advisors of such Person and such Person’s Affiliates.

 

“Release” shall mean any spilling, leaking, seepage, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, emanating or migrating in, into, onto or through the environment.
“Released” shall have a meaning correlative thereto.

 

“Remedies Notice Period” has the meaning specified in the Final Order.

 

“Reorganization” shall mean, with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.

 

“Report” shall have the meaning assigned to such term in Section 8.02(b).

 

“Reportable Event” shall mean any reportable event as defined in Section 4043(c)
of ERISA or the regulations issued thereunder with respect to a Plan (other than
a Plan maintained by an ERISA Affiliate that is considered an ERISA Affiliate
only pursuant to subsection (m) or (o) of Section 414 of the Code), other than
those events as to which the thirty (30)-day notice period referred to in
Section 4043(c) of ERISA has been waived.

 

“Required Lenders” shall mean, at any time, the Lenders holding more than 50% of
the aggregate amount of Commitments and Loans outstanding at any time; provided,
however, the Commitments and Loans of any Defaulting Lender shall be excluded
from such calculation; provided, further, that if the number of Lenders,
excluding Defaulting Lenders, is greater than one (1) Lender (including any
Lender’s Affiliates as one (1) Person for this purpose), Required Lenders must
include at least two (2) unaffiliated Lenders.

 

21

 

 

“Responsible Officer” of any Person shall mean any executive officer or
Financial Officer of such Person and any other officer or similar official
thereof responsible for the administration of the obligations of such Person in
respect of this Agreement.

 

“Restricted Payment” shall have the meaning assigned to such term in
Section 6.06.

 

“S&P” shall mean Standard & Poor’s Ratings Services, a Standard & Poor’s
Financial Services LLC business.

 

“Sanctioned Country” shall mean, at any time, a country, region or territory
which is itself the subject or target of any Sanctions (at the time of this
Agreement, Crimea, Cuba, Iran, North Korea, and Syria).

 

“Sanctioned Person” shall mean, at any time, (a) any Person listed in any
Sanctions-related list of designated Persons maintained by OFAC, the
U.S. Department of State, the or by the United Nations Security Council, (b) any
Person operating, organized or resident in a Sanctioned Country, (c) any Person
directly or indirectly owned or controlled (individually or in the aggregate) by
any such Person or Persons described in the foregoing clauses (a) or (b), or
(d) any Person otherwise the subject, or target, of any Sanctions.

 

“Sanctions” means individually and collectively, respectively, any and all
economic sanctions, trade sanctions, financial sanctions, sectoral sanctions,
secondary sanctions, trade embargoes anti-terrorism laws and other sanctions
laws, regulations or embargoes, including those imposed, administered or
enforced from time to time by:  (a) the United States of America, including
those administered by OFAC, the U.S. Department of State, the U.S. Department of
Commerce, or through any existing or future executive order, (b) the United
Nations Security Council, (c) the European Union or any European Union member
state, (d) Her Majesty’s Treasury of the United Kingdom, or (e) any other
Governmental Authority with jurisdiction over any Loan Party or any of their
respective Subsidiaries or Affiliates.

 

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

 

“Section 363 Sale” shall mean a sale of all or substantially all of the assets
and business of the Loan Parties conducted pursuant to Section 363 of the
Bankruptcy Code.

 

“Secured Parties” shall mean (a) the Administrative Agent, (b) the Lenders and
(c) the successors and assigns of each of the foregoing.

 

“Securities” shall have the meaning assigned thereto in Article 8 of the UCC.

 

“Securities Account” shall have the meaning assigned thereto in Article 8 of the
UCC.

 

“Securities Act” shall mean the Securities Act of 1933.

 

22

 

 

“Security Documents” shall mean, collectively, the Final Order, this Agreement,
the Mortgages and any other agreements, instruments and documents executed by
any Loan Party in connection with this Agreement that are intended to create,
perfect or evidence Liens to secure the Obligations, including, without
limitation, all other security agreements, pledge agreements, debentures, share
charges, loan agreements, notes, pledges, powers of attorney, assignments,
notices, and any financing statements whether theretofore, now or hereafter
executed by any Loan Party and delivered to the Administrative Agent in
connection with this Agreement.

 

“Specified Disposition Letter” shall mean that certain Consultant Agreement,
dated as of May 6, 2020 by and among the Borrower and the Specified Liquidation
Agent, as amended, supplemented, or modified from time to time with the consent
of the ABL DIP Agent.

 

“Specified Liquidation Agent” shall mean, collectively, Great American Group,
LLC and its Affiliates.

 

“Specified Store Closing Sales” shall mean the closure of certain of the Loan
Parties’ stores as referenced in the Specified Disposition Letter conducted by
the Specified Liquidation Agent pursuant to the Specified Disposition Letter.

 

“Status Calls” shall have the meanings assigned to such term in Section 5.17.

 

“subsidiary” shall mean, with respect to any Person (the “parent”) at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
of which securities or other ownership interests representing more than 50% of
the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, by the parent and/or one or more subsidiaries
of the parent.

 

“Subsidiary” shall mean any direct or indirect subsidiary of the Borrower or a
Loan Party, as applicable.

 

“Subsidiary Guarantor” shall mean each Loan Party other than Holdings.

 

“Taxes” shall mean any and all present or future taxes, levies, imposts, duties
(including stamp duties), deductions, charges (including ad valorem charges),
assessments, fees or withholdings imposed by any Governmental Authority and any
and all interest and penalties related thereto.

 

“Termination Date” shall mean the earliest of (a) Maturity Date, (b) the date of
consummation of a sale of all or substantially all of the Loan Parties’ assets
under Section 363 or a plan under Section 1129 of the Bankruptcy Code, (c) the
effective date of a Plan of Reorganization, (d) the date on which the Final
Order is no longer in full force and effect, (e) the date on which the
Obligations become due and payable pursuant to this Agreement, whether by
acceleration or otherwise, and (f) the date which the Administrative Agent
delivers written notice to the Borrower of its election, on account of the
occurrence of an Event of Default, to accelerate all Obligations hereunder.

 

23

 

 

 

“Test Period” shall mean, on any date of determination, the period of
four (4) consecutive fiscal quarters (taken as one (1) accounting period) of the
Borrower then most recently ended for which financial statements have been most
recently delivered or were required to be delivered.

 

“Trademarks” shall mean, with respect to any Person, all of such Person’s right,
title, and interest in and to the following: (a) all trademarks (including
service marks), trade names, trade dress, and trade styles and the registrations
and applications for registration thereof and the goodwill of the business
symbolized by the foregoing; (b) all licenses of the foregoing, whether as
licensee or licensor; (c) all renewals of the foregoing; (d) all income,
royalties, damages, and payments now or hereafter due or payable with respect
thereto, including, without limitation, damages, claims, and payments for past
and future infringements thereof; (e) all rights to sue for past, present, and
future infringements of the foregoing, including the right to settle suits
involving claims and demands for royalties owing; and (f) all rights
corresponding to any of the foregoing throughout the world.

 

“Transaction Costs” shall mean fees and expenses payable or otherwise borne by
Holdings, any other Parent Entity, the Borrower and its Subsidiaries in
connection with the Transactions occurring on or about the Closing Date.

 

“Transactions” shall mean, collectively, the transactions to occur pursuant to
the Loan Documents, including the execution and delivery of the Loan Documents
and the initial borrowings hereunder.

 

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in
the State of New York or in any other state the laws of which are required to be
applied in connection with the issue of perfection of security interests.

 

“U.S. Person” shall mean any Person that is a “United States Person” as defined
in Section 7701(a)(30) of the Code.

 

“USA PATRIOT Act” shall mean The Uniting and Strengthening America by Providing
Adequate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Title III of Pub. L. No. 107 56 (signed into law October 26, 2001)).

 

“U.S. Tax Compliance Certificate” shall have the meaning assigned to such term
in Section 2.14(e)(i)(B)(3).

 

“U.S. Trustee” shall mean the United States Trustee applicable in the Chapter 11
Cases.

 

“Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness
at any date, the number of years obtained by dividing: (a) the sum of the
product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including a payment at final maturity, in respect thereof, by
(ii) the number of years (calculated to the nearest one-twelfth that will elapse
between such date and the making of such payment); by (b) the outstanding
principal amount of such Indebtedness.

 

“WF Concentration Account” shall mean the Borrower’s Main Concentration Account
No.: [REDACTED] held at Wells Fargo Bank, National Association.

 

24

 

 

“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.

 

“Write-Down and Conversion Powers” shall mean, 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.

 

Section 1.02          Terms Generally.

 

(a)           The definitions set forth or referred to in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined. The
words “herein,” “hereto,” “hereof” and “hereunder” and words of similar import
when used in any Loan Document shall refer to such Loan Document as a whole and
not to any particular provision thereof. 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.” All references herein to Articles, Sections,
Exhibits and Schedules shall be deemed references to Articles and Sections of,
and Exhibits and Schedules to, the Loan Documents in which the reference appears
unless the context shall otherwise require.

 

(b)           Except as otherwise expressly provided herein, any reference in
this Agreement to any Loan Document or other document, agreement or instrument
(including any by-laws, limited partnership agreement, limited liability company
agreement, articles of incorporation, certificate of limited partnership or
certificate of formation, as the case may be) shall mean such Loan Document,
agreement or instrument as amended, restated, amended and restated,
supplemented, otherwise modified, replaced, renewed, extended or refinanced from
time to time and any reference in this Agreement to any Person shall include a
reference to such Person’s permitted assigns and successors-in-interest.

 

(c)            Unless otherwise defined herein, the following terms are used
herein as defined in the UCC (and if defined in more than one Article of the
UCC, such terms shall have the meanings given in Article 9 thereof): Account
Debtor, Documents, Deposit Account, General Intangibles, Letter of Credit,
Securities Account and Security.

 

(d)           Unless otherwise defined herein, the following terms are used
herein as defined in the Approved Budget: Total Cash Receipts, Total
Non-Operating Disbursements, Total Operating Disbursements and Professional
Fees.

 

25

 

 

Section 1.03          Accounting Terms.

 

(a)           Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as in
effect from time to time; provided that, if the Borrower notifies the
Administrative Agent that the Borrower requests an amendment to any provision
hereof to eliminate the effect of any change occurring after the Closing Date in
GAAP or in the application thereof on the operation of such provision (or if the
Administrative Agent notifies the Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith; provided  further that if an amendment is requested by the
Borrower or the Required Lenders, then the Borrower and the Administrative Agent
shall negotiate in good faith to enter into an amendment of such affected
provisions (without the payment of any amendment or similar fees to the Lenders)
to preserve the original intent thereof in light of such change in GAAP or the
application thereof subject to the approval of the Required Lenders (not to be
unreasonably withheld, conditioned or delayed); provided  further that all terms
of an accounting or financial nature used herein shall be construed, and all
computations of amounts and ratios referred to herein shall be made without
giving effect to (i) any election under Accounting Standards Codification
825-10-25 (previously referred to as Statement of Financial Accounting Standards
159) (or any other Accounting Standards Codification or Financial Accounting
Standard having a similar result or effect) to value any Indebtedness or other
liabilities of the Borrower or any Subsidiary at “fair value,” as defined
therein and (ii) any treatment of Indebtedness in respect of convertible debt
instruments under Accounting Standards Codification 470-20 (or any other
Accounting Standards Codification or Financial Accounting Standard having a
similar result or effect) to value any such Indebtedness in a reduced or
bifurcated manner as described therein, and such Indebtedness shall at all times
be valued at the full stated principal amount thereof.

 

(b)           Notwithstanding anything to the contrary contained in
paragraph (a) above or the definition of Capital Lease Obligations, in the event
of an accounting change requiring all leases to be capitalized, only those
leases (assuming for purposes hereof that they were in existence on the date
hereof) that would constitute Capital Lease Obligations on the date hereof shall
be considered Capital Lease Obligations and all calculations and deliverables
under this Agreement or any other Loan Document shall be made in accordance
therewith (provided that all financial statements delivered to the
Administrative Agent in accordance with the terms of this Agreement after the
date of such accounting change shall contain a schedule showing the adjustments
necessary to reconcile such financial statements with GAAP as in effect
immediately prior to such accounting change).

 

Section 1.04           Rounding. Except as otherwise expressly provided herein,
any financial ratios required to be maintained by the Borrower pursuant to this
Agreement shall be calculated by dividing the appropriate component by the other
component, carrying the result to one (1) 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).

 

Section 1.05          Timing of Payment or Performance. When the payment of any
obligation or the performance of any covenant, duty or obligation is stated to
be due or performance required on a day which is not a Business Day (other than
as described in the definition of Prime Rate or NYFRB Rate), the date of such
payment or performance shall extend to the immediately succeeding Business Day
and such extension of time shall be reflected in computing interest or fees, as
the case may be.

 

Section 1.06          Classification. For purposes of determining compliance at
any time with Sections 6.01, 6.02, 6.04, 6.05, 6.06, 6.07 and 6.09, in the event
that any Lien, Investment, Indebtedness, Disposition, Restricted Payment,
affiliate transaction, contractual restriction or prepayment of Indebtedness
meets the criteria of more than one (1) of the categories of transactions or
items permitted pursuant to any clause of such Sections 6.01, 6.02, 6.04, 6.05,
6.06, 6.07 and 6.09, the Borrower, in its sole discretion, may classify or
reclassify such transaction or item (or portion thereof) and will only be
required to include the amount and type of such transaction (or portion thereof)
in any one (1) category.

 

26

 

 

Section 1.07           References to Laws. Unless otherwise expressly provided
herein, references to any law shall include all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting
such law.

 

Section 1.08           Interest Rates; LIBOR Notification. The interest rate on
Loans is determined by reference to the LIBO Rate, which is derived from the
London interbank offered rate. The London interbank offered rate is intended to
represent the rate at which contributing banks may obtain short-term borrowings
from each other in the London interbank market. In July 2017, the U.K. Financial
Conduct Authority announced that, after the end of 2021, it would no longer
persuade or compel contributing banks to make rate submissions to the ICE
Benchmark Administration (together with any successor to the ICE Benchmark
Administrator, the “IBA”) for purposes of the IBA setting the London interbank
offered rate. As a result, it is possible that commencing in 2022, the London
interbank offered rate may no longer be available or may no longer be deemed an
appropriate reference rate upon which to determine the interest rate on Loans.
In light of this eventuality, public and private sector industry initiatives are
currently underway to identify new or alternative reference rates to be used in
place of the London interbank offered rate. In the event that the London
interbank offered rate is no longer available or in certain other circumstances
as set forth in Section 2.11(b) of this Agreement, such Section 2.11(b) provides
a mechanism for determining an alternative rate of interest. The Administrative
Agent will notify the Borrower, pursuant to Section 2.11 in advance of any
change to the reference rate upon which the interest rate on Loans is based.
However, the Administrative Agent does not warrant or accept any responsibility
for, and shall not have any liability with respect to, the administration,
submission or any other matter related to the London interbank offered rate or
other rates in the definition of “LIBO Rate” or with respect to any alternative
or successor rate thereto, or replacement rate thereof, including without
limitation, whether the composition or characteristics of any such alternative,
successor or replacement reference rate, as it may or may not be adjusted
pursuant to Section 2.11(b), will be similar to, or produce the same value or
economic equivalence of, the LIBO Rate or have the same volume or liquidity as
did the London interbank offered rate prior to its discontinuance or
unavailability.

 

ARTICLE II

The Commitments and Borrowings

 

Section 2.01           The Loans.

 

(a)            Each Lender agrees, severally on a Pro Rata basis, on the terms
set forth herein, to make Loans to the Borrower in an amount not to exceed such
Lender’s Commitment.

 

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(b)           Notwithstanding the foregoing,

 

(i)             Each Loan that is made shall automatically and permanently
reduce the aggregate Commitments and the Commitment of each Lender. Amounts
borrowed under this Section 2.01 and subsequently repaid or prepaid may not be
reborrowed. The maximum amount of Loans the Lenders are committed to advance to
the Borrower at any time shall be subject to and limited by the terms of the
Final Order and the Approved Budget.

 

(c)           The obligation of the Lenders to provide Loans on any date after
the Closing Date (each such Loan, a “Delayed Draw Term Loan”) shall be subject
to the satisfaction on the date of the borrowing of such Delayed Draw Term Loan
of each of the following conditions (the “Delayed Draw Term Loan Conditions”):

 

(i)            (A) The Final Order shall have been entered in form and substance
acceptable to the Administrative Agent; (B) the Final Order shall not have been
vacated, stayed, reversed, modified, or amended without the Administrative
Agent’s consent and shall otherwise be in full force and effect; and (C) no
motion for reconsideration of the Final Order shall have been timely filed by a
Loan Party of any of their Subsidiaries;

 

(ii)           immediately before and after giving effect to the borrowing of
Delayed Draw Term Loans and the use of the proceeds thereof, no Default or Event
of Default shall exist;

 

(iii)          the Borrower shall have delivered to the Administrative Agent a
Borrowing Request requesting such Delayed Draw Term Loans no less than three (3)
Business Days prior to the desired funding date therefor;

 

(iv)          each extension of Delayed Draw Term Loans shall be in a minimum
amount of $2,500,000; and

 

(v)           the representations and warranties of each Loan Party set forth in
Article III of this Agreement or in any other Loan Document shall be true and
correct in all material respects (without duplication of any materiality
qualifier contained therein) on the date of, and upon giving effect to, such
funding (except for representations and warranties that expressly relate to an
earlier date, in which case such representations and warranties shall be true
and correct in all material respects as such earlier date).

 

Section 2.02          Loans and Borrowings. All Loans shall be made by the
Lenders ratably in accordance with their respective Commitments. The failure of
any Lender to make any Loan required to be made by it shall not relieve any
other Lender of its obligations hereunder.

 

Section 2.03          Requests for Borrowings and Notices.

 

(a)          To request a Borrowing of Delayed Draw Term Loans, the Borrower
shall notify the Administrative Agent of such request by telephone not later
than 12:00 p.m., Local Time, three (3) Business Days before the date of the
proposed Borrowing. Such telephonic Borrowing Request shall be irrevocable and
shall be confirmed promptly by hand delivery, fax or other electronic
transmission (including by “.pdf” or “.tif”) to the Administrative Agent of a
written Borrowing Request in a form approved by the Administrative Agent and
signed by the Borrower. Such telephonic and written Borrowing Request shall
specify the following information in compliance with Section 2.02:

 

(i)             the aggregate amount of the requested Borrowing; and

 

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(ii)            the date of such Borrowing, which shall be a Business Day.

 

(b)           Promptly following receipt of a Borrowing Request in accordance
with this Section, the Administrative Agent shall advise each Lender of the
details thereof and of the amount of such Lender’s Loan to be made as part of
the requested Borrowing.

 

Section 2.04          [Reserved].

 

Section 2.05          Funding of Borrowings.

 

(a)           Each Lender shall make a Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds by
1:00 p.m., Local Time, to the account of the Administrative Agent most recently
designated by it for such purpose by notice to the Lenders. The Administrative
Agent will make the proceeds of such Loans available to the Borrower by promptly
crediting the amounts so received, in like funds, to the WF Concentration
Account.

 

(b)           Unless the Administrative Agent shall have received notice from a
Lender prior to the date of the Borrowing Request that such Lender will not make
available to the Administrative Agent such Lender’s share of the Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. In such event, if a Lender has not in fact made its share of the
Borrowing available to the Administrative Agent, then the applicable Lender and
the Borrower agrees to pay to the Administrative Agent (provided, that any such
payment by the Borrower to the Administrative Agent is without prejudice to any
claim the Borrower may have against such applicable Lender) forthwith on demand
(without duplication) such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to
but excluding the date of payment to the Administrative Agent, at (i) in the
case of such Lender, the greater of the NYFRB Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate applicable
to all Loans. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender’s Loan included in such Borrowing.

 

Section 2.06          Reserved.

 

Section 2.07          Repayment of Loans; Termination of Commitments.

 

(a)           Subject to the Approved Budget, the Borrower shall have the right
at any time and from time to time to prepay any Borrowing in whole or in part,
subject to prior written notice not later than 2:00 p.m. (Local time) two
Business Days before the date of such prepayment.

 

29

 

 

(b)           Loans shall be due and payable in full on the Termination Date,
unless payment is sooner required hereunder. Subject to the Approved Budget,
Loans may be prepaid from time to time, without penalty or premium.

 

(c)           Subject to the Intercreditor Agreement, contemporaneously with
each date upon which the Borrower or any of its Subsidiaries receives any cash
proceeds from any Real Estate Sale with respect to the Collateral, an amount
equal to 100% of the Net Proceeds therefrom shall be applied as a mandatory
repayment in accordance with the requirements of Section 2.07(g).

 

(d)           Subject to the Intercreditor Agreement, contemporaneously with
each date upon which the Borrower or any of its Subsidiaries receives any cash
proceeds from any Casualty Event with respect to the Collateral, (i) if an Event
of Default has occurred and is continuing, an amount equal to 100% of the Net
Proceeds therefrom shall be applied as a mandatory repayment in accordance with
the requirements of Section 2.07(g), (ii) so long as no Event of Default has
occurred and is continuing, (A) if the Net Proceeds therefrom are in an amount
less than $1,000,000, the Administrative Agent shall permit such Net Proceeds to
be disbursed to the Borrower from the WF Concentration Account or such other
account into which the Net Proceeds were received for purposes of
reconstructing, repairing or restoring the Collateral, (B) if the Net Proceeds
therefrom are in an amount greater than $1,000,000 but less than $5,000,000, the
Administrative Agent shall permit such Net Proceeds to be disbursed to the
Borrower from the WF Concentration Account or such other account into which the
Net Proceeds were received for purposes of reconstructing, repairing or
restoring the Collateral, provided, that the Borrower has provided reasonably
detailed evidence of the damage and repairs to the Administrative Agent prior to
the disbursement of such Net Proceeds, and (C) if the Net Proceeds therefrom are
in an amount greater than $5,000,000, then the amount in excess of $5,000,000
shall be applied as a mandatory repayment in accordance with the requirements of
Section 2.07(g); provided, that other than as set forth in clauses (i) and (ii)
above, the Borrower shall be entitled to settle any and all of Borrower’s
insurance claims and collect the proceeds thereof.

 

(e)           Within five (5) Business Days following each date upon which the
Borrower or any of its Subsidiaries receives any cash proceeds from any issuance
or incurrence of Indebtedness secured by the Collateral (other than Indebtedness
permitted to be incurred pursuant to Section 6.01), an amount equal to 100% of
the Net Proceeds therefrom shall be applied as a mandatory repayment in
accordance with the requirements of Section 2.07(g).

 

(f)            The Commitments shall be automatically and permanently reduced
upon any incurrence of Loans by the principal amount of such Loans so extended
hereunder. The Commitments shall terminate on the Termination Date, unless
sooner terminated in accordance with this Agreement.

 

(g)           Each prepayment of Borrowings pursuant to this Section 2.07 shall
be applied ratably among the parties entitled thereto.

 

(h)           Prepayments permitted or required under this Section 2.07 shall be
without premium or penalty.

 

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Section 2.08          Evidence of Debt.

 

(a)           Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.

 

(b)           The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender’s share thereof.

 

(c)           The entries made in the accounts maintained pursuant to paragraph
(d) of this Section shall be, absent manifest error, prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement; and,
provided, further that in the event of any inconsistency between the Register
and any Lender’s records, the recordations in the Register shall govern.

 

(d)           Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to such Lender (or, if requested by
such Lender, to such Lender and its registered assigns) and in a form approved
by the Administrative Agent. Thereafter, the Loans evidenced by such promissory
note and interest thereon shall at all times (including after assignment
pursuant to Section 9.04) be represented by one or more promissory notes in such
form.

 

Section 2.09          Fees.

 

(a)           Fee Letter. The Borrower agrees to pay the fees set forth in the
Fee Letter, in the amounts and at the times separately agreed upon between the
Borrower and the Administrative Agent.

 

(b)          Generally. All such fees shall be paid on the dates due, in
immediately available Dollars. Once paid, none of these fees shall be refundable
under any circumstances.

 

Section 2.10          Interest.

 

(a)           The Loans comprising each Borrowing shall bear interest at the
LIBO Rate plus the Applicable Margin.

 

(b)          Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fees or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise or if
any Event of Default has occurred and is continuing, all overdue amounts shall
automatically bear interest, after as well as before judgment, at a rate per
annum equal to 2.00% plus the rate otherwise applicable to such Obligation (the
“Default Rate”); provided, however, the Default Rate shall only be applicable
after five (5) days written notice to Borrower and then only to the extent that
such Event of Default remains uncured after the expiration of such five (5) day
period.

 

31 

 

 

(c)           Accrued interest on each Loan shall be payable in arrears (i) on
the last Business Day of each month until the Obligations have been paid in
full, commencing July 31, 2020 and (ii) on the Termination Date; provided
that interest accrued pursuant to paragraph (b) of this Section shall be payable
on demand.

 

(d)           All interest hereunder shall be computed on the basis of a year of
three hundred sixty (360) days. The applicable Prime Rate or LIBO Rate shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.

 

Section 2.11           Alternate Rate of Interest. (a) If prior to a Borrowing:

 

(i)            the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the LIBO Rate; or

 

(ii)           the Administrative Agent is advised by the Required Lenders that
the LIBO Rate will not adequately and fairly reflect the cost to such Lenders of
making or maintaining their Loans included in such Borrowing;

 

then the Administrative Agent shall give written notice thereof to the Borrower
and the Lenders as promptly as practicable thereafter and, until the
Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, such Borrowing shall
be made as a Loan bearing interest at a rate determined by reference to the
Prime Rate.

 

(b)          If at any time the Administrative Agent determines (which
determination shall be conclusive absent manifest error) that the circumstances
set forth in clause (a)(i) have arisen and such circumstances are unlikely to be
temporary, then the Administrative Agent and the Borrower shall endeavor to
establish an alternate rate of interest to the LIBO Rate that gives due
consideration to the then prevailing market convention for determining a rate of
interest for syndicated loans in the United States at such time, and shall enter
into an amendment to this Agreement to reflect such alternate rate of interest
and such other related changes to this Agreement as may be applicable (but for
the avoidance of doubt, such related changes shall not include a reduction of
the Applicable Margin); provided that, if such alternate rate of interest as so
determined would be less than zero, such rate shall be deemed to be zero for the
purposes of this Agreement. Notwithstanding anything to the contrary in Section
9.08, such amendment shall become effective without any further action or
consent of any other party to this Agreement so long as the Administrative Agent
shall not have received, within five Business Days of the date notice of such
alternate rate of interest is provided to the Lenders, a written notice from the
Required Lenders stating that such Required Lenders object to such amendment.
Until an alternate rate of interest shall be determined in accordance with this
clause (b),  such Borrowing shall be made as a Loan bearing interest at a rate
determined by reference to the Prime Rate.

 

Section 2.12          Extension Option. Borrower, at its option, may request to
extend the Maturity Date (the “Extension Option”) to the date that is three (3)
months from the Initial Maturity Date (the “Extended Maturity Date”). Borrower
must notify Administrative Agent of such request by written notice at least
thirty (30) days prior to the Initial Maturity Date. For the Extension Option to
be effective (i) no Default or Event of Default shall have occurred and be
continuing on either the date the Borrower requests to extend the Maturity Date
or on the Initial Maturity Date; (ii) on the Initial Maturity Date, as
applicable, the conditions as set forth under Section 4.02, as applicable, must
be satisfied; and (iii) in connection with the exercise of the Extension Option,
Borrower shall pay to Administrative Agent for the benefit of the Lenders the
fully earned, non-refundable Extension Fee at the time of such exercise.

  

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Section 2.13          [Reserved].

 

Section 2.14          Taxes.

 

(a)           Any and all payments by or on account of any obligation of any
Loan Party hereunder shall be made free and clear of and without deduction or
withholding for any Indemnified Taxes or Other Taxes; provided that if a Loan
Party or other applicable withholding agent shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable by
any Loan Party shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) the Administrative Agent or any Lender, as applicable, receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the applicable withholding agent shall make such deductions and (iii) the
applicable withholding agent shall timely pay the full amount deducted to the
relevant Governmental Authority in accordance with Applicable Law.

 

(b)           In addition, the Loan Parties shall timely pay to the relevant
Governmental Authority in accordance with Applicable Law, or at the option of
the Administrative Agent timely reimburse it for the payment of, any Other
Taxes.

 

(c)           Each Loan Party shall indemnify the Administrative Agent and each
Lender, within ten (10) days after written demand therefor, for the full amount
of any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender, as applicable, on or with respect to any payment by or on account of any
obligation of such Loan Party hereunder (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto. A certificate as to the amount of such payment or
liability, prepared in good faith and delivered to such Loan Party by a Lender
or by the Administrative Agent on its own behalf, on behalf of another agent or
on behalf of a Lender, shall be conclusive absent manifest error.

 

(d)           As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by a Loan Party to a Governmental Authority, such Loan Party shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

 

33

 

 

(e)           Any Lender 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 Borrower and the Administrative Agent, at the time or times
reasonably requested by the Borrower or the Administrative Agent, such properly
completed and executed documentation reasonably requested by the Borrower or the
Administrative Agent as will permit such payments to be made without withholding
or at a reduced rate of withholding. In addition, any Lender, if reasonably
requested by the Borrower or the Administrative Agent, shall deliver such other
documentation prescribed by Applicable Law or reasonably requested by the
Borrower or the Administrative Agent as will enable the Borrower or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements. Notwithstanding
anything to the contrary in the preceding two (2) sentences, the completion,
execution and submission of such documentation (other than such documentation
set forth in Section 2.14(e)(ii)(A), (ii)(B) and (ii)(D) below) shall not be
required if in the Lender’s reasonable judgment such completion, execution or
submission would subject such Lender to any material unreimbursed cost or
expense or would materially prejudice the legal or commercial position of such
Lender.

 

(i)            Without limiting the generality of the foregoing, in the event
that the Borrower is a U.S. Person,

 

(A)          any Lender that is a U.S. Person shall deliver to the Borrower and
the Administrative 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 Borrower or the Administrative Agent), executed copies
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 Borrower and the Administrative 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 Borrower or the Administrative
Agent), whichever of the following is applicable:

 

(1)           in the case of a Foreign Lender claiming the benefits of an income
tax treaty to which the United States is a party (x) with respect to payments of
interest under any Loan Document, executed copies of IRS Form W-8BEN or W-8BEN-E
establishing an exemption from, or reduction of, U.S. federal withholding Tax
pursuant to the “interest” article of such tax treaty and (y) with respect to
any other applicable payments under any Loan Document, IRS Form W-8BEN or
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 copies of IRS Form W-8ECI;

 

(3)           in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under Section 881(c) of the Code, (x) a
certificate substantially in the form of Exhibit G-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” related
to the Borrower as described in Section 881(c)(3)(C) of the Code (a “U.S. Tax
Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or W-8BEN-E;
or

 

34

 

 

(4)           to the extent a Foreign Lender is not the beneficial owner,
executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS
Form W-8BEN or W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the
form of Exhibit G-2 or Exhibit G-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 (1) 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 G-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 Borrower and the Administrative 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 Borrower or the Administrative
Agent), executed copies of any other form prescribed by Applicable Law as a
basis for claiming exemption from or a reduction in U.S. federal withholding
Tax, duly completed, together with such supplementary documentation as may be
prescribed by Applicable Law to permit the Borrower or the Administrative 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 Borrower and the Administrative Agent at the time or
times prescribed by law and at such time or times reasonably requested by the
Borrower or the Administrative 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 Borrower or the
Administrative Agent as may be necessary for the Borrower and the Administrative
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.

 

Each Lender agrees that if any form or certification it previously delivered
expires or becomes obsolete or inaccurate in any respect, it shall update such
form or certification or promptly notify the Borrower and the Administrative
Agent in writing of its legal inability to do so.

 

35

 

 

(f)            If the Administrative Agent or a Lender determines, in its sole
discretion exercised in good faith, that it has received a refund of any
Indemnified Taxes or Other Taxes as to which it has been indemnified by a Loan
Party or with respect to which such Loan Party has paid additional amounts
pursuant to this Section 2.14, it shall pay over such refund to such Loan Party
(but only to the extent of indemnity payments made, or additional amounts paid,
by such Loan Party under this Section 2.14 with respect to the Indemnified Taxes
or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of
the Administrative Agent or such Lender (including any Taxes imposed with
respect to such refund) as is determined by the Administrative Agent or Lender
and in its sole discretion, and without interest (other than any interest paid
by the relevant Governmental Authority with respect to such refund); provided
that such Loan Party, upon the request of the Administrative Agent or such
Lender, agrees to repay as soon as reasonably practicable the amount paid over
to such Loan Party (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent or such Lender in
the event the Administrative Agent or such Lender is required to repay such
refund to such Governmental Authority. Notwithstanding anything to the contrary
in this paragraph (f), in no event will the indemnified party be required to pay
any amount to an indemnifying party pursuant to this paragraph (f) the payment
of which would place the indemnified party in a less favorable net after-Tax
position than the indemnified party would have been in if the Tax subject to
indemnification and giving rise to such refund had not been deducted, withheld
or otherwise imposed and the indemnification payments or additional amounts with
respect to such Tax had never been paid. This Section 2.14(f) shall not be
construed to require the Administrative Agent or any Lender to make available
its Tax returns (or any other information relating to its Taxes which it deems
confidential) to the Loan Parties or any other Person.

 

(g)          Each Lender shall severally indemnify the Administrative Agent,
within ten (10) days after demand therefor, for (i) any Taxes attributable to
such Lender (but only to the extent that any Loan Party has not already
indemnified the Administrative Agent for such Taxes and without limiting the
obligation of the Loan Parties to do so) and (ii) any Taxes attributable to such
Lender’s failure to comply with the provisions of Section 9.04(c) relating to
the maintenance of a Participant Register, in either case, that are payable or
paid by the Administrative Agent in connection with any Loan Document, and any
reasonable expenses arising therefrom or with respect thereto, 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 Administrative Agent shall be
conclusive absent manifest error. Each Lender hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under any Loan Document or otherwise payable by the
Administrative Agent to the Lender from any other source against any amount due
to the Administrative Agent under this paragraph (g).

 

Section 2.15          Payments Generally; Pro Rata Treatment; Sharing of
Set-offs.

 

(a)           Unless otherwise specified, the Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest or fees, or
of amounts payable under Section 2.12 or 2.14, or otherwise) prior to 2:00 p.m.,
Local Time, on the date when due, in immediately available funds, without
condition or deduction for any defense, recoupment, set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent to the applicable account designated
to the Borrower by the Administrative Agent. The Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof. All payments
hereunder shall be made in Dollars. Any payment required to be made by the
Administrative Agent hereunder shall be deemed to have been made by the time
required if the Administrative Agent shall, at or before such time, have taken
the necessary steps to make such payment in accordance with the regulations or
operating procedures of the clearing or settlement system used by the
Administrative Agent to make such payment.

 

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(b)           Any proceeds of Collateral received by the Administrative Agent
not constituting either a specific payment of principal, interest, fees or other
sum payable under the Loan Documents shall be applied ratably:

 

(i)            first, to pay any fees, indemnities, or expense reimbursements
including amounts then due to the Administrative Agent from the Borrower,

 

(ii)           second, to pay any fees or expense reimbursements then due to the
Lenders from the Borrower,

 

(iii)          third, to pay interest then due and payable on the Loans ratably,

 

(iv)          fourth, to prepay principal on the Loans, and

 

(v)           fifth, to the payment of any other Obligation due to the
Administrative Agent or any Lender by the Borrower.

 

(c)           [Reserved].

 

(d)           If (other than (x) any payment obtained by a Lender as
consideration for the assignment or sale of a participation in any of its Loans
to any assignee or participant, including any assignee or participation that is
a Loan Party or any of its Affiliates or (y) as otherwise expressly provided
elsewhere herein, including, without limitation, as provided in or contemplated
by Section 9.04(f)) any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans resulting in such Lender receiving payment of a
greater proportion of the aggregate amount of its Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans of other Lenders to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans; provided that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph (d) shall not be construed to apply to any payment
made by the Borrower pursuant to and in accordance with the express terms of
this Agreement. The Borrower consents to the foregoing and agrees, to the extent
it may effectively do so under Applicable Law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.

 

(e)            Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders that the Borrower will not make such
payment, the Administrative Agent may assume that the Borrower has 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
Borrower has not in fact made such payment, then each of the Lenders severally
agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender 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 Administrative Agent, at the greater of the NYFRB Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation.

 

37

 

 

 

(f)           If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.05(b) or Section 2.15(e), then the Administrative
Agent may, in its discretion (notwithstanding any contrary provision hereof),
apply any amounts thereafter received by the Administrative Agent for the
account of such Lender to satisfy such Lender’s obligations under such Sections
until all such unsatisfied obligations are fully paid.

 

(g)          Each borrowing by the Borrower from the Lenders hereunder shall be
made pro rata according to the respective Commitments of the relevant Lenders.

 

Section 2.16         Mitigation Obligations; Replacement of Lenders.

 

(a)          If any Lender requests compensation under Section 2.12, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.14,
then such Lender shall use reasonable efforts to designate a different Lending
Office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or Affiliates, if, in
the reasonable judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.12 or 2.14, as
applicable, in the future and (ii) would not subject such Lender to any material
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender in any material respect. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.

 

(b)          If any Lender requests compensation under Section 2.12, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.14,
or if any Lender is a Defaulting Lender or becomes an Affected Lender, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, (i) terminate the Commitments of such Lender and repay all
Obligations of the Borrower owing to such Lender relating to the Loans and
participations held by such Lender as of such termination date or (ii) require
such Lender to assign and delegate, without recourse (in accordance with and
subject to the restrictions contained in Section 9.04), all its interests,
rights and obligations under this Agreement to an assignee that shall assume
such obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior
written consent of the Administrative Agent, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts), (iii) in the case of
any such assignment resulting from a claim for compensation under Section 2.12
or payments required to be made pursuant to Section 2.14, such assignment will
result in a reduction in such compensation or payments, (iv) [reserved],
(v) such assignment shall otherwise comply with Section 9.04 (provided that the
Borrower shall be obligated to pay the registration and processing fee referred
to therein) and (vi) until such time as such Commitments are terminated,
obligations are repaid or such assignment is consummated, the Borrower shall pay
all additional amounts (if any) required pursuant to Section 2.12 or
Section 2.14, as the case may be. Nothing in this Section 2.16 shall be deemed
to prejudice any rights that the Borrower, the Administrative Agent or any
Lender may have against any replaced Lender. Each Lender hereby grants to the
Administrative Agent an irrevocable power of attorney (which power is coupled
with an interest) to execute and deliver, on behalf of such Lender as assignor,
any Assignment and Acceptance necessary to effectuate any assignment of such
Lender’s interests hereunder in the circumstances contemplated by this
Section 2.16(b).

 

38

 

 

(c)           If any Lender (such Lender, a “Non-Consenting Lender”) has failed
to consent to a proposed amendment, waiver, discharge or termination which
pursuant to the terms of Section 9.08 requires the consent of all of the Lenders
or all of the Lenders affected and with respect to which the Required Lenders
shall have granted their consent, then the Borrower shall have the right (unless
such Non-Consenting Lender grants such consent) to replace such Non-Consenting
Lender by (i) terminating the Commitments of such Lender and repaying all
obligations of the Borrower owing to such Lender relating to the Loans and
participations held by such Lender as of such termination date or (ii) requiring
such Non-Consenting Lender to assign (in accordance with and subject to the
restrictions contained in Section 9.04) all or the affected portion of its Loans
and its Commitments hereunder to one (1) or more assignees, provided that:
(a) all Obligations of the Borrower owing to such Non-Consenting Lender being
replaced shall be paid in full to such Non-Consenting Lender concurrently with
such assignment, (b) the replacement Lender shall purchase the foregoing by
paying to such Non-Consenting Lender a price equal to the principal amount
thereof plus accrued and unpaid interest thereon, (c) [reserved], (d) such
assignment shall otherwise comply with Section 9.04 (provided that the Borrower
shall be obligated to pay the registration and processing fee referred to
therein) and (e) the replacement Lender shall grant its consent with respect to
the applicable proposed amendment, waiver, discharge or termination. Each Lender
hereby grants to the Administrative Agent an irrevocable power of attorney
(which power is coupled with an interest) to execute and deliver, on behalf of
such Lender as assignor, any Assignment and Acceptance necessary to effectuate
any assignment of such Lender’s interests hereunder in the circumstances
contemplated by this Section 2.16(c).

 

Section 2.17          Illegality. If any Lender reasonably determines that any
Change in Law has made it unlawful, or that any Governmental Authority has
asserted after the Closing Date that it is unlawful, for any Lender or its
applicable Lending Office to make or maintain any Loans, then, on notice thereof
by such Lender to the Borrower through the Administrative Agent (at which time
such Lender shall be deemed an “Affected Lender”), any obligations of such
Affected Lender to make Loans shall be suspended until such Affected Lender
notifies the Administrative Agent and the Borrower that the circumstances giving
rise to such determination no longer exist. Upon receipt of such notice,
interest on the Loans shall accrue and be payable at the Prime Rate. Upon any
such prepayment or conversion, the Borrower shall also pay accrued interest on
the amount so prepaid or converted.

 

Section 2.18          Defaulting Lenders.

 

(a)          Reallocation of Pro Rata Share; Amendments. For purposes of
determining the Lenders’ obligations to fund or acquire participations in Loans,
the Administrative Agent may exclude the Commitments and Loans of any Defaulting
Lender(s) from the calculation of Pro Rata shares and any Commitments of any
such Defaulting Lender shall automatically be reallocated among the
non-Defaulting Lenders Pro Rata in accordance with their Commitments up to an
amount such that the Commitment of each non-Defaulting Lender does not exceed
its Commitments, so long as the conditions set forth in Section 4.02 are
satisfied at the time of such reallocation. A Defaulting Lender shall have no
right to vote on any amendment, waiver or other modification of a Loan Document,
except as provided in Section 9.08.

 

39

 

 

(b)          Payments; Fees. Any payment of principal, interest, fees or other
amounts received by the Administrative Agent for the account of a Defaulting
Lender (whether voluntary or mandatory, at maturity, pursuant to Article VII or
otherwise, and including any amounts made available to the Administrative Agent
by that Defaulting Lender pursuant to Section 9.06), shall be applied at such
time or times as may be determined by the Administrative Agent as follows:
first, to the payment of any amounts owing by that Defaulting Lender to the
Administrative Agent hereunder; second, to the funding of any Loan in respect of
which that Defaulting Lender has failed to fund its portion thereof as required
by this Agreement, as determined by the Administrative Agent; third, if so
determined by the Administrative Agent or the Borrower, to be held in a deposit
account and released in order to satisfy obligations of that Defaulting Lender
to fund Loans under this Agreement; fourth, to the payment of any amounts owing
to the Lenders as a result of any judgment of a court of competent jurisdiction
obtained by any Lender against that Defaulting Lender as a result of that
Defaulting Lender’s breach of its obligations under this Agreement; fifth, to
the payment of any amounts owing to the Borrower as a result of any judgment of
a court of competent jurisdiction obtained by the Borrower against that
Defaulting Lender as a result of that Defaulting Lender’s breach of its
obligations under this Agreement; and sixth, to that Defaulting Lender or as
otherwise directed by a court of competent jurisdiction; provided that if
(x) such payment is a payment of the principal amount of any Loans in respect of
which that Defaulting Lender has not fully funded its appropriate share and
(y) such Loans were made at a time when the conditions set forth in Section 4.02
were satisfied or waived, such payment shall be applied solely to pay the Loans
of all non-Defaulting Lenders on a Pro Rata basis prior to being applied to the
payment of any Loans of that Defaulting Lender. 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 2.18(b)
shall be deemed paid to and redirected by that Defaulting Lender, and each
Lender irrevocably consents hereto. A Lender shall not be entitled to receive
any fees accruing hereunder during the period in which it is a Defaulting
Lender.

 

(c)          Cure. The Borrower and the Administrative Agent may agree in
writing that a Lender is no longer a Defaulting Lender. At such time, Pro Rata
shares shall be reallocated without exclusion of such Lender’s Commitments and
Loans, and all outstanding Loans and other exposures under the Commitments shall
be reallocated among the Lenders and settled by the Administrative Agent (with
appropriate payments by the reinstated Lender) in accordance with the readjusted
Pro Rata shares. Unless expressly agreed in writing by the Borrower and the
Administrative Agent (each of which shall make such determination, in its sole
discretion), no reinstatement of a Defaulting Lender shall constitute a waiver
or release of claims against such Lender. The failure of any Lender to fund a
Loan or otherwise to perform its obligations hereunder shall not relieve any
other Lender of its obligations, and no Lender shall be responsible for default
by another Lender. No reallocation hereunder shall constitute a wavier or
release of any claim of any party hereunder against a Defaulting Lender arising
from that Lender having become a Defaulting Lender, including any claim of a
non-Defaulting Lender as a result of such non-Defaulting Lender’s increased
exposure following such reallocation.

 

40

 

 

ARTICLE III

Representations and Warranties

 

Each of Holdings (solely to the extent applicable to it) and each other Loan
Party represents and warrants to the Administrative Agent and each of the
Lenders that:

 

Section 3.01         Organization; Powers. Subject to any restriction arising on
account of each Loan Party’s status as a “debtor” under the Bankruptcy Code and
any required approvals of the Court, each of Holdings, the Borrower and each of
the Subsidiaries (a) is a limited partnership, limited liability company or
corporation duly organized, validly existing and in good standing (or, if
applicable in a foreign jurisdiction, enjoys the equivalent status under the
laws of any jurisdiction of organization outside the United States) under the
laws of the jurisdiction of its organization, (b) has all requisite power and
authority to own its property and assets and to carry on its business as now
conducted, (c) is qualified to do business and in good standing in each
jurisdiction where such qualification is required; except in each case referred
to in this Section 3.01 (other than in clause (a) and clause (b), respectively,
with respect to the Borrower), to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect.

 

Section 3.02          Authorization. Subject to the entry of the Final Order,
the execution, delivery and performance by Holdings, the Borrower and each of
the Subsidiary Guarantors of each of the Loan Documents to which it is a party,
and the borrowings hereunder, the transactions forming a part of the
Transactions and the payment of the Transaction Costs (a) have been duly
authorized by all corporate, stockholder, limited partnership or limited
liability company action required to be obtained by Holdings, the Borrower and
such Subsidiary Guarantors and (b) other than violations arising as a result of
the commencement of, or otherwise related to, Chapter 11 Cases or where
enforcement is stayed as upon commencement of the Chapter 11 Cases or as
otherwise excused by the Court, will not (i) violate (A) any provision of
(x) law, statute, rule or regulation applicable to such party, or (y) of the
certificate or articles of incorporation or other constitutive documents or
by-laws of Holdings, the Borrower or any such Subsidiary Guarantor, (B) any
applicable order of any court or any rule, regulation or order of any
Governmental Authority or (C) any provision of any indenture, certificate of
designation for preferred stock, agreement or other instrument to which
Holdings, the Borrower or any such Subsidiary Guarantor is a party or by which
any of them or any of their property is or may be bound, (ii) be in conflict
with, result in a breach of or constitute (alone or with notice or lapse of time
or both) a default under, give rise to a right of or result in any cancellation
or acceleration of any right or obligation (including any payment) or to a loss
of a material benefit under any such indenture, certificate of designation for
preferred stock, agreement or other instrument, where any such conflict,
violation, breach or default referred to in clause (b)(i)(A)(x), (b)(i)(B),
(b)(i)(C) or (b)(ii) of this Section 3.02, could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, or (iii) result in
the creation or imposition of any Lien upon or with respect to any property or
assets now owned or hereafter acquired by Holdings, the Borrower or any such
Subsidiary Guarantor, other than the Liens created by the Loan Documents and
Liens permitted by Section 6.02 hereof.

 

Section 3.03          Enforceability. Subject to the entry of the Final Order,
this Agreement has been duly executed and delivered by Holdings and the Borrower
and constitutes, and each other Loan Document when executed and delivered by
each Loan Party that is party thereto will constitute, a legal, valid and
binding obligation of such Loan Party enforceable against each such Loan Party
in accordance with its terms, subject to (i) the effects of bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance or other similar
laws affecting creditors’ rights generally, (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and (iii) implied covenants of good faith and fair dealing.

 

41

 

 

Section 3.04         Governmental Approvals. Other than violations arising as a
result of the commencement of, or otherwise related to, the Chapter 11 Cases or
where enforcement is stayed as upon commencement of the Chapter 11 Cases or as
otherwise excused by the Court, no action, consent or approval of, registration
or filing with or any other action by any Governmental Authority is or will be
required in connection with the Transactions and the payment of the Transaction
Costs, except for (a) recordation of the Mortgages, (b) such as have been made
or obtained and are in full force and effect and (c) such actions, consents,
approvals, registrations or filings the failure to be obtained or made which
could not reasonably be expected to have a Material Adverse Effect.

 

Section 3.05         Financial Condition.

 

(a)          All financial statements of the Loan Parties that have been or may
hereafter be delivered by any Loan Party to the Administrative Agent and/or the
Lenders present fairly, in all material respects, the consolidated financial
condition and results of operations and cash flows of the Borrower and its
Subsidiaries as of the date(s) and for the period(s) thereof in accordance with
GAAP.

 

(b)          No Loan Party or any Subsidiary has on the date hereof any material
Indebtedness or any material contingent liabilities, off-balance sheet
liabilities or liabilities for Taxes, except as referred to or reflected or
provided for in the Approved Budget, the “first day” orders or the financial
statements of the Loan Parties or their Subsidiaries previously delivered to the
Lenders.

 

Section 3.06         No Material Adverse Effect. Since the Petition Date, no
event, development, circumstance or change has occurred that has or would
reasonably be expected to have a Material Adverse Effect.

 

Section 3.07         Properties. As of the date of this Agreement, Schedule 3.07
sets forth the address of each parcel of real property that is owned by any Loan
Party (collectively, the “Real Property”). Each of the Loan Parties and each of
its Subsidiaries has good and indefeasible title to all of its material real and
personal property, free of all Liens other than those permitted by Section 6.02.

 

Section 3.08         Capitalization and Subsidiaries. Schedule 3.08 sets forth
as of the Closing Date (a) a correct and complete list of the name and
relationship to Holdings of each and all of Holding’s Subsidiaries, (b) a true
and complete listing of each class of the authorized Equity Interests of all
Loan Parties, all of which issued Equity Interests are validly issued,
outstanding, fully paid and non-assessable, and, other than with respect to
Holdings, owned beneficially and of record by the Persons identified on Schedule
3.08, and (c) the type of entity of each Loan Party. All of the issued and
outstanding Equity Interests owned by any Loan Party have been (to the extent
such concepts are relevant with respect to such ownership interests) duly
authorized and issued and are fully paid and non-assessable. There are no
outstanding commitments or other obligations of any Loan Party to issue, and no
options, warrants or other rights of any Person to acquire, any shares of any
class of capital stock or other equity interests of such Loan Party. Holdings
has no Foreign Subsidiaries.

 

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Section 3.09         Litigation; Compliance with Laws.

 

(a)          Except the Chapter 11 Cases, there are no actions, suits,
investigations or proceedings at law or in equity or by or on behalf of any
Governmental Authority or in arbitration now pending against, or to the
knowledge of Holdings or the Borrower threatened in writing against, Holdings or
the Borrower or any of the Subsidiaries or any business, property or rights of
any such Person (i) that involve any Loan Document, the Transactions or the
payment of the Transaction Costs or (ii) that would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.

 

(b)          None of Holdings, the Borrower, the Subsidiaries or their
respective properties or assets is in violation of any law, rule or regulation
(including any zoning, building, ordinance, code or approval or any building
permit, but excluding any Environmental Laws that are the subject of
Section 3.16) or any restriction of record or agreement affecting any owned Real
Property or is in default with respect to any judgment, writ, injunction or
decree of any Governmental Authority, where such violation or default could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect unless non-compliance therewith is permitted by any applicable
Governmental Authority (including any order of the Court) or as a result of the
commencement of the Chapter 11 Cases.

 

Section 3.10          Investment Company Act. None of Holdings, the Borrower or
any Subsidiary is an “investment company” as defined in, or subject to
regulation under, the Investment Company Act of 1940, as amended.

 

Section 3.11          Use of Proceeds. The proceeds of the Loans have been used
and will be used, whether directly or indirectly, as set forth in Section 5.13.

 

Section 3.12          Federal Reserve Regulations.

 

(a)           None of Holdings, the Borrower or any Subsidiary is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying Margin Stock.

 

(b)          No part of the proceeds of any Loan will be used, whether directly
or indirectly, and whether immediately, incidentally or ultimately, (i) to
purchase or carry Margin Stock or to extend credit to others for the purpose of
purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose, or (ii) for any purpose that entails a violation of,
or that is inconsistent with, the provisions of the Regulations of the Board,
including Regulation U or Regulation X.

 

Section 3.13         Tax.

 

(a)          Each of Holdings, the Borrower and its Subsidiaries has filed or
caused to be filed all U.S. federal, state, local and non-U.S. Tax returns
required to have been filed by it that are material to such companies, taken as
a whole, and each such Tax return is true and correct in all material respects;

 

43

 

 

(b)          Each of Holdings, the Borrower and its Subsidiaries has timely paid
or caused to be timely paid all Taxes shown to be due and payable by it on the
returns referred to in clause (a) and all other material Taxes or assessments
(except Taxes for which payment is stayed or excused under the Bankruptcy Code
or assessments that are being contested in good faith by appropriate proceedings
in accordance with Section 5.03 and for which Holdings, the Borrower or any of
its Subsidiaries (as the case may be) has set aside on its books adequate
reserves (in accordance with GAAP)); and

 

(c)          With respect to each of Holdings, the Borrower and its
Subsidiaries, no tax lien has been filed, and, to the knowledge of the Borrower
and its Subsidiaries, no claim is being asserted, with respect to any such
Taxes.

 

Section 3.14         Disclosure.

 

(a)          The Loan Parties have disclosed to the Lenders all material
agreements, instruments and corporate or other restrictions to which any Loan
Party or any Subsidiary is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. No reports, financial statements, certificates or other
information furnished by or on behalf of any Loan Party or any Subsidiary to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or any other Loan Document (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 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 delivered and, if such projected financial
information was delivered prior to the Closing Date, as of the Closing Date.

 

(b)          As of the Closing Date and solely to the extent such Beneficial
Ownership Certification has been requested by the Administrative Agent, to the
best knowledge of the Borrower, the information included in the Beneficial
Ownership Certification provided on or prior to the Closing Date to any Lender
in connection with this Agreement is true and correct in all material respects.

 

Section 3.15         Employee Benefit Plans.

 

(a)          Except as could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect: (i) each Loan Party and each ERISA
Affiliate is in compliance with the applicable provisions of ERISA and the
provisions of the Code relating to Plans and the regulations and published
interpretations thereunder; and (ii) no ERISA Event has occurred or is
reasonably expected to occur; the present value of all accumulated benefit
obligations under each Plan (based on those assumptions used for purposes of
Accounting Standards Codification No. 715: Compensation Retirement Benefits) did
not, as of the date of the most recent financial statements reflecting such
amounts, exceed the fair market value of the assets of such Plan allocable to
such accrued benefits and the present value of all accrued benefit obligations
of all underfunded Plans did not, as of the date of the most recent financial
statements reflecting such amounts, exceed the value of the assets of all such
underfunded Plans.

 

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(b)          Except as could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, no Foreign Plan Event has
occurred.

 

Section 3.16         Environmental Matters. Except as to matters that could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect: (i) no written notice of violation, request for information,
order, complaint or assertion of penalty has been received by the Borrower or
any of the Subsidiaries, and there are no judicial, administrative or other
actions, suits or proceedings pending or, to the knowledge of the Borrower,
threatened which allege a violation of or liability under any Environmental Laws
or concerning Hazardous Materials, in each case relating to the Borrower or any
of the Subsidiaries, (ii) the Borrower and the Subsidiaries has all permits
necessary for its operations to comply with all applicable Environmental Laws
and is, and during the term of all applicable statutes of limitation, has been,
in compliance with the terms of such permits and with all other applicable
Environmental Laws, (iii) no Hazardous Material is located at any property
currently owned by the Borrower or any of the Subsidiaries in quantities or
concentrations that would reasonably be expected to give rise to any liability
or obligation of the Borrower or any of the Subsidiaries under any Environmental
Laws, and no Hazardous Material has been generated by or on behalf of the
Borrower or any of the Subsidiaries that has been transported to or Released at
or from any location in a manner that would reasonably be expected to give rise
to any liability or obligation of the Borrower or any of the Subsidiaries, and
(iv) there is no agreement to which the Borrower or any of the Subsidiaries is a
party in which the Borrower or any of the Subsidiaries has assumed or
undertaken, or retained, responsibility for any known or reasonably likely
liability or obligation arising under or relating to Environmental Laws.

 

Section 3.17          Security Documents. [Reserved].

 

Section 3.18         Affiliate Transactions. Except as permitted by Section
6.07, there are no existing agreements, arrangements or transactions between any
Loan Party and any of its Affiliates (other than the Borrower or any of its
Subsidiaries).

 

Section 3.19         Labor Matters. Except as, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect: (a) there
are no strikes or other labor disputes pending or, to the knowledge of Holdings
or the Borrower, threatened in writing against the Borrower or any of the
Subsidiaries; (b) the hours worked and payments made to employees of the
Borrower and the Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other Applicable Law dealing with such matters; (c) all
Persons treated as contractors by the Borrower and the Subsidiaries are properly
categorized as such, and not as employees, under Applicable Law; and (d) all
payments due from the Borrower or any of the Subsidiaries or for which any claim
may be made against the Borrower or any of the Subsidiaries, on account of wages
and employee health and welfare insurance and other benefits have been paid or
accrued as a liability on the books of the Borrower or such Subsidiary to the
extent required by GAAP. Except as, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect the consummation of the
Transactions and the payment of the Transaction Costs will not give rise to a
right of termination or right of renegotiation on the part of any union under
any material collective bargaining agreement to which the Borrower or any of its
Subsidiaries (or any predecessor) is a party or by which Holdings, the Borrower
or any of its Subsidiaries (or any predecessor) is bound.

 

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Section 3.20         Insurance. Schedule 3.20 sets forth a true, complete and
correct description of all material insurance maintained by or on behalf of
Holdings, the Borrower or the Subsidiaries as of the Closing Date. Except as,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect, as of such date, to the knowledge of the Borrower and
its Subsidiaries such insurance is in full force and effect.

 

Section 3.21         USA PATRIOT Act and OFAC.

 

(a)          To the extent applicable, each Loan Party is in compliance, in all
material respects, with the (i) Trading with the Enemy Act, as amended, and each
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling
legislation or executive order relating thereto, and (ii) USA PATRIOT Act. To
the knowledge of the Borrower, no part of the proceeds of the Loans will be
used, 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.

 

(b)          The Borrower has implemented and maintains in effect policies and
procedures designed to ensure compliance by the Borrower, its Subsidiaries and
their respective directors, officers, employees and agents with Anti-Corruption
Laws and Sanctions, and the Borrower, its Subsidiaries and their respective
officers and employees.

 

(c)          To the knowledge of the Borrower, its directors and agents are in
compliance with Anti-Corruption Laws and Sanctions in all material respects.

 

(d)          None of (i) the Borrower, any Subsidiary or any of their respective
directors or officers, or (ii) to the knowledge of the Borrower, any agent of
the Borrower or any Subsidiary that will act in any capacity in connection with
or benefit from the credit facility established hereby, is a Sanctioned Person.

 

(e)          No Borrowing, use of proceeds by the Borrower or other transaction
contemplated by this Agreement will violate Anti-Corruption Laws or Sanctions.

 

Section 3.22         EEA Financial Institution. No Loan Party is an EEA
Financial Institution.

 

Section 3.23         Plan Assets. None of the Borrower or any of its
Subsidiaries is an entity deemed to hold “plan assets” (within the meaning of
the Plan Asset Regulations).

 

Section 3.24        Accounts. As of the Closing Date, all of each Loan Party’s
Deposit Accounts, Securities Accounts and Commodities Accounts (other than
Excluded Accounts) are listed on Schedule 5.12, including the name of the
institution where such account is maintained, the account number and description
of account.

 

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Section 3.25         Approved Budget. [Reserved].

 

Section 3.26         Material Agreements. All Material Agreements to which any
Loan Party or any Subsidiary is a party or is bound as of the date of this
Agreement are listed on Schedule 3.26. Except for any defaults or events of
default arising solely as a result of the commencement of the Chapter 11 Cases
or prior to the commencement of the Chapter 11 Cases, no Loan Party nor any
Subsidiary is in default in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in (i) any Material Agreement
to which it is a party or (ii) any agreement or instrument evidencing or
governing any Material Indebtedness, in each case, as could not reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect.

 

Section 3.27         Chapter 11 Cases.

 

(a)          The Chapter 11 Cases were commenced on the Petition Date in
accordance with Applicable Law and proper notice thereof was given for (i) the
motion seeking approval of the Loan Documents and the Final Order and (ii) the
hearing for the entry of the Final Order.

 

(b)          After the entry of the Final Order, the Obligations will constitute
allowed administrative expense claims in the Chapter 11 Cases having priority
over all administrative expense claims and unsecured claims against the Loan
Parties now existing or hereafter arising, of any kind whatsoever, including all
administrative expense claims of the kind specified in Sections 105, 326, 330,
331, 503(b), 506(c), 507(a), 507(b), 546(c), 726, 1114 or any other provision of
the Bankruptcy Code or otherwise, as provided under Section 364(c)(l) of the
Bankruptcy Code, subject to the priorities with respect to the ABL Obligations
as further set forth in the Final Order, and/or Intercreditor Agreement, as
applicable. In the event both the Administrative Agent and the ABL DIP Agent
hold superpriority claims that are not satisfied from their respective
collateral, such claims shall be pari passu and any proceeds received in respect
of such claims shall be applied as provided in the Intercreditor Agreement.

 

(c)          After the entry of the Final Order, the Obligations will be secured
by a valid and perfected first priority Lien on all of the Collateral subject,
as to priority, only to the extent set forth in the Final Order.

 

(d)          The Final Order is in full force and effect and has not been
reversed, stayed (whether by statutory stay or otherwise), vacated, or, without
the Administrative Agent’s consent, modified or amended. The Loan Parties are in
compliance in all material respects with the Final Order.

 

ARTICLE IV

Conditions of Lending

 

The Administrative Agent and the Lenders shall not be required to fund any Loans
on the Closing Date, until the following conditions are satisfied or waived:

 

Section 4.01          Closing Date. On the Closing Date:

 

(a)           [Reserved].

 

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(b)          The representations and warranties set forth in Article III hereof
shall be true and correct in all material respects as of such date, with the
same effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties shall be true and correct in all
material respects as of such earlier date).

 

(c)          At the time of and immediately after giving effect to the Closing
Date, no Event of Default or Default shall have occurred and be continuing.

 

(d)          The Administrative Agent (or its counsel) shall have received from
each party hereto either (i) a counterpart of this Agreement signed on behalf of
such party or (ii) written evidence satisfactory to the Administrative Agent
(which may include fax or other electronic transmission of a signed signature
page of this Agreement) that such party has signed a counterpart of this
Agreement.

 

(e)          [Reserved].

 

(f)           The Administrative Agent shall have received in the case of each
Loan Party each of the items referred to in clauses (i), (ii), (iii) and
(iv) below:

 

 (i)         a copy of the certificate or articles of incorporation, certificate
of limited partnership or certificate of formation, including all amendments
thereto, of each Loan Party, certified as of a recent date by the Secretary of
State (or other similar official) of the jurisdiction of its organization, and a
certificate as to the good standing (to the extent such concept or a similar
concept exists under the laws of such jurisdiction) of each such Loan Party as
of a recent date from such Secretary of State (or other similar official);

 

 (ii)        a certificate of the secretary or assistant secretary or similar
officer of each Loan Party dated the Closing Date and certifying:

 

(A)            that attached thereto is a true and complete copy of the by-laws
(or limited partnership agreement, limited liability company agreement or other
equivalent governing documents) of such Loan Party as in effect on the Closing
Date,

 

(B)             that attached thereto is a true and complete copy of resolutions
duly adopted by the board of directors (or equivalent governing body) of such
Loan Party (or its managing general partner or managing member) authorizing the
execution, delivery and performance of the Loan Documents to which such Person
is a party and, in the case of the Borrower, the borrowings hereunder, and that
such resolutions have not been modified, rescinded or amended and are in full
force and effect on the Closing Date,

 

(C)            that the certificate or articles of incorporation, certificate of
limited partnership or certificate of formation of such Loan Party has not been
amended since the date of the last amendment thereto disclosed pursuant to
clause (i) above,

 

(D)            as to the incumbency and specimen signature of each officer
executing any Loan Document or any other document delivered in connection
herewith on behalf of such Loan Party,

 

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(E)              as to the absence of any pending proceeding for the dissolution
or liquidation of such Loan Party;

 

 (iii)        a certificate of another officer as to the incumbency and specimen
signature of the Secretary or Assistant Secretary or similar officer executing
the certificate pursuant to clause (ii) above; and

 

 (iv)        a certificate of a Responsible Officer of Holdings or the Borrower
certifying that as of the Closing Date (x) all the representations and
warranties described in Section 4.01(b) are true and correct to the extent set
forth therein and (y) that as of the Closing Date, no Default or Event of
Default has occurred and is continuing or would result from any Borrowing to
occur on the date hereof or the application of the proceeds thereof.

 

(g)           (i)  the Administrative Agent shall have received the results of a
search of the Uniform Commercial Code (or equivalent) filings made with respect
to the Loan Parties and copies of the financing statements (or similar
documents) disclosed by such search, (ii) the Administrative Agent shall have
received evidence reasonably satisfactory to the Administrative Agent that the
Liens indicated by such financing statements (or similar documents) are either
permitted by Section 6.02 or have been released (or authorized for release in a
manner reasonably satisfactory to the Administrative Agent); and (iii) each
document required by the Security Documents or under law or reasonably requested
by the Administrative Agent to be filed, registered or recorded in order to
create in favor of the Administrative Agent, for the benefit of itself, the
Lenders and the other Secured Parties, a perfected Lien on the Collateral
described therein, prior and superior in right to any other Person (other than
with respect to Liens expressly permitted by Section 6.02), shall be in proper
form for filing, registration or recordation, except as set forth in Section
5.23.

 

(h)         Financial Statements. The Lenders shall have received unaudited
interim consolidated financial statements of Holdings and its Subsidiaries for
the fiscal quarter ended December 31, 2019.

 

(i)           Intercreditor Agreement. The Administrative Agent shall have
entered into the Intercreditor Agreement with the ABL DIP Agent in form and
substance satisfactory to the Administrative Agent and the ABL DIP Agent.

 

(j)           The Administrative Agent shall have received all fees payable to
any Lender on or prior to the Closing Date to the extent invoiced at least 3
Business Days prior to the Closing Date, all other amounts due and payable
pursuant to the Loan Documents on or prior to the Closing Date, including, to
the extent invoiced, reimbursement or payment of all reasonable and documented
(in summary format) out-of-pocket expenses (including reasonable and documented
fees, charges and disbursements of Willkie Farr & Gallagher LLP) required to be
reimbursed or paid by the Loan Parties hereunder or under any other Loan
Document.

 

(k)           No Material Adverse Effect.

 

 (i)          Since the Petition Date, other than those events or circumstances
arising from the commencement of the Chapter 11 Cases, there has been no event
or circumstance, either individually or in the aggregate, that has or could
reasonably be expected to have a Material Adverse Effect.

 

49

 

 

 (ii)          Except for actions, suits, investigations, proceedings, claims or
disputes stayed by Section 362 of the Bankruptcy Code, no orders, injunctions or
pending litigation exists which could reasonably be expected to have a Material
Adverse Effect or which challenges this Agreement, the Loan Documents or the
credit facilities contemplated hereunder.

 

 (iii)        Since the Petition Date, there has been no material increase in
the liabilities, liquidated or contingent, of the Borrower and the Subsidiary
Guarantors taken as a whole, or material decrease in the assets of the Borrower,
the Subsidiary Guarantors taken as a whole except as set forth in motions or
orders filed in the bankruptcy.

 

 (iv)        Other than those resulting from the commencement of the Chapter 11
Cases, since the Petition Date there shall have been no adverse change in the
ability of the Administrative Agent and the Lenders to enforce the Loan
Documents and the Obligations of the Borrower and the Subsidiary Guarantors
hereunder.

 

(l)            To the extent requested by the Administrative Agent not less than
ten (10) days prior to the Closing Date, the Administrative Agent shall have
received, at least five (5) days prior to the Closing Date, 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 and the Beneficial Ownership Regulation.

 

(m)         [Reserved].

 

(n)          The Administrative Agent (or its counsel) shall have received from
each party thereto either (i) a counterpart of the Fee Letter signed on behalf
of such party or (ii) written evidence satisfactory to the Administrative Agent
(which may include fax or other electronic transmission (including a “.pdf”
electronic version) of a signed signature page of this Agreement) that such
party has signed a counterpart of the Fee Letter.

 

(o)          Security Interest. Subject to the Final Order, the Administrative
Agent shall be satisfied that the Loan Documents and the Final Order shall be
effective to create in favor of the Administrative Agent a legal, valid, first
priority, perfected and enforceable security interest and Lien upon the
Collateral, with the priority set forth in the Final Order and the terms
thereof.

 

(p)          [Reserved].

 

(q)          Insolvency Matters – Chapter 11 Cases. The Court shall have entered
an Final Order in form and substance satisfactory to the Administrative Agent.

 

(r)           Real Estate Documents. With respect to each parcel of real
property specified on Schedule 4.01(r) (each, individually, a “Mortgaged
Property,” and, collectively, the “Mortgaged Properties”), the Administrative
Agent shall have received the following, which in each case shall be in form and
substance reasonably satisfactory to the Administrative Agent:

 

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 (i)           to the extent in the Loan Parties’ possession as of the date
hereof, a survey with respect to such Mortgaged Property;

 

 (ii)         if any such parcel of such Mortgaged Property is determined by the
Administrative Agent to be in a flood zone, a flood notification form signed by
the Borrower and evidence that flood insurance is in place for the building and
contents located at such Mortgaged Property; and

 

 (iii)        [Reserved].

  

(s)           ABL DIP Facility. The ABL DIP Facility shall be in full force and
effect and no “Default” or “Event of Default” (as defined in the ABL DIP Credit
Agreement) shall have occurred and be continuing under the ABL DIP Credit
Agreement that remains uncured or not expressly waived in writing by the ABL DIP
Lenders.

 

(t)           Title Reports. At least three (3) Business Days prior to the
hearing on the proposed Final Order, the Administrative Agent shall have
received title reports or other evidence reasonably satisfactory to
Administrative Agent evidencing that title to each Mortgaged Property is vested
in the Loan Parties subject only to liens and encumbrances satisfactory to the
Administrative Agent in its sole discretion.

 

(u)          Other Documents. The Administrative Agent shall have received such
other customary documents as the Administrative Agent or its counsel may have
reasonably requested prior to the Closing Date.

 

The Administrative Agent and each Lender, by delivering its signature page to
this Agreement and funding a Loan on the Closing Date, shall be deemed to have
acknowledged receipt of and consented to and approved each Loan Document and
each other document required to be approved by the Administrative Agent or any
Lender, as applicable, on the Closing Date.

 

Section 4.02          Conditions Precedent to Delayed Draw Term Loans. On the
date of each Borrowing of Delayed Draw Term Loans:

 

(a)          the Borrower shall have delivered to the Administrative Agent a
customary Borrowing Request certifying as to, among other things, that the Loans
will be utilized in accordance with Section 5.13;

 

(b)          The Delayed Draw Term Loan Conditions shall have been satisfied;

 

(c)          At the time of and immediately after giving effect to such
Borrowing and the application of the proceeds thereof, no Default or Event of
Default shall have occurred and be continuing (except for any defaults or events
of default arising solely as a result of the commencement of the Chapter 11
Cases);

 

(d)          the representations and warranties of each Loan Party set forth in
Article III of this Agreement or in any other Loan Document shall be true and
correct in all material respects (without duplication of any materiality
qualifier contained therein) on the date of, and upon giving effect to, such
funding or issuance (except for representations and warranties that expressly
relate to an earlier date, in which case such representations and warranties
shall be true and correct in all material respects as such earlier date); and

 

51

 

 

(e)          The Borrower shall have paid the balance of all reasonable and
documented fees and expenses then due and payable under this Agreement.

 

Each request by the Borrower for funding of a Delayed Draw Term Loan shall
constitute a representation by the Borrower that the conditions in clauses (a)
through (e) above are satisfied on the date of such request and on the date of
such funding.

 

ARTICLE V

Affirmative Covenants

 

Each of Parent (solely as to Sections 5.01, 5.05 and 5.09 as applicable to it)
and the Borrower covenants and agrees with each Lender that so long as any
Commitments or Obligations (other than contingent obligations as to which no
claim or demand for payment has been made, or in the case of indemnification
obligations, no notice has been given) are outstanding, the Borrower (and
Holdings solely to the extent applicable to it) will, and the Borrower will
cause each of the Subsidiaries to:

 

Section 5.01          Existence; Conduct of Business.

 

(a)          Use commercially reasonable efforts to do or cause to be done all
things reasonably necessary to preserve, renew and keep in full force and effect
its legal existence, except where the failure to do so would not reasonably be
expected to have a Material Adverse Effect, and except to the extent the failure
to do so could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, the rights, qualifications, permits, franchises,
governmental authorizations, Intellectual Property rights, Licenses and permits
with respect to the conduct of its business, and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted; provided that the foregoing provisions shall not prohibit any merger,
amalgamation, consolidation, liquidation or dissolution permitted under Section
6.05.

 

(b)          Except where the failure to do so would not reasonably be expected
to have a Material Adverse Effect, use commercially reasonable efforts to do or
cause to be done all things necessary to (i) lawfully obtain, preserve, renew,
extend and keep in full force and effect the permits, franchises,
authorizations, patents, trademarks, service marks, trade names, copyrights,
licenses and rights with respect thereto reasonably necessary to the normal
conduct of the business of the Borrower and the Subsidiaries and (ii) at all
times maintain and preserve all property reasonably necessary to the normal
conduct of the business of the Borrower and the Subsidiaries and keep such
property in satisfactory repair, working order and condition and from time to
time make, or cause to be made, all needful and proper repairs, renewals,
additions, improvements and replacements thereto in accordance with prudent
industry practice (in each case except as expressly permitted by this
Agreement).

 

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Section 5.02          Insurance. Maintain with financially sound and reputable
carriers having a financial strength rating of at least A- by A.M. Best Company
insurance in such amounts (with no greater risk retention) and against such
risks (including, without limitation: loss or damage by fire and loss in
transit; theft, burglary, pilferage, larceny, embezzlement, and other criminal
activities; business interruption; and general liability) and such other
hazards, as is customarily maintained by companies of established repute engaged
in the same or similar businesses operating in the same or similar locations. In
the event any Real Property constituting Collateral hereunder is located in any
area that has been designated by the Federal Emergency Management Agency as a
“Special Flood Hazard Area”, such Loan Party shall purchase and maintain flood
insurance on such Real Property constituting Collateral hereunder (including any
personal property which is located on such Real Property). The minimum amount of
flood insurance required by this Section shall be in an amount equal to the
total replacement cost value of the improvements. All insurance policies
required hereunder which cover any Collateral shall name the Administrative
Agent (for the benefit of the Administrative Agent and the Lenders) as an
additional insured or as lender loss payee, as applicable, and shall contain
lender loss payable clauses or mortgagee clauses, through endorsements in form
and substance satisfactory to the Administrative Agent, which provide that: (a)
all proceeds thereunder with respect to any Collateral shall be payable to the
Administrative Agent (provided that the Administrative Agent’s application of
such proceeds shall be subject to the Intercreditor Agreement and the Final
Order); (b) no such insurance shall be affected by any act or neglect of the
insured or owner of the property described in such policy; and (c) such policy
and lender loss payable or mortgagee clauses may be canceled, amended, or
terminated only upon at least thirty (30) days (ten (10) days in the case of
failure to pay premiums) prior written notice given to the Administrative Agent.
All premiums on any such insurance shall be paid when due by such Loan Party,
and copies of the policies delivered to the Administrative Agent upon
Administrative Agent’s request therefor. If such Loan Party fails to obtain any
insurance as required by this Section, the Administrative Agent may obtain such
insurance at the Borrower’s expense. By purchasing such insurance, the
Administrative Agent shall not be deemed to have waived any Default arising from
the Loan Party’s failure to maintain such insurance or pay any premiums
therefor. The Borrower will furnish to the Lenders, upon request of the
Administrative Agent, information in reasonable detail as to the insurance so
maintained.

 

Section 5.03         Taxes. Pay and discharge promptly when due all material
Taxes, imposed upon it or upon its income or profits or in respect of its
property, as well as all lawful claims which, if unpaid, might give rise to a
Lien (other than a Lien permitted under Section 6.02) upon such properties or
any part thereof except to the extent not overdue by more than thirty (30) days
or, if more than thirty (30) days overdue (a) the validity or amount thereof
shall be contested in good faith by appropriate proceedings, and the Borrower or
the affected Subsidiary, as applicable, shall have set aside on its books
reserves in accordance with GAAP with respect thereto and (b) in the case of a
Tax or claim which has or may become a Lien on any of the Collateral, such
contest proceedings conclusively operate to stay the sale of any portion of the
Collateral to satisfy such Tax or claim.

 

Section 5.04         Financial Statements, Reports and Other Information.
Furnish to the Administrative Agent (which will promptly furnish such
information to the Lenders):

 

(a)          as soon as available, but in any event in accordance with
Applicable Law and not later than ninety (90) days after the end of each fiscal
year (commencing with the fiscal year ending June 30, 2020), a consolidated
balance sheet and related statements of operations, cash flows and owners’
equity showing the financial position of Holdings and its Subsidiaries as of the
close of such fiscal year and the consolidated results of its operations during
such year and setting forth in comparative form the corresponding figures for
the prior fiscal year, which consolidated balance sheet and related statements
of operations, cash flows and owners’ equity shall be accompanied by customary
management’s discussion and analysis and audited by independent public
accountants of recognized national standing and accompanied by an opinion of
such accountants (which opinion shall be without a “going concern” or like
qualification, other than solely with respect to an upcoming maturity date of
Indebtedness or a potential inability to satisfy a financial covenant, or
exception and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements fairly present,
in all material respects, the financial condition and results of operations of
Holdings and its Subsidiaries on a consolidated basis in accordance with GAAP,
supporting schedules reconciling such consolidated balance sheet and related
statements of operations and cash flows with the consolidated financial
condition and results of operations of Holdings or the Borrower, as applicable,
for the relevant period (it being understood that the delivery by the Borrower
of annual reports on Form 10-K of Holdings and its consolidated Subsidiaries
shall satisfy the requirements of this Section 5.04(a) to the extent such annual
reports include the information specified herein);

 

53

 

 

(b)          as soon as available, but in any event in accordance with
Applicable Law and not later than forty-five (45) days after the end of each
fiscal quarter (commencing with the fiscal quarter ending September 30, 2020), a
consolidated balance sheet and related statements of operations and cash flows
showing the financial position of Holdings and its Subsidiaries as of the close
of such fiscal quarter and the consolidated results of its operations during
such fiscal quarter and the then-elapsed portion of the fiscal year and setting
forth in comparative form the corresponding figures for the corresponding
periods of the prior fiscal year, all of which shall be in reasonable detail and
which consolidated balance sheet and related statements of operations and cash
flows shall be accompanied by customary management’s discussion and analysis and
certified by a Financial Officer of the Borrower on behalf of the Borrower as
fairly presenting, in all material respects, the financial position and results
of operations of Holdings and its Subsidiaries on a consolidated basis in
accordance with GAAP (subject to normal year-end audit adjustments and the
absence of footnotes), supporting schedules reconciling such consolidated
balance sheet and related statements of operations and cash flows with the
consolidated financial position and results of operations of Holdings or the
Borrower, as applicable, for the relevant period (it being understood that the
delivery by the Borrower of quarterly reports on Form 10-Q of Holdings and its
consolidated Subsidiaries shall satisfy the requirements of this Section 5.04(b)
to the extent such quarterly reports include the information specified herein);

 

(c)          within thirty (30) days after the end of each month (for each of
the first two (2) months of each fiscal quarter), a balance sheet and related
statements of operations and cash flows showing the financial position of
Holdings and its Subsidiaries as of the close of such month and the consolidated
results of its operations during such month, all of which shall be in reasonable
detail;

 

(d)          concurrently with any delivery of financial statements under
paragraphs (a) or (b) above, a Compliance Certificate certifying that no Default
or Event of Default has occurred or, if such a Default or an Event of Default
has occurred, specifying the nature and extent thereof and any corrective action
taken or proposed to be taken with respect thereto;

 

54

 

 

 

(e)          except to the extent otherwise specified, by Thursday of every
calendar week prepared as of the close of business on Saturday of the previous
week, delivered electronically in a text formatted file similar to the file
provided under the ABL DIP Credit Agreement, a reconciliation of the loan
balance per the Borrower’s general ledger to the loan balance under this
Agreement;

 

(f)           [reserved];

 

(g)           promptly upon the Administrative Agent’s reasonable request,
information relating to the Collateral to the extent available using
commercially reasonable efforts;

 

(h)           promptly after the same become publicly available, copies of all
periodic and other publicly available reports, proxy statements and, to the
extent requested by the Administrative Agent, other materials filed by Holdings,
the Borrower or any of its Subsidiaries with the SEC or any securities exchange,
or distributed to its stockholders generally, as applicable and all press
releases and other statements made available generally by Holdings or any of its
Subsidiaries to the public concerning material developments in the business of
Holdings or any of its Subsidiaries;

 

(i)            [Reserved];

 

(j)            promptly following a request therefor, (x) such other information
regarding compliance with the terms of this Agreement, as the Administrative
Agent or any Lender may reasonably request, and (y) information and
documentation reasonably requested by the Administrative Agent or any Lender for
purposes of compliance with applicable “know your customer” and anti-money
laundering rules and regulations, including the USA PATRIOT Act and the
Beneficial Ownership Regulation;

 

(k)           promptly upon any extension thereof, notice from the ABL DIP Agent
that it has agreed to extend a Case Milestone;

 

(l)            promptly following reasonable request therefore from the
Administrative Agent, copies of (i) any documents described in Sections 101(f)
and/or (j) of ERISA with respect to any Plan, and/or (ii) any notices or
documents described in Sections 101(f), (k) and/or (l) of ERISA requested with
respect to any Multiemployer Plan; provided, that if any Loan Party or any ERISA
Affiliate has not requested such documents or notices from the administrator or
sponsor of the applicable Plan or Multiemployer Plan, then, upon reasonable
request of the Administrative Agent, the Loan Party(ies) and/or the ERISA
Affiliate(s) shall promptly make a request for such documents or notices from
such administer or sponsor and the Borrower shall provide copies of such
documents and notices to the Administrative Agent promptly after receipt
thereof;

 

(m)          promptly, from time to time, such other information regarding
compliance with the terms of any Loan Document, as in each case the
Administrative Agent may reasonably request (for itself or on behalf of any
Lender); and

 

(n)           documents required to be delivered pursuant to this Section 5.04
may be delivered electronically and if so delivered, shall be deemed to have
been delivered on the date (i) on which Holdings or the Borrower (or a
representative thereof) posts such documents (or provides a link thereto) at
www.tuesdaymorning.com; provided that, other than with respect to items required
to be delivered pursuant to Section 5.04(e) above, Holdings or the Borrower
shall promptly notify (which notice may be by facsimile or electronic mail) the
Administrative Agent of the posting of any such documents at
www.tuesdaymorning.com and provide to the Administrative Agent by electronic
mail electronic versions (i.e., soft copies) of such documents; (ii) on which
such documents are delivered by Holdings or the Borrower to the Administrative
Agent for posting on behalf of Holdings and the Borrower on IntraLinks, SyndTrak
or another relevant secure website, if any, to which each Lender and the
Administrative Agent have access (whether a commercial, third-party website or
whether sponsored by the Administrative Agent); (iii) on which such documents
are faxed to the Administrative Agent (or electronically mailed to an address
provided by the Administrative Agent); or (iv) with respect to any item required
to be delivered pursuant to Section 5.04(e) above in respect of information
filed by Holdings or its applicable Parent Entity with any securities exchange
or with the SEC or any analogous Governmental Authority or private regulatory
authority with jurisdiction over matters relating to securities (other than
Form 10-Q reports and Form 10-K reports), on which such items have been made
available on the SEC website or the website of the relevant analogous
governmental or private regulatory authority.

 

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Section 5.05          Notices of Material Events. Furnish to the Administrative
Agent (and the Administrative Agent shall make available to each Lender)
promptly after any a Responsible Officer obtains knowledge (but in any event
within any time period that may be specified below) written notice of the
following:

 

(a)           the occurrence of any Default, Event of Default, or any “Default”
or “Event of Default” as defined in the ABL DIP Credit Agreement;

 

(b)           any action, suit or proceeding, whether at law or in equity or by
or before any Governmental Authority or in arbitration, against Holdings, the
Borrower or any of their Subsidiaries would reasonably be expected to have a
Material Adverse Effect;

 

(c)           the occurrence of any ERISA Event or Foreign Plan Event that,
individually or together with all other ERISA Events or Foreign Plan Events that
have occurred, would reasonably be expected to have a Material Adverse Effect;

 

(d)           the filing of any Lien for unpaid taxes in excess of $1,000,000;

 

(e)           any change in the Borrower’s chief executive officer or chief
financial officer;

 

(f)            any discharge, resignation or withdrawal of the registered public
accounting firm (provided that filing an applicable 8-K with the SEC shall
satisfy any notice requirements under clause (e) above or this clause (f));

 

(g)           any Casualty Event or the commencement of any action or proceeding
that could reasonably be expected to result in a Casualty Event,

 

(h)           if a Beneficial Ownership Certification has been delivered, any
change in the information provided in the Beneficial Ownership Certification
delivered to such Lender that would result in a change to the list of beneficial
owners identified in such certification;

 

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(i)            [reserved]; and

 

(j)            any other development specific to Holdings, the Borrower or any
of their Subsidiaries that is not a matter of general public knowledge and that
has had, or would reasonably be expected to have, a Material Adverse Effect.

 

Each notice delivered under this Section shall be accompanied by a statement of
a Responsible Officer of the Borrower setting forth the material details of the
event or development requiring such notice and any action taken or proposed to
be taken with respect thereto.

 

Section 5.06          Compliance with Laws. (a) Comply with (x) each Applicable
Law applicable to it or its property (including without limitation Environmental
Laws), except, in each case, where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect or such compliance is stayed by the Chapter 11 Cases and (y) the
Bankruptcy Code, the Bankruptcy Rules, the Final Order, and any other order of
the Court in all material respects, and (z) subject to the foregoing clause
(a)(y), perform in all material respects its obligations under Material
Agreements to which it is a party; provided that this Section 5.06 shall not
apply to Environmental Laws, which are the subject of Section 5.08, or to laws
related to Taxes, which are the subject of Section 5.03 and (b) maintain in
effect and enforce such policies and procedures designed to ensure compliance by
the Borrower, its Subsidiaries and their respective directors, officers,
employees and agents with Anti-Corruption Laws and applicable Sanctions.

 

Section 5.07          Maintaining Records; Access to Properties and Inspections.

 

(a)           Maintain all financial records in a manner sufficient to permit
the preparation of consolidated financial statements in accordance with GAAP.

 

(b)           Permit the Administrative Agent, subject (except when an Event of
Default exists) to reasonable advance notice to, and reasonable coordination
with, the Borrower and normal business hours, to visit and inspect the
Collateral; provided that the Administrative Agent shall only be permitted to
conduct one appraisal with respect to each Mortgaged Property; provided further,
if an Event of Default has occurred and is continuing, there shall be no limit
on the number of additional appraisals. No such inspection or visit shall unduly
interfere with the business or operations of the Borrower, nor result in any
damage to the Property or other Collateral. Neither the Administrative Agent nor
any Lender shall have any duty to the Borrower to make any inspection. The
Borrower acknowledges that all inspections, appraisals and reports are prepared
by the Administrative Agent and Lenders for their purposes, and the Borrower
shall not be entitled to rely upon them.

 

(c)            Reimburse the Administrative Agent for all reasonable and
documented out-of-pocket (in summary format) reasonable and necessary costs and
expenses (other than legal fees or costs and expenses which are covered under
Section 9.05) of the Administrative Agent in connection with (i) examinations of
the Borrower’s books and records or any other financial or Collateral matters as
the Administrative Agent deems appropriate; and (ii) appraisals permitted
hereunder; in each case subject to the limitations set forth under the preceding
paragraph. Subject to and without limiting the foregoing, the Borrower
specifically agrees to pay the Administrative Agent’s then standard charges for
appraisal activities, including the standard charges of the Administrative
Agent’s internal appraisal group. This Section shall not be construed to limit
the Administrative Agent’s right to use third parties for such purposes.

 

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Section 5.08          Compliance with Environmental Laws.

 

(a)           Comply, and make reasonable efforts to cause all lessees and other
Persons occupying its properties to comply, with all Environmental Laws
applicable to its operations and properties; and obtain and renew all
authorizations and permits required pursuant to Environmental Law for its
operations and properties, in each case in accordance with Environmental Laws.
This clause (a) shall be deemed not breached by a noncompliance with the
foregoing if, upon learning of such noncompliance, the Borrower and any of its
affected Subsidiaries promptly undertake reasonable efforts to eliminate such
noncompliance, and such noncompliance and the elimination thereof, in the
aggregate with any other noncompliance with any of the foregoing and the
elimination thereof, could not reasonably be expected to have a Material Adverse
Effect.

 

(b)           Except as could not reasonably be expected to have a Material
Adverse Effect, generate, use, treat, store, release, dispose of, and otherwise
manage Hazardous Materials in a manner that would not reasonably be expected to
result in a material liability to the Borrower or any of the Subsidiaries or to
materially affect any Real Property; and take reasonable efforts to prevent any
other Person from generating, using, treating, storing, releasing, disposing of,
or otherwise managing Hazardous Materials in a manner that could reasonably be
expected to result in a material liability to, or materially affect any Real
Property.

 

Section 5.09          Further Assurances; Mortgages.

 

(a)           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, fixture filings, Mortgages and
other documents and recordings of Liens in stock registries), that may be
required under any Applicable Law, or that the Administrative Agent may
reasonably request, which may be required by any Applicable Law or which the
Administrative Agent may, from time to time, reasonably request to carry out the
terms and conditions of this Agreement and the other Loan Documents and to
ensure perfection and priority of the Liens created or intended to be created by
the Security Documents, all in form and substance reasonably satisfactory to the
Administrative Agent and all at the expense of the Loan Parties.

 

(b)           [Reserved].

 

(c)           Subject to Applicable Law, cause each of its Subsidiaries formed
or acquired after the date of this Agreement, provided that prior to any such
formation or acquisition, such Loan Party shall have received the written
consent of the Administrative Agent to such formation or acquisition, to become
a Loan Party, in each case, by executing a Joinder Agreement. Upon execution and
delivery thereof, each such Person (A) shall automatically become a Guarantor as
provided in Article XI hereunder, and thereupon shall have all of the rights,
benefits, duties and obligations in such capacity under the Loan Documents and
(B) will grant Liens to the Administrative Agent, for the benefit of the
Administrative Agent and the other Secured Parties, in any property of such Loan
Party which constitutes Collateral (in each case to the extent required of any
Loan Party pursuant to the Loan Documents to which such Loan Party is a party).

 

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(d)           (i) Furnish to the Administrative Agent promptly (and in any event
within five (5) days) written notice of any change in (A) any Loan Party’s
corporate or organization name, (B) any Loan Party’s organizational form or
(C) any Loan Party’s organizational identification number; provided that neither
Holdings nor the Borrower shall effect or permit any such change unless all
filings have been made, or will have been made within any applicable statutory
period, under the UCC or otherwise that are required in order for the
Administrative Agent to continue at all times following such change to have a
valid, legal and perfected security interest in all the Collateral to for the
benefit of the Secured Parties and (ii) promptly notify (and in any event within
five (5) days) the Administrative Agent if any material portion of the
Collateral is damaged or destroyed.

 

Section 5.10          Fiscal Year; Accounting. In the case of Holdings and the
Borrower, (i) cause its fiscal year to end on June 30 and (ii) prohibit any
change to the accounting policies or reporting practices of the Loan Parties,
except in accordance with GAAP.

 

Section 5.11          [Reserved].

 

Section 5.12          Collateral Monitoring and Reporting. The Borrower shall
deliver to the Administrative Agent (and the Administrative Agent shall promptly
deliver same to the Lenders) copies of all borrowing base certificates (and all
back-up information) delivered to the ABL DIP Agent.

 

Section 5.13         Use of Proceeds. The proceeds of the Loans will only be
used by the Borrower, in each case, strictly in accordance with the Approved
Budget (subject to Permitted Variances, as defined in the ABL DIP Credit
Agreement): (a) to repay the ABL Obligations; (b) to fund general working
capital requirements of the Loan Parties and (c) for payment of all reasonably
documented (in summary format) accrued and unpaid reasonable transaction costs,
fees and expenses with respect to this Agreement, including reasonable fees and
expenses of professional advisors to the Lenders and the Administrative Agent,
in each case, to the extent permitted under the Final Order and the ABL DIP
Credit Agreement (and the Orders as defined in the ABL DIP Credit Agreement).

 

Section 5.14          Approved Budget.

 

(a)           The use of Loans and other extensions of credit by the Loan
Parties under this Agreement and the other Loan Documents shall be limited in
accordance with the Approved Budget (subject to variances permitted under this
Section 5.14) and the terms hereof. The initial Approved Budget shall depict, on
a weekly basis, cash receipts, expenses, and disbursements, net cash flows,
inventory receipts, sales and costs of sales at stores being closed and proposed
to be closed, Total Cash Receipts, Total Operating Disbursements, Total
Non-Operating Disbursements, Professional Fees, the projected Borrowing Base,
Availability and the other items set forth therein, for the first thirteen (13)
week period from the Closing Date.

 

(b)           [Reserved].

 

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(c)          Administrative Agent and the Lenders (i) may assume that the Loan
Parties will comply with the Approved Budget, (ii) shall have no duty to monitor
such compliance and (iii) shall not be obligated to pay (directly or indirectly
from the Collateral) any unpaid expenses incurred or authorized to be incurred
pursuant to any Approved Budget. The line items in the Approved Budget for
payment of interest, expenses and other amounts to the Administrative Agent and
the Lenders are estimates only, and the Loan Parties remain obligated to pay any
and all Obligations in accordance with the terms of the Loan Documents and the
Final Order regardless of whether such amounts exceed such estimates. Nothing in
any Approved Budget shall constitute an amendment or other modification of any
Loan Document or other lending limits set forth therein.

 

Section 5.15          [Reserved].

 

Section 5.16          Material Agreements. The Borrower shall, and shall cause
its Subsidiaries, subject to the Bankruptcy Code and applicable orders of the
Court, (a) to, perform and observe in all material respects all the terms and
provisions of each Material Agreement to be performed or observed by it; and (b)
to use commercially reasonable efforts to maintain each such Material Agreement
in full force and effect, enforce each such Material Agreement in accordance
with its terms.

 

Section 5.17          Status Calls. On each Friday after the Closing Date, cause
the Borrower Sale Advisor, the Borrower Financial Advisor and each of their
respective representatives to be available for conference calls during normal
business hours (“Status Calls”) for the purpose of providing the Administrative
Agent and the advisors assisting the Administrative Agent with an update on the
status and progress of any restructuring and/or sale diligence, negotiations and
documentation, accompanied, in each case, by a written summary of such update
which may, in the Administrative Agent’s sole discretion, be provided to the
Lenders. In addition to the foregoing, the Loan Parties agree that Status Calls
shall be conducted (i) promptly following a request by the Administrative Agent
and (ii) at least once per week. Notwithstanding anything to the contrary
contained in this Section 5.17, none of the Loan Parties will be required to
disclose or permit access to any document, information or other matter (i) in
respect of which disclosure to the Administrative Agent or any Lender (or their
respective representatives or contractors) is prohibited by Applicable Law or
any binding agreement or (ii) that is subject to attorney client or similar
privilege or constitutes attorney work product.

 

Section 5.18          Administrative Agent Professionals. The Administrative
Agent, on behalf of itself and the Lenders, shall be entitled to retain any
Agent Professional to provide advice, analysis and reporting for the benefit of
the Administrative Agent and the Lenders concerning this Agreement. The Loan
Parties shall pay all reasonably documented reasonable fees and expenses of each
Agent Professional and all such fees and expenses shall constitute Obligations
and be secured by the Collateral. The Loan Parties and their advisors (including
the Borrower Financial Advisor and the Borrower Sale Advisor) shall grant access
to, and make commercially reasonable efforts to cooperate in all respects with,
the Administrative Agent, the Lenders, the Agent Professionals, and any other
representatives of the foregoing and provide all information that such parties
may request in a timely manner relating to this Agreement.

 

Section 5.19          [Reserved].

 

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Section 5.20          Debtor-In-Possession Obligations. Comply in a timely
manner with its obligations and responsibilities as a debtor-in-possession under
the Bankruptcy Code, the Bankruptcy Rules, and any other order of the Court.

 

Section 5.21          Payment of Obligations. Subject to the Final Order and the
terms thereof, pay or discharge all Material Indebtedness and all other material
liabilities and obligations, including Taxes, incurred after the Petition Date
(but for the avoidance of doubt, Taxes incurred before the Petition Date which
are required to be paid in accordance with the Final Order or any other order of
the Court shall be permitted to be paid), before the same shall become
delinquent or in default (after giving effect to any applicable cure periods),
but subject to the Approved Budget (and the Permitted Variances (as defined in
the ABL DIP Credit Agreement) thereunder), except where either (a)(i) the
validity or amount thereof is being contested in good faith by appropriate
proceedings, and (ii) such Loan Party or Subsidiary has set aside on its books
adequate reserves with respect thereto in accordance with GAAP, or (b) such
liabilities would not result in aggregate liabilities in excess of $1,000,000
and none of the Collateral would become subject to forfeiture or loss as a
result of the contest; provided, however, that each Loan Party will, and will
cause each Subsidiary to, remit withholding taxes and other payroll taxes to
appropriate Governmental Authorities as and when claimed to be due,
notwithstanding the foregoing exceptions.

 

Section 5.22          [Reserved].

 

Section 5.23          Post-Closing Obligations. Complete each of the items and
take each of the actions set forth on Schedule 5.23 hereto by the deadline
indicated thereon (as such deadlines may be extended in the sole discretion of
the Administrative Agent).

 

ARTICLE VI

Negative Covenants

 

Each of Holdings (solely as to Section 6.08(a)) and the other Loan Parties
covenants and agrees with each Lender that, so long as any Commitments or
Obligations (other than contingent obligations as to which no claim or demand
for payment has been made, or, in the case of indemnification obligations, no
notice has been given) are outstanding, the Loan Parties will not and will not
permit any of its Subsidiaries to (and Holdings as to Section 6.08(a), will
not):

 

Section 6.01          Indebtedness. Incur, create, assume or permit to exist any
Indebtedness, except:

 

(a)           the Obligations and Indebtedness of any Loan Party under the Loan
Documents;

 

(b)           [reserved];

 

(c)           Indebtedness owed to (including obligations in respect of letters
of credit or bank guarantees or similar instruments for the benefit of) any
Person providing workers’ compensation, securing unemployment insurance and
other social security laws or regulation, health, disability or other employee
benefits or property, casualty or liability insurance or self-insurance or other
similar obligations to the Borrower or any Subsidiary Guarantor;

 

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(d)          Indebtedness of the Borrower to any Subsidiary Guarantor and of any
Subsidiary Guarantor to the Borrower or any other Subsidiary Guarantor;

 

(e)           Indebtedness in respect of bids, trade contracts (other than for
debt for borrowed money), leases (other than Capital Lease Obligations),
statutory obligations, surety, stay, customs and appeal bonds, performance,
performance and completion and return of money bonds, government contracts,
financial assurances and completion guarantees 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 (including Indebtedness in respect of letters of credit, bank
guarantees or similar instruments in lieu of such items to support the issuance
thereof);

 

(f)            Indebtedness in respect of netting services, overdraft protection
and similar arrangements, in each case, in connection with cash management and
deposit accounts;

 

(g)           Capital Lease Obligations and purchase money Indebtedness
(including any industrial revenue bond, industrial development bond and similar
financings) incurred by the Borrower or any Subsidiary Guarantor prior to or
within two hundred seventy (270) days after the acquisition, lease, repair or
improvement of the respective asset in order to finance such acquisition, lease,
repair or improvement, and any Permitted Refinancing Indebtedness in respect
thereof, in an aggregate outstanding principal amount that at the time of, and
after giving effect to, the incurrence thereof would not exceed $15 million for
the Test Period most recently ended on or prior to the date of determination for
which financial statements are available;

 

(h)           the ABL Obligations; provided, however, with respect to the
principal amount of any loans incurred under the ABL DIP Credit Agreement and
Pre-Petition ABL Credit Agreement, the principal amount thereof shall not exceed
$110,000,000.00;

 

(i)            Guarantees (i) by the Loan Parties of the Indebtedness described
in Section 6.01(h), or (ii) by the Borrower or any Loan Party of any
Indebtedness of any other Loan Party permitted to be incurred under this
Agreement; provided that no Guarantee by Holdings or any of its Subsidiaries of
Indebtedness described in Section 6.01(h) shall be permitted unless Holdings or
the applicable Subsidiaries, as the case may be, shall have also provided a
Guarantee of the Obligations under the Loan Documents on substantially the terms
set forth in the applicable Guarantee of such Indebtedness or on terms
acceptable to the Administrative Agent (provided, however, it being understood
and agreed that the Guarantees hereunder shall only be secured by the
Collateral);

 

(j)            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, in each case, in accordance with
the Approved Budget;

 

(k)           Indebtedness existing on the Closing Date and set forth on
Schedule 6.01 and any Permitted Refinancing Indebtedness incurred to Refinance
such Indebtedness;

 

(l)            Indebtedness supported by a Letter of Credit issued under (and as
defined in) the ABL DIP Credit Agreement, in a principal amount not in excess of
the stated amount of such Letter of Credit;

 

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(m)          Indebtedness incurred by the Borrower and any Subsidiary Guarantor
representing deferred compensation to directors, officers, employees, members of
management and consultants of Holdings, any Parent Entity, the Borrower or any
Subsidiary Guarantor in the ordinary course of business, in each case, in
accordance with the Approved Budget;

 

(n)           Indebtedness in respect of (x) letters of credit, bankers’
acceptances supporting trade payables, warehouse receipts or similar facilities
entered into in the ordinary course of business or (y) any Letter of Credit
issued under (and as defined in) the ABL DIP Credit Agreement in favor of any
issuing bank under the ABL DIP Credit Agreement to support any Defaulting
Lender’s (as defined in the ABL DIP Credit Agreement) participation in Letters
of Credit issued under and as defined in the ABL DIP Credit Agreement;

 

(o)           Indebtedness arising out of the creation of any Lien (other than
for Liens securing debt for borrowed money) permitted under Section 6.02;

 

(p)           Indebtedness incurred in the ordinary course of business in
respect of obligations of the Borrower or any Subsidiary Guarantor to pay the
deferred purchase price of goods or services or progress payments in connection
with such goods and services;

 

(q)           unfunded pension fund and other employee benefit plan obligations
and liabilities incurred in the ordinary course of business to the extent that
they are permitted to remain unfunded under Applicable Law;

 

(r)            all premium (if any), interest (including post-petition
interest), fees, expenses, charges and additional or contingent interest on
Indebtedness described in paragraphs (a) through (q) above.

 

Notwithstanding any of the foregoing, other than the Indebtedness contemplated
by Section 6.01(h) and as set forth in the Final Order, no Indebtedness
permitted under this Section 6.01 shall be permitted to have an administrative
expense claim status under the Bankruptcy Code senior to or pari passu with the
superpriority administrative expense claims of the Administrative Agent and the
Lenders.

 

Section 6.02          Liens. Create, incur, assume or permit to exist any Lien
on any property or assets (including Equity Interests, evidences of Indebtedness
or other securities of any Person) at the time owned by it or on any income or
revenues or rights in respect of any thereof, except:

 

(a)           Liens on property or assets of the Borrower and any Subsidiary
Guarantor existing on the Closing Date and set forth on Schedule 6.02 and any
refinancing, modification, replacement, renewal or extension thereof; provided,
that the Lien does not extend to any additional property other than
after-acquired property that is affixed to or incorporated in the property
covered by such Lien and the proceeds and products thereof;

 

(b)           any Lien created under the Loan Documents;

 

(c)           Liens for Taxes, assessments or other governmental charges or
levies which are not overdue by more than thirty (30) days or, if more than
thirty (30) days overdue, which are being contested in accordance with
Section 5.03;

 

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(d)           landlord’s, carriers’, warehousemen’s, mechanics’, materialmen’s,
repairmen’s, construction or other like Liens arising in the ordinary course of
business and securing obligations that are not overdue by more than thirty
(30) days or, if more than thirty (30) days overdue, (i) which are being
contested in accordance with Section 5.03 or (ii) with respect to which the
failure to make payment could not reasonably be expected to have a Material
Adverse Effect;

 

(e)           (i) subject to the Final Order, pledges and deposits made
(including to support obligations in respect of letters of credit, bank
guarantees or similar instruments to secure) in the ordinary course of business
in compliance with the Federal Employers Liability Act or any other workers’
compensation, unemployment insurance and other social security laws or
regulations and deposits securing premiums or liability to insurance carriers
under insurance or self-insurance arrangements in respect of such obligations or
otherwise as permitted in Section 6.01(c) and (ii) pledges and deposits securing
liability for reimbursement or indemnification obligations of (including to
support obligations in respect of letters of credit, bank guarantees or similar
instruments for the benefit of) insurance carriers in respect of property,
casualty or liability insurance to the Borrower or any Subsidiary provided by
such insurance carriers;

 

(f)            (i) deposits to secure the performance of bids, trade contracts
(other than for debt for borrowed money), leases (other than Capital Lease
Obligations), statutory obligations, surety, stay, customs and appeal bonds,
performance, performance and completion and return of money bonds, government
contracts, financial assurances and completion and similar obligations and
similar obligations, including those incurred to secure health, safety and
environmental obligations in the ordinary course of business and
(ii) obligations in respect of letters of credit or bank guarantees that have
been posted to support payment of the items set forth in clause (i) of this
Section 6.02(f);

 

(g)           zoning restrictions, easements, trackage rights, leases (other
than Capital Lease Obligations), licenses, special assessments, rights-of-way,
restrictions on use of Real Property and other similar encumbrances incurred in
the ordinary course of business that, in the aggregate, do not interfere in any
material respect with the ordinary conduct of the business of the Borrower or
any Subsidiary;

 

(h)           Liens securing Capital Lease Obligations, and purchase money
Indebtedness or improvements thereto hereafter acquired, leased, repaired or
improved by the Borrower or any Subsidiary Guarantor (including the interests of
vendors and lessors under conditional sale and title retention agreements);
provided that (i) such security interests secure Indebtedness permitted by
Section 6.01(g) (including any Permitted Refinancing Indebtedness in respect
thereof), (ii) such security interests are created, and the Indebtedness secured
thereby is incurred, within two hundred seventy (270) days after such
acquisition, lease, completion of construction or repair or improvement (except
in the case of any Permitted Refinancing Indebtedness), (iii) the Indebtedness
secured thereby does not exceed the cost of such equipment or other property or
improvements at the time of such acquisition or construction, including
transaction costs (including any fees, costs or expenses or prepaid interest or
similar items) incurred by the Borrower or any Subsidiary Guarantor in
connection with such acquisition or construction or material repair or
improvement or financing thereof and (iv) such security interests do not apply
to any other property or assets of the Borrower or any Subsidiary Guarantor
(other than to the proceeds and products of and the accessions to such equipment
or other property or improvements but not to other parts of the property to
which any such improvements are made); provided, that individual financings
otherwise permitted to be secured hereunder provided by one Person (or its
affiliates) may be cross collateralized to other such financings provided by
such Person (or its affiliates);

 

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(i)            Liens securing judgments that do not constitute an Event of
Default under Section 7.01(j);

 

(j)            any interest or title of a lessor, sublessor, licensor or
sublicensee under any leases, subleases, licenses or sublicenses entered into by
the Borrower or any Subsidiary in the ordinary course of business;

 

(k)           Liens that are contractual rights of set-off (i) relating to the
establishment of depository relations with banks not given in connection with
the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts
of the Borrower or any Subsidiary Guarantor to permit satisfaction of overdraft
or similar obligations incurred in the ordinary course of business of the
Borrower or any Subsidiary Guarantor, (iii) relating to purchase orders and
other agreements entered into with customers of the Borrower or any Subsidiary
Guarantor in the ordinary course of business, (iv) attaching to commodity
trading or other brokerage accounts incurred in the ordinary course of business
and (v) encumbering reasonable customary initial deposits and margin deposits;

 

(l)            Liens arising solely by virtue of any statutory or common law
provision relating to banker’s liens, rights of set-off or similar rights as to
Deposit Accounts, Securities Accounts, or Commodities Accounts or other funds or
investments maintained with depository institutions or securities intermediaries
arising in the ordinary course of business;

 

(m)          (i) leases, subleases, licenses or sublicenses of property in the
ordinary course of business or (ii) rights reserved to or vested in any Person
by the terms of any lease, license, franchise, grant or permit held by the
Borrower or any Subsidiary Guarantor or by a statutory provision to terminate
any such lease, license, franchise, grant or permit or to require periodic
payments as a condition to the continuance thereof;

 

(n)           Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;

 

(o)           Liens consisting of an agreement to dispose of any property in a
transaction permitted under Section 6.05;

 

(p)           Liens arising from precautionary UCC financing statements (or
similar filings under other Applicable Law) regarding operating leases or
consignment or bailee arrangements;

 

(q)           Liens securing Indebtedness permitted under Section 6.01(h)
(including any adequate protection liens and adequate protection superpriority
claims); provided that any such Liens are subject to the Intercreditor
Agreement;

 

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(r)           [reserved];

 

(s)          Liens (i) arising out of conditional sale, title retention,
consignment or similar arrangements for sale of goods entered into by the
Borrower or any Subsidiary Guarantor in the ordinary course of business and
(ii) arising by operation of law under Article 2 of the UCC;

 

(t)           Liens on cash or deposits granted in favor of any issuing bank
under the ABL DIP Credit Agreement to support any Defaulting Lender’s (as
defined in the ABL DIP Credit Agreement) participation in Letters of Credit
issued under and as defined in the ABL DIP Credit Agreement;

 

(u)          Liens on insurance policies and the proceeds thereof securing the
financing of Indebtedness permitted pursuant to Section 6.01(j)(i);

 

(v)          [reserved];

 

(w)         [reserved];

 

(x)           Liens, encumbrances and other matters disclosed as exceptions in
Schedule B, or insured over by, title insurance policies; and

 

(y)          Other title and survey exceptions as Administrative Agent has
approved or may approve in writing in Administrative Agent’s reasonable
discretion which encumbrances in the aggregate do not materially and adversely
affect the value or use of the property.

 

Notwithstanding the foregoing, (i) Liens on any Collateral permitted under this
Section 6.02 shall at all times be junior and subordinate to the Liens under the
Loan Documents and the Final Order securing the Obligations. The prohibition
provided for in this Section 6.02 specifically includes any effort by any Loan
Party, any official committee in any Chapter 11 Case or any other party in
interest in the Chapter 11 Cases, as applicable, to prime or create pari passu
to any claims, Liens or interests of the Administrative Agent and the Lenders
except as provided in the Final Order or the Intercreditor Agreement.

 

Section 6.03          [Reserved].

 

Section 6.04          Investments, Loans and Advances. Purchase, hold or acquire
any Equity Interests, evidences of Indebtedness or other securities of, make or
permit to exist any loans or advances to or Guarantees of the obligations of,
another Person or make any Acquisition (each, an “Investment”), except:

 

(a)          the Transactions;

 

(b)          Investments among the Borrower and Subsidiary Guarantors in
accordance with the Approved Budget; provided, that, in each case, if any such
Investment is in the form of Indebtedness of a Loan Party, such Investment shall
be subordinated to the Obligations on terms reasonably satisfactory to the
Administrative Agent;

 

(c)          Permitted Investments;

 

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(d)          Investments arising out of the receipt by the Borrower or any
Subsidiary of promissory notes and other non-cash consideration for Dispositions
permitted under Section 6.05;

 

(e)          accounts receivable, notes receivable, security deposits and
prepayments arising and trade credit granted in the ordinary course of business
and any Investments received in satisfaction or partial satisfaction thereof
from financially troubled account debtors and other credits to suppliers made in
the ordinary course of business;

 

(f)           Investments in existence on the date hereof and described in
Schedule 6.04;

 

(g)          Investments resulting from pledges and deposits permitted by
Section 6.02(b), (e), (f) and (t);

 

(h)         Guarantees (i) permitted by Sections 6.01(i) and (ii) of leases
(other than Capital Lease Obligations) or of other obligations not constituting
Indebtedness, in each case in the ordinary course of business;

 

(i)           Investments received in connection with the bankruptcy or
reorganization of any Person, or settlement of obligations of, or other disputes
with or judgments against, or foreclosure or deed in lieu of foreclosure with
respect to any Lien held as security for an obligation, in each case in the
ordinary course of business;

 

(j)            Investments consisting of Liens permitted under Section 6.02;

 

(k)           Investments in the ordinary course of business consisting of
(i) endorsements for collection or deposit or (ii) customary trade arrangements
with customers, in accordance with the Approved Budget; or

 

(l)           Investments made in the ordinary course of business in connection
with obtaining, maintaining or renewing client and customer contracts and loans
or advances made to, and guarantees with respect to obligations of,
distributors, suppliers, licensors and licensees in the ordinary course of
business, in each case, in accordance with the Approved Budget.

 

Notwithstanding the foregoing, the Loan Parties shall not make any Investments
of Collateral without the prior written consent of the Administrative Agent.

 

Section 6.05          Mergers, Consolidations and Dispositions. Merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or Dispose of (in one (1) transaction or in a series of
related transactions) all or any part of its assets (whether now owned or
hereafter acquired), or Dispose of any Equity Interests of any Subsidiary of the
Borrower (including pursuant to any Division), except that this Section 6.05
shall not prohibit:

 

(a)         (i) the Disposition of inventory and equipment in the ordinary
course of business by the Borrower or any Subsidiary, (ii) the Disposition of
surplus, obsolete, used or worn out property (other than the Collateral),
whether now owned or hereafter acquired, in the ordinary course of business by
the Borrower or any Subsidiary, (iii) [reserved] or (iv) Dispositions of cash
and Permitted Investments, in each case in the ordinary course of business and
in accordance with the Approved Budget;

 

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(b)          if at the time thereof and immediately after giving effect thereto
no Event of Default shall have occurred and be continuing, (i) the merger of any
Subsidiary of Holdings (which shall either be (A) newly formed expressly for the
purpose of such transaction and which owns no assets, (B) Intermediate Holdings
or (C) a Subsidiary of the Borrower) into the Borrower in a transaction in which
the Borrower is the surviving or resulting entity or the surviving or resulting
Person expressly assumes the obligations of the Borrower in a manner reasonably
satisfactory to the Administrative Agent (for the avoidance of doubt, the
Borrower shall not be permitted to consummate a Division), (ii) the merger or
consolidation of any Subsidiary with or into any other Subsidiary; provided that
in any such merger or consolidation involving any Subsidiary Guarantor, a
Subsidiary Guarantor shall be the surviving or resulting Person or such
transaction shall be an Investment permitted by Section 6.04, (iii) the
liquidation or dissolution of any Subsidiary (other than the Borrower) or change
in form of entity of any Subsidiary if the Borrower determines in good faith
that such liquidation, dissolution or change in form is in the best interests of
the Borrower and is not disadvantageous to the Lenders, or (iv) the merger of
Parent and Intermediate Holdings (or the dissolution or consolidation of
Intermediate Holdings);

 

(c)           the Specified Store Closing Sales;

 

(d)          Dispositions of receivables in the ordinary course of business
(i) not as part of an accounts receivables financing transaction or (ii) in
connection with the collection, settlement or compromise thereof in a bankruptcy
or similar proceeding;

 

(e)           licensing and cross-licensing arrangements involving any
technology or other Intellectual Property of the Borrower or any Subsidiary
Guarantor in the ordinary course of business;

 

(f)           the issuance of Qualified Capital Stock by the Borrower to
Intermediate Holdings;

 

(g)          sales of Equity Interests of any Subsidiary of the Borrower;
provided that the purchaser shall be the Borrower or another Subsidiary
Guarantor;

 

(h)          Dispositions of property subject to casualty or condemnation
proceeding (including in lieu thereof) upon receipt of the Net Proceeds
therefor;

 

(i)           Dispositions of Intellectual Property in the ordinary course of
business consisting of the abandonment of Intellectual Property rights which, in
the reasonable good faith determination of the Borrower, are not material to the
conduct of the business of the Borrower and the Subsidiaries;

 

(j)           [reserved];

 

(k)          the expiration of any option agreement in respect of personal
property;

 

(l)           any Subsidiary of the Borrower may consummate a merger,
dissolution, liquidation or consolidation, the purpose of which is to effect a
Disposition otherwise permitted under this Section 6.05; or

 

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(m)         Dispositions (other than Dispositions of Collateral) in connection
with the outsourcing of services in the ordinary course of business.

 

Section 6.06         Dividends and Distributions. Declare or pay, directly or
indirectly, any dividend or make any other distribution (by reduction of capital
or otherwise), whether in cash, property, securities or a combination thereof
(other than Collateral), with respect to any Equity Interests of the Borrower
(other than dividends and distributions on such Equity Interests payable solely
by the issuance of additional Equity Interests of the Borrower) or directly or
indirectly redeem, purchase, retire or otherwise acquire for value any Equity
Interests of the Borrower or set aside any amount for any such purpose (other
than through the issuance of additional Equity Interests of the Person
redeeming, purchasing, retiring or acquiring such shares) (a “Restricted
Payment”); provided, however, that the Borrower may make Restricted Payments as
shall be necessary to allow Holdings (or any Parent Entity) (i) to pay operating
expenses in the ordinary course of business and other corporate overhead, legal,
accounting and other professional fees and expenses (including, without
limitation, those owing to third parties plus any customary indemnification
claims made by directors, officers, employees, members of management and
consultants of Holdings (or any Parent Entity) attributable to the ownership or
operations of Holdings, the Borrower and the Subsidiaries), and (ii) to pay
franchise or similar taxes and other fees and expenses required in connection
with the maintenance of its existence and its ownership of the Borrower and in
order to permit Holdings to make payments (other than cash interest payments)
which would otherwise be permitted to be paid by the Borrower under
Section 6.07(b), in each case, in accordance with the Approved Budget.

 

Section 6.07         Transactions with Affiliates. No Loan Party will, nor will
it permit any Subsidiary to 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) a transaction between or among
any Loan Parties, (b) a transaction between or among any Subsidiaries that are
not Loan Parties, (c) Investments permitted under Section 6.04, (d)
transactions, arrangements, reimbursements and indemnities permitted between or
among such parties under this Agreement, (e) the payment of reasonable fees and
costs to directors, and compensation and employee benefit arrangements paid to,
and indemnities provided for the benefit of, directors, officers and employees
of the Loan Parties or any of their Subsidiaries in accordance with the Approved
Budget, (f) the Borrower and its Subsidiaries may provide cash management and
corporate overhead services to the Subsidiaries of the Borrower, or (g) those
transactions existing as of the date hereof and set forth on Schedule 6.07.

 

Section 6.08         Business of Holdings, the Borrower and the Subsidiaries.
Notwithstanding any other provisions hereof, engage at any time in any business
or business activity other than:

 

(a)          in the case of Holdings, (i) ownership and acquisition of Equity
Interests in Intermediate Holdings or the Borrower, as applicable, together with
activities directly related thereto, (ii) performance of its obligations under
and in connection with the Loan Documents and the other agreements contemplated
hereby and thereby, (iii) actions incidental to the consummation of the
Transactions (including the payment of Transaction Costs), (iv) the incurrence
of and performance of its obligations related to Indebtedness and Guarantees
incurred by Holdings after the Closing Date and that are related to the other
activities referred to in, or otherwise permitted by, this Section 6.08(a),
(v) actions required by law to maintain its existence, (vi) the payment of taxes
and other customary obligations, (vii) the issuance of Equity Interests,
(viii) any transaction permitted in this Article VI (including guaranteeing
Indebtedness or obligations of the Borrower and its Subsidiaries),
(ix) performance of its obligations under and in connection with the ABL DIP
Credit Agreement and Pre-Petition ABL Credit Agreement and the other agreements
contemplated thereby and (x) activities incidental to its maintenance and
continuance and to the foregoing activities, or

 

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(b)          in the case of the Borrower and any Subsidiary, any business or
business activity conducted by any of them on the Closing Date and any business
or business activities incidental or related thereto, or any business or
activity that is reasonably similar thereto or a reasonable extension,
development or expansion thereof or ancillary thereto.

 

Notwithstanding anything to the contrary contained in herein, Holdings shall not
sell, dispose of, grant a Lien on or otherwise transfer its Equity Interests in
Intermediate Holdings or the Borrower, as applicable (other than (i) Liens
created by the Security Documents, or (ii) Liens arising by operation of law
that would be permitted under Section 6.02).

 

Section 6.09         Limitation on Modification of Indebtedness; Modification of
Certificate of Incorporation, By-Laws and Certain Other Agreements; etc.

 

(a)          Amend or modify in any manner materially adverse to the Lenders, or
grant any waiver or release under or terminate in any manner (if such granting
or termination shall be materially adverse to the Lenders), the articles or
certificate of incorporation or by-laws or limited liability company operating
agreement of Holdings, the Borrower or any of the Subsidiary Guarantors
(provided that immaterial amendments of an administrative, mechanical,
ministerial or technical nature may be made so long as contemporaneous notice
thereof is given to the Administrative Agent), other than with the prior written
consent of the Administrative Agent; or

 

(b)         Permit the Borrower or any Subsidiary to enter into any agreement or
instrument that by its terms restricts (i) the payment of dividends or
distributions or the making of cash advances to (or the repayment of cash
advances from) the Borrower or any Subsidiary or (ii) the granting of Liens on
Collateral pursuant to the Security Documents, in each case other than those
arising under any Loan Document, except, in each case, restrictions existing by
reason of:

 

(i)             restrictions imposed by Applicable Law;

 

(ii)            contractual encumbrances or restrictions set forth in the ABL
DIP Credit Agreement and Pre-Petition ABL Credit Agreement, subject to the
Intercreditor Agreement;

 

(iii)          customary provisions contained in leases, subleases, licenses or
sublicenses of Intellectual Property and other similar agreements entered into
in the ordinary course of business;

 

(iv)          customary provisions restricting subletting or assignment of any
lease governing a leasehold interest;

 

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(v)           customary provisions restricting assignment of any agreement
entered into in the ordinary course of business;

 

(vi)          customary restrictions and conditions contained in any agreement
relating to any Disposition permitted under Section 6.05 pending the
consummation of such Disposition;

 

(vii)         customary restrictions and conditions contained in the document
relating to any Lien, so long as (A) such Lien is permitted under Section 6.02
and such restrictions or conditions relate only to the specific asset subject to
such Lien and the proceeds and products thereof, and (B) such restrictions and
conditions are not created for the purpose of avoiding the restrictions imposed
by this Section 6.09;

 

(viii)        customary net worth provisions contained in the Real Property
leases entered into by Subsidiaries of the Borrower, so long as the Borrower has
determined in good faith that such net worth provisions could not reasonably be
expected to impair the ability of the Borrower and its Subsidiaries to meet
their ongoing obligations.

 

Section 6.10          [Reserved].

 

Section 6.11          Use of Proceeds. The Borrower will not request any
Borrowing, and the Borrower shall not use, and shall procure that Holdings, its
Subsidiaries and its or their respective directors, officers, employees and
agents shall not use directly or indirectly, the proceeds of any Borrowing (a)
in furtherance of an offer, payment, promise to pay, or authorization of the
payment or giving of money, or anything else of value, to any Person in
violation of any Anti-Corruption Laws or any Sanctions, (b) for the purpose of
funding, financing or facilitating any activities, business or transaction of or
with any Sanctioned Person, or in any Sanctioned Country, or (c) in any manner
that would result in the violation of any Sanctions applicable to any party
hereto.

 

Section 6.12          [Reserved].

 

Section 6.13         Prepayments of Other Debt. Other than pursuant to an order
of the Court and in accordance with the Approved Budget, directly or indirectly,
voluntarily purchase, redeem, defease or prepay any principal of, premium, if
any, interest or other amount payable in respect of any Indebtedness prior to
its scheduled maturity, other than (i) the Obligations and ABL Obligations or
(ii) any payments in respect of accrued payroll and related expenses as of the
commencement of the Chapter 11 Cases in accordance with the Approved Budget.

 

Section 6.14          [Reserved].

 

Section 6.15        Insolvency Proceeding Claims. No Loan Party shall incur,
create, assume, suffer to exist or permit any other superpriority administrative
claim which is pari passu with or senior to the claim of the Administrative
Agent or the Lenders against the Loan Parties with respect to the Collateral.

 

Section 6.16          Bankruptcy Actions. No Loan Party shall seek, consent to,
or permit to exist, without the prior written consent of the Administrative
Agent, any order granting authority to take any action that is prohibited by the
terms of this Agreement, the Final Order or the other Loan Documents or refrain
from taking any action that is required to be taken by the terms of this
Agreement, the Final Order or any of the other Loan Documents.

 

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Section 6.17          Subrogation. No Loan Party shall assert any right of
subrogation or contribution against any other Loan Party.

 

Section 6.18          [Reserved].

 

ARTICLE VII

 

Events of Default

 

Section 7.01          Events of Default. In case of the happening of any of the
following events (each, an “Event of Default”):

 

(a)          any representation, warranty or certification made or deemed made
by or on behalf of any Loan Party or any Subsidiary in, or in connection with,
this Agreement or any other Loan Document or any amendment or modification
hereof or thereof or waiver hereunder or thereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with this Agreement or any other Loan Document or any amendment or
modification hereof or thereof or waiver hereunder or thereunder (including,
without limitation, any Budget Compliance Report or Compliance Certificate),
shall prove to have been false or misleading in any material respect when made
or deemed made;

 

(b)          default shall be made in the payment of any principal of any Loan
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration thereof or
otherwise;

 

(c)          default shall be made in the payment of any interest on any Loan or
in the payment of any fee or any other amount (other than an amount referred to
in paragraph (b) above) due under any Loan Document, when and as the same shall
become due and payable;

 

(d)          default shall be made in the due observance or performance by
Holdings, the Borrower or any of the Subsidiaries of any covenant, condition or
agreement contained in Sections 5.01, 5.04, 5.05, 5.06, 5.07, 5.13, 5.16, 5.17,
5.18, 5.19, 5.20, 5.21 or in Article VI;

 

(e)          default shall be made in the due observance or performance by
Holdings, the Borrower or any of the Subsidiaries of any covenant, condition or
agreement contained in Article V (other than those specified in paragraphs (b),
(c) and (d) above) and, to the extent such default can be remedied, such default
shall continue unremedied for a period of twenty (20) days after notice thereof
from the Administrative Agent;

 

(f)           except for defaults occasioned by the filing of the Chapter 11
Cases or entry into this Agreement or resulting from obligations with respect to
which the Bankruptcy Code prohibits any Loan Party or any Subsidiary from
complying or permits any Loan Party or Subsidiary not to comply (i) any event or
condition occurs that (A) results in any Material Indebtedness becoming due
prior to its scheduled maturity or (B) enables or permits (with all applicable
grace periods having expired) the holder or holders any Material Indebtedness or
any trustee or agent on its or their behalf to cause any such Material
Indebtedness become due, or to require the prepayment, repurchase, redemption or
defeasance thereof, prior to its scheduled maturity, (ii) Holdings, the Borrower
or any Loan Party fails to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) and such
payment is not made within any applicable notice or grace period in respect of
any Material Indebtedness (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicated credit
arrangement);

 

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(g)          [Reserved];

 

(h)          the occurrence and continuation of an event of default under and as
defined in the ABL DIP Credit Agreement that remains uncured or not expressly
waived in writing by the ABL DIP Lenders;

 

(i)           [Reserved];

 

(j)           there is entered against Holdings, the Borrower or any Subsidiary
one (1) or more final judgments or orders for the payment of money aggregating
in excess of $5.0 million (to the extent not covered by third-party insurance as
to which the insurer has been notified of such judgment and does not deny
coverage), which judgments are not subject to the Automatic Stay for a period of
twenty (20) consecutive days, or any action shall be legally taken by a judgment
creditor to levy upon assets or properties of Holdings, the Borrower or any
Subsidiary to enforce any such judgment;

 

(k)          (i) an ERISA Event and/or a Foreign Plan Event shall have occurred,
(ii) a trustee shall be appointed by a United States district court to
administer any Plan(s) or (iii) any Loan Party or any ERISA Affiliate shall have
been notified by the sponsor of a Multiemployer Plan that it has incurred or
will be assessed Withdrawal Liability to such Multiemployer Plan and such Person
does not have reasonable grounds for contesting such Withdrawal Liability or is
not contesting such Withdrawal Liability in a timely and appropriate manner; and
in each case in clauses (i) through (iii) above, such event or condition,
together with all other such events or conditions, if any, could reasonably be
expected to have a Material Adverse Effect;

 

(l)           (i) any Loan Document or any material provision of any Loan
Document shall for any reason cease to be, or shall be asserted in writing by
Holdings, the Borrower or any Subsidiary not to be, a legal, valid and binding
obligation of any party thereto, (ii) except as permitted by the terms of any
Security Document, (A) any Security Document shall for any reason fail to create
a valid security interest in any Collateral purported to be covered thereby, or
(B) the Final Order or any Security Document shall for any reason (other than
pursuant to the terms thereof) cease to create a valid and perfected or recorded
Lien on and security interest in any portion of the Collateral purported to be
covered thereby, or such Lien or other security interest shall cease to have the
status and priority provided in the Final Order or (iii) the Loan Guaranty shall
fail to remain in full force or effect or any action shall be taken to
discontinue or to assert the invalidity or unenforceability of the Loan
Guaranty, or any Subsidiary Guarantor shall deny that it has any further
liability under the Loan Guaranty to which it is a party, or shall give notice
to such effect;

 

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(m)         the provisions of the Intercreditor Agreement shall for any reason
be revoked or invalidated, in whole or in part, or otherwise cease to be in full
force and effect, or any Loan Party, any agent with respect to the ABL
Facilities, or any lender thereunder, or any Affiliate of any of the foregoing
shall have commenced a suit or an action, including any motion or adversary
proceeding in the Chapter 11 Cases, contesting in any manner the validity or
enforceability thereof or deny that it has any further liability or obligation
thereunder, or the Obligations, for any reason shall not have the priority
contemplated by this Agreement or the Intercreditor Agreement;

 

(n)          if there occurs any uninsured loss of any portion of the Collateral
with a market or book value in excess of $2,000,000;

 

(o)          [Reserved];

 

(p)          the Loan Parties shall fail to deliver timely any report or
information under the Final Order and such failure shall continue unremedied for
a period of twenty (20) days after notice thereof from the Administrative Agent
or the Loan Parties shall fail to meet timely any other material deadline under
the Final Order;

 

(q)          the occurrence of any of the following in the Chapter 11 Cases:

 

(i)            the bringing of a motion, taking of any action or the filing of
any plan of reorganization or disclosure statement attendant thereto by any of
the Loan Parties or any Subsidiary, or any Person claiming by or through any
Loan Party or any Subsidiary, in the Chapter 11 Cases: (A) to obtain additional
financing under Section 364(c) or Section 364(d) of the Bankruptcy Code not
otherwise permitted pursuant to this Agreement (other than Indebtedness issued
in exchange for, or the Net Proceeds of which are used to Refinance, the ABL
Obligations so long as the principal amount of such refinancing Indebtedness
does not exceed the principal amount of the ABL Obligations permitted pursuant
to Section 6.01(h) hereof); (B) to grant any Lien other than Liens permitted
pursuant to Section 6.02 upon or affecting any Collateral; (C) [reserved]; or
(D) any other action or actions materially adverse to the Administrative Agent
and Lenders, as a whole, or their rights and remedies hereunder, under any other
Loan Documents, or their interest in the Collateral;

 

(ii)           (A) the filing of any plan of reorganization, sale order or
disclosure statement attendant thereto, or any direct or indirect amendment to
such plan, sale order or disclosure statement, by a Loan Party that does not
propose to indefeasibly repay in full in cash the Obligations, or any of the
Loan Parties or their Subsidiaries shall seek, support or fail to contest in
good faith the filing or confirmation of any such plan or entry of any such
order, (B) the entry of any order terminating any Loan Party’s exclusive right
to file a plan of reorganization, or (C) the expiration of any Loan Party’s
exclusive right to file a plan of reorganization;

 

(iii)          the entry of an order in any of the Chapter 11 Cases confirming a
plan of reorganization that does not contain a provision for termination of the
Commitments and indefeasible repayment in full in cash of all of the Obligations
on or before the Initial Maturity Date or Extended Maturity Date, as applicable;

 

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(iv)          (A) the entry of an order amending, supplementing, staying,
vacating or otherwise modifying the Loan Documents or the Final Order without
the written consent of the Administrative Agent or the filing of a motion by the
Loan Parties or its Affiliates for reconsideration with respect to the Final
Order, or the Final Order shall otherwise not be in full force and effect
without the prior written consent of the Administrative Agent and the Required
Lenders in their sole discretion, or (B) any Loan Party or any Subsidiary shall
fail to comply with the Final Order in any material respect; or

 

(v)           the payment of, or application for authority to pay, any
pre-petition claim without Required Lenders’ prior written consent unless in
accordance with the Approved Budget or pursuant to the Final Order of the Court;
or

 

(vi)          the allowance of any claim or claims under Section 506(c) of the
Bankruptcy Code or otherwise against the Administrative Agent, any Lender or any
of the Collateral; or

 

(vii)         (A) the appointment of an interim or permanent trustee in the
Chapter 11 Cases or the appointment of a trustee receiver or an examiner in the
Chapter 11 Cases with expanded powers to operate or manage the financial
affairs, the business, or reorganization of the Loan Parties; (B) the sale
without the Administrative Agent’s written consent of all or substantially all
of the Loan Parties’ assets (which includes the sale of the Collateral) either
through a sale under Section 363, through a confirmed plan of reorganization in
the Chapter 11 Cases or otherwise that does not result in payment in full in
cash of all of the Obligations at the closing of such sale or initial payment of
the purchase price or effectiveness of such plan, as applicable; or (C) the
entry of a Real Estate Sale Order without the Administrative Agent’s written
consent that contemplates a Real Estate Sale which does not result in payment in
full in cash of all of the Obligations at the closing of such sale; or

 

(viii)       entry of an order for the dismissal or conversion to chapter 7 of
title 11 of the Bankruptcy Code of any Loan Party’s bankruptcy case; the
appointment of a bankruptcy trustee, examiner or other fiduciary with decision
making authority except with the express written consent of the Administrative
Agent; the granting of any other superpriority administrative expense claim
(other than Liens permitted hereunder in favor of the ABL DIP Agent or the
Pre-Petition ABL Agent) or the entry of an order granting relief from the
Automatic Stay with respect to the Collateral (if not in favor of the
Administrative Agent) except with the express written consent of the
Administrative Agent; any Loan Party shall attempt to vacate or modify the Final
Order over the objection of the Administrative Agent; or any Loan Party shall
institute any proceeding or investigation or support same by any other person
who seeks to challenge the status and/or validity of the liens of the
Administrative Agent (as security for the Lenders); or

 

(ix)           [reserved]; or

 

(x)            the commencement of a suit or an action (but not including a
motion for standing to commence a suit or an action) against either the
Administrative Agent or any Lender and, as to any suit or action brought by any
Person other than a Loan Party or a Subsidiary, officer or employee of a Loan
Party, the continuation thereof without dismissal for thirty (30) days after
service thereof on either the Administrative Agent or such Lender, that asserts
or seeks by or on behalf of a Loan Party, any state or federal environmental
protection or health and safety agency, any official committee in any Chapter 11
Case or any other party in interest in any of the Chapter 11 Cases, a claim or
any legal or equitable remedy that would (x) have the effect of invalidating,
subordinating or challenging any or all of the Obligations or Liens of the
Administrative Agent or any Lender under the Loan Documents to any other claim,
or (y) have a Material Adverse Effect on the rights and remedies of the
Administrative Agent or any Lender under any Loan Document or the collectability
of all or any portion of the Obligations; or

 

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(xi)          the entry of an order in the Chapter 11 Cases avoiding or
permitting recovery of any portion of the payments made on account of the
Obligations owing under Loan Documents; or

 

(xii)          the failure of any Loan Party to perform any of its material
obligations under, or the occurrence of an event of default under or as defined
in, the Final Order or any order of the Court approving any Plan of
Reorganization, a Section 363 Sale, or to perform in any material respect its
material obligations under any order of the Court approving bidding procedures;
or

 

(xiii)         other than Liens permitted hereunder securing the ABL Facilities,
the existence of any claims or charges, or the entry of any order of the Court
authorizing any claims or charges, other than in respect of this Agreement and
the other Loan Documents, or as otherwise permitted under the applicable Loan
Documents or permitted under the Final Order, entitled to superpriority
administrative expense claim status in any Chapter 11 Case pursuant to Section
364(c)(1) of the Bankruptcy Code pari passu with or senior to the claims of the
Administrative Agent and the Secured Parties under this Agreement and the other
Loan Documents, or there shall arise or be granted by the Court (A) any claim
having priority over any or all administrative expenses of the kind specified in
clause (b) of Section 503 or clause (b) of Section 507 of the Bankruptcy Code or
(B) any Lien on the Collateral having a priority senior to or pari passu with
the Liens and security interests granted herein, except, in each case, as
expressly provided in the Loan Documents or in the Final Order (but only in the
event specifically consented to by the Administrative Agent), whichever is in
effect; or

 

(xiv)        the Final Order shall cease to create a valid and perfected Lien on
the Collateral or to be in full force and effect, shall have been reversed,
modified, amended, stayed, vacated, or subject to stay pending appeal, in the
case of modification or amendment, without prior written consent of
Administrative Agent; or

 

(xv)         an order in the Chapter 11 Cases shall be entered charging any of
the Collateral under Section 506(c) of the Bankruptcy Code against the
Administrative Agent and the Secured Parties or the commencement of other
actions that is materially adverse to Administrative Agent, the Secured Parties
or their respective rights and remedies under the Loan Documents in any of the
Chapter 11 Cases or inconsistent with any of the Loan Documents; or

 

(xvi)        [reserved]; or

 

(xvii)       [reserved]; or

 

(xviii)      an order materially adversely impacting the rights and interests of
the Administrative Agent and the Lenders, as determined by the Administrative
Agent in its Permitted Discretion, shall have been entered by the Court; or

 

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(xix)         any Loan Party shall challenge, support or encourage a challenge
of any payments made to the Administrative Agent or any Lender with respect to
the Obligations; or

 

(xx)          other than the Specified Store Closing Sales, any Loan Party or
any person on behalf of any Loan Party shall file any motion seeking authority
to consummate a sale of the Collateral to the extent having a value in excess of
$2,000,000 outside the ordinary course of business and not otherwise permitted
hereunder and without the Administrative Agent’s consent; or

 

(xxi)         [reserved]; or

 

(xxii)        if, unless otherwise approved by the Administrative Agent, an
order of the Court shall be entered providing for a change of venue with respect
to any of the Chapter 11 Cases and such order shall not be reversed or vacated
within ten (10) days; or

 

(xxiii)      any Loan Party or any Subsidiary thereof shall file any motion or
other request with the Court seeking (A) to grant or impose, under Section 364
of the Bankruptcy Code or otherwise, liens or security interests in any DIP
Collateral (as defined in the Final Order), whether senior, equal or subordinate
to the Administrative Agent’s liens and security interests (other than Liens
permitted hereunder securing the ABL Facilities); or (B) to modify or affect any
of the rights of the Administrative Agent or the Lenders under the Final Order
or the Loan Documents and related documents by any plan of reorganization
confirmed in the Chapter 11 Cases or subsequent order entered in the Chapter 11
Cases; or

 

(xxiv)      [reserved]; or

 

(xxv)       any Loan Party or any Subsidiary thereof shall take any action in
support of any matter set forth in this clause (q) or any other Person shall do
so and such application is not contested in good faith by the Loan Parties and
the relief requested is granted in an order that is not stayed pending appeal;

 

then, and in every such event, and at any time thereafter during the continuance
of such event, subject to the Final Order and the Intercreditor Agreement and
the terms thereof and notwithstanding the provisions of Section 362 of the
Bankruptcy Code and without notice, application or motion, hearing before, or
order of the Court, the Administrative Agent may, and at the request of the
Required Lenders shall, by notice to the Borrower, take any or all of the
following actions, at the same or different times: (i) terminate the
Commitments, whereupon the Commitments shall terminate immediately, but without
affecting the Administrative Agent’s Liens or the Obligations, (ii) declare the
Loans then outstanding to be due and payable in whole (or in part, in which case
any principal not so declared to be due and payable may thereafter be declared
to be due and payable), whereupon the principal of the Loans so declared to be
due and payable, together with accrued interest thereon and all reasonable fees
and other obligations of the Borrower accrued hereunder, shall become due and
payable immediately, in each case without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Borrower,
anything contained herein or in any other Loan Document to the contrary
notwithstanding, (iii) subject to the Remedies Notice Period, direct any or all
of the Loan Parties to sell or otherwise dispose of any or all of the Collateral
(subject to the Intercreditor Agreement) on terms and conditions acceptable to
the Administrative Agent pursuant to Section 363, Section 365 and other
applicable provisions of the Bankruptcy Code (and, without limiting the
foregoing, direct any Loan Party to assume and assign any lease or executory
contract included in the Collateral (subject to the Intercreditor Agreement) to
the Administrative Agent’s designees in accordance with and subject to Section
365 of the Bankruptcy Code); and/or (iv) subject to the Remedies Notice Period,
(A) exercise on behalf of itself and the Secured Parties all rights and remedies
available to it and the Secured Parties under the Loan Documents or Applicable
Law or (B) take any and all actions described in the Final Order, including,
without limitation, those actions specified in the Final Order after the
occurrence of any Event of Default.

 

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At any hearing during the Remedies Notice Period to contest the enforcement of
remedies, the only issue that may be raised by any party in opposition thereto
shall be whether, in fact, an Event of Default has occurred, and the Loan
Parties hereby waive their right to and shall not be entitled to seek relief,
including, without limitation, under Section 105 of the Bankruptcy Code, to the
extent that such relief would in way impair or restrict the rights and remedies
of the Administrative Agent or the Secured Parties, as set forth in this
Agreement, the Final Order or other Loan Documents. It is agreed and understood
that the Administrative Agent may not charge default interest pursuant to this
Agreement during such time as the occurrence of such Event of Default is being
contested during the Remedies Notice Period but once determined that such Event
of Default exists, the Administrative Agent may charge default interest pursuant
to this Agreement retroactively to cover the period from which the Event of
Default exists through the date of determination.

 

The Automatic Stay shall terminate with respect to the Collateral, and the
Administrative Agent may exercise rights and remedies in accordance with the
Loan Documents and Applicable Law. Notwithstanding the foregoing, the Lenders
shall not be obligated to provide any Loans at any time a default or an Event of
Default has occurred.

 

The Administrative Agent (together with its agents, representatives and
designees) is hereby granted an irrevocable, non-exclusive license or other
right to use, license or sub-license (without payment of royalty or other
compensation to any Person) any and all Trademarks, tradenames, and service
marks related to the name “Tuesday Morning” now owned or hereafter acquired by
the Loan Parties, in advertising for sale, marketing, selling, collecting,
completing manufacture of, or otherwise exercising any rights or remedies with
respect to, any Collateral, in each case, after the occurrence and during the
continuance of an Event of Default, subject to the rights, remedies and
priorities under the Final Order and the Intercreditor Agreement. The
Administrative Agent (together with its agents, representatives and designees)
is hereby granted a non-exclusive right to have access to, and a rent-free right
to use, any and all owned locations (including, without limitation, warehouse
locations, distribution centers and store locations) for the purpose of
arranging for and effecting the sale or disposition of Collateral, subject to
the Intercreditor Agreement. Upon the occurrence and the continuance of an Event
of Default and the exercise by the Administrative Agent or Lenders of their
rights and remedies under this Agreement and the other Loan Documents, the Loan
Parties shall assist the Administrative Agent and Lenders in effecting a sale or
other disposition of the Collateral upon such terms as are reasonably acceptable
to the Administrative Agent, subject to the Final Order and the Intercreditor
Agreement.

 

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Section 7.02          Allocation. Notwithstanding anything herein to the
contrary, but subject to the Intercreditor Agreement, upon the occurrence and
during the continuance of an Event of Default, monies to be applied to the
Obligations, whether arising from payments by the Loan Parties, realization on
Collateral, setoff or otherwise, shall be allocated as follows:

 

(a)           first, to payment of that portion of the Obligations constituting
fees, indemnities, expenses (including extraordinary expenses) and other
amounts, owing to the Administrative Agent in its capacity as such;

 

(b)           second, to payment of that portion of the Obligations constituting
indemnities, expenses, and other amounts (other than principal, interest and
fees) payable to the Lenders, ratably among them in proportion to the amounts
described in this clause second payable to them;

 

(c)           third, to payment of that portion of the Obligations constituting
accrued and unpaid interest on the Loans and other Obligations, and fees,
ratably among the Lenders in proportion to the respective amounts described in
this clause third payable to them;

 

(d)           fourth, to payment of that portion of the Obligations constituting
unpaid principal of the Loans, ratably among the Lenders in proportion to the
respective amounts described in this clause fourth held by them; and

 

(e)           last, the balance, if any, after all of the Obligations have been
paid in full, to the Loan Parties or as otherwise required by the Intercreditor
Agreement.

 

Amounts shall be applied to each category of Obligations set forth above until
Full Payment thereof and then to the next category. If amounts are insufficient
to satisfy a category, they shall be applied on a pro rata basis among the
Obligations in the category. The allocations set forth in this Section 7.02 are
solely to determine the rights and priorities of the Administrative Agent and
the Secured Parties as among themselves, and may, except as set forth in the
next sentence, be changed by agreement among them without the consent of any
Loan Party. If any monies remain after distribution to all of the categories
above, such monies shall be returned to the Borrower.

 

ARTICLE VIII

 

The Administrative Agent

 

Section 8.01           Appointment, Authority and Duties of the Administrative
Agent.

 

(a)           Appointment and Authority. Each Secured Party hereby irrevocably
appoints and designates Franchise Group, Inc. as the Administrative Agent under
all Loan Documents and Franchise Group, Inc. hereby accepts such appointments.
The Administrative Agent may, and each Secured Party authorizes the
Administrative Agent to, enter into all Loan Documents to which the
Administrative Agent is intended to be a party and accept all Security
Documents, for the benefit of Secured Parties. Each Secured Party agrees that
any action taken by the Administrative Agent or Required Lenders in accordance
with the provisions of the Loan Documents, and the exercise by the
Administrative Agent or Required Lenders of any rights or remedies set forth
therein, together with all other powers reasonably incidental thereto, shall be
authorized by and binding upon all Secured Parties. Without limiting the
generality of the foregoing, the Administrative Agent shall have the sole and
exclusive authority to (a) act as the disbursing and collecting agent for the
Lenders with respect to all payments and collections arising in connection with
the Loan Documents; (b) execute and deliver as the Administrative Agent each
Loan Document, including any intercreditor or subordination agreement, and
accept delivery of each Loan Document from any Loan Party or other Person;
(c) act as collateral agent for Secured Parties for purposes of perfecting and
administering Liens under the Loan Documents, and for all other purposes stated
therein; (d) manage, supervise or otherwise deal with Collateral; and (e) take
any Enforcement Action or otherwise exercise any rights or remedies with respect
to any Collateral under the Loan Documents, Applicable Law or otherwise. No
Secured Party shall have any right individually to take any Enforcement Action
or otherwise exercise any rights or remedies with respect to any Collateral
under the Loan Documents, Applicable Law or otherwise. The duties of the
Administrative Agent shall be ministerial and administrative in nature, and the
Administrative Agent shall not have a fiduciary relationship with any Secured
Party, Participant or other Person, by reason of any Loan Document or any
transaction relating thereto.

 

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(b)           Duties. The Administrative Agent shall not have any duties except
those expressly set forth in the Loan Documents. The conferral upon the
Administrative Agent of any right shall not imply a duty to exercise such right,
unless instructed to do so by Required Lenders in accordance with this
Agreement.

 

(c)           Agent Professionals. The Administrative Agent may perform its
duties through agents and employees. The Administrative Agent may consult with
and employ Agent Professionals, and shall be entitled to act upon, and shall be
fully protected in any action taken in good faith reliance upon, any advice
given by an Agent Professional.

 

(d)           Instructions of Required Lenders. The rights and remedies
conferred upon the Administrative Agent under the Loan Documents may be
exercised without the necessity of joinder of any other party, unless required
by Applicable Law. The Administrative Agent may request instructions from
Required Lenders or other Secured Parties with respect to any act (including the
failure to act) in connection with any Loan Documents, and may seek assurances
to its satisfaction from Secured Parties of their indemnification obligations
against all Claims that could be incurred by the Administrative Agent in
connection with any act. The Administrative Agent shall be entitled to refrain
from any act until it has received such instructions or assurances, and the
Administrative Agent shall not incur liability to any Lender by reason of so
refraining. Instructions of Required Lenders shall be binding upon all Secured
Parties, and no Secured Party shall have any right of action whatsoever against
the Administrative Agent as a result of the Administrative Agent acting or
refraining from acting in accordance with the instructions of Required Lenders.
Notwithstanding the foregoing, instructions by and consent of specific Lenders
or Secured Parties shall be required to the extent provided in Section 9.08(b).
In no event shall the Administrative Agent be required to take any action that,
in its opinion, is contrary to Applicable Law or any Loan Documents or could
subject any Agent Indemnitee to personal liability.

 

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Section 8.02          Agreements Regarding Collateral.

 

(a)           [Reserved].

 

(b)           Reports. The Administrative Agent shall promptly forward to each
Lender, when complete, copies of any appraisal report prepared by or for the
Administrative Agent with respect to any Loan Party or Collateral (“Report”).
Each Lender agrees (i) that neither Franchise Group, Inc. nor the Administrative
Agent makes any representation or warranty as to the accuracy or completeness of
any Report, and shall not be liable for any information contained in or omitted
from any Report; (ii) that the Reports are not intended to be comprehensive
audits or examinations, and that the Administrative Agent or any other Person
performing any audit or examination will inspect only specific information
regarding the Collateral and will rely significantly upon the Borrower’s books
and records as well as upon representations of the Borrower’s officers and
employees; and (iii) to keep all Reports confidential in accordance with
Section 9.16 and not to distribute or use any Report in any manner other than
administration of the Loans and other Obligations. Each Lender shall indemnify
and hold harmless the Administrative Agent and any other Person preparing a
Report from any action such Lender may take as a result of or any conclusion it
may draw from any Report, as well as from any Claims arising as a direct or
indirect result of the Administrative Agent furnishing a Report to such Lender.

 

Section 8.03           Reliance By the Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall not incur any liability in relying,
upon any certification, notice or other communication (including those by
telephone, telex, telegram, telecopy or e-mail) believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person, and upon the
advice and statements of Agent Professionals. The Administrative Agent shall
have a reasonable and practicable amount of time to act upon any instruction,
notice or other communication under any Loan Document, and shall not be liable
for any such delay in acting.

 

Section 8.04           Action Upon Default. The Administrative Agent shall not
be deemed to have knowledge of any Default or Event of Default, or of any
failure to satisfy any conditions in Article IV, unless it has received written
notice from the Borrower or Required Lenders specifying the occurrence and
nature thereof. If any Lender acquires knowledge of a Default, Event of Default
or failure of such conditions, it shall promptly notify the Administrative Agent
and the other Lenders thereof in writing. Each Secured Party agrees that, except
with the written consent of the Required Lenders, it will not take any
Enforcement Action, accelerate Obligations, or exercise any right that it might
otherwise have under Applicable Law to credit bid at foreclosure sales, UCC
sales or other similar dispositions of Collateral or to assert any rights
relating to any Collateral.

 

Section 8.05          Payments Received by Defaulting Lender. If a Defaulting
Lender obtains a payment or reduction of any Obligation, it shall immediately
turn over the amount thereof to the Administrative Agent for application under
Section 2.18 and it shall provide a written statement to the Administrative
Agent describing the Obligation affected by such payment or reduction.

 

Section 8.06           Limitation on Responsibilities of the Administrative
Agent. The Administrative Agent shall not be liable to any Secured Party for any
action taken or omitted to be taken under the Loan Documents, except for losses
to the extent caused by the Administrative Agent’s gross negligence or willful
misconduct. The Administrative Agent does not assume any responsibility for any
failure or delay in performance or any breach by any Loan Party, Lender or other
Secured Party of any obligations under the Loan Documents. The Administrative
Agent does not make any express or implied representation, warranty or guarantee
to Secured Parties with respect to any Obligations, Collateral, Loan Documents
or Loan Party. No Agent Indemnitee shall be responsible to Secured Parties for
any recitals, statements, information, representations or warranties contained
in any Loan Documents; the execution, validity, genuineness, effectiveness or
enforceability of any Loan Documents; the genuineness, enforceability,
collectability, value, sufficiency, location or existence of any Collateral, or
the validity, extent, perfection or priority of any Lien therein; the validity,
enforceability or collectability of any Obligations; or the assets, liabilities,
financial condition, results of operations, business, creditworthiness or legal
status of any Loan Party or Account Debtor. No Agent Indemnitee shall have any
obligation to any Secured Party to ascertain or inquire into the existence of
any Default or Event of Default, the observance by any Loan Party of any terms
of the Loan Documents, or the satisfaction of any conditions precedent contained
in any Loan Documents.

 

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Section 8.07           Successor Administrative Agent.

 

(a)           Resignation; Successor Administrative Agent. Subject to the
appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving at least
30 days written notice thereof to Lenders and the Borrower. Upon receipt of such
notice, Required Lenders shall have the right, in consultation with (and with
the consent of) the Borrower, to appoint a successor Administrative Agent which
shall be (i) a Lender or an Affiliate of a Lender; or (ii) a commercial bank
that is organized under the laws of the United States or any state or district
thereof, has a combined capital surplus of at least $1,000,000,000 and (provided
no Event of Default exists under Sections 7.01(b) (with respect to the Borrower
only)) is subject to the approval of the Borrower. If no successor agent is
appointed prior to the date that is 30 days from the effective date of the
resignation of the Administrative Agent, then the Administrative Agent may
appoint a successor agent from among the Lenders or, if no Lender accepts such
role, the Administrative Agent may appoint Required Lenders as successor
Administrative Agent. Upon acceptance by a successor Administrative Agent of an
appointment to serve as the Administrative Agent hereunder, or upon appointment
of Required Lenders as successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
powers and duties of the retiring Administrative Agent without further act, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder but shall continue to have the benefits of the
indemnification set forth in Section 8.15. Notwithstanding any Administrative
Agent’s resignation, the provisions of this Section 8.07 shall continue in
effect for its benefit with respect to any actions taken or omitted to be taken
by it while the Administrative Agent. Any successor to Franchise Group, Inc. by
merger or acquisition of stock or this loan shall continue to be the
Administrative Agent hereunder without further act on the part of the parties
hereto, unless such successor resigns as provided above.

 

(b)           [Reserved].

 

Section 8.08          Due Diligence and Non-Reliance. Each Lender acknowledges
and agrees that it has, independently and without reliance upon the
Administrative Agent or any other Lenders, and based upon such documents,
information and analyses as it has deemed appropriate, made its own credit
analysis of each Loan Party and its own decision to enter into this Agreement
and to fund Loans hereunder. Each Secured Party has made such inquiries as it
feels necessary concerning the Loan Documents, Collateral and Loan Parties. Each
Secured Party acknowledges and agrees that the other Secured Parties have made
no representations or warranties concerning any Loan Party, any Collateral or
the legality, validity, sufficiency or enforceability of any Loan Documents or
Obligations. Each Secured Party will, independently and without reliance upon
any other Secured Party, and based upon such financial statements, documents and
information as it deems appropriate at the time, continue to make and rely upon
its own credit decisions in making Loans, and in taking or refraining from any
action under any Loan Documents. Except for notices, reports and other
information expressly required to be furnished to or expressly requested by a
Lender, the Administrative Agent shall have no duty or responsibility to provide
any Secured Party with any notices, reports or certificates furnished to the
Administrative Agent by any Loan Party or any credit or other information
concerning the affairs, financial condition, business or properties of any Loan
Party (or any of its Affiliates) which may come into possession of the
Administrative Agent and its Affiliates.

 

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Section 8.09           Remittance of Payments and Collections.

 

(a)           Remittances Generally. All payments by any Lender to the
Administrative Agent shall be made by the time and on the day set forth in this
Agreement, in immediately available funds. If no time for payment is specified,
payment shall be made by Lender not later than 2:00 p.m. (Local Time) on such
day. Payment by the Administrative Agent to any Secured Party shall be made by
wire transfer, in the type of funds received by the Administrative Agent. Any
such payment shall be subject to the Administrative Agent’s right of offset for
any amounts due from such payee under the Loan Documents.

 

(b)           Failure to Pay. If any Secured Party fails to pay any amount when
due by it to the Administrative Agent pursuant to the terms hereof, such amount
shall bear interest from the due date until paid at the rate determined by the
Administrative Agent as customary in the banking industry for interbank
compensation. In no event shall Borrower be entitled to receive credit for any
interest paid by a Secured Party to the Administrative Agent, nor shall any
Defaulting Lender be entitled to interest on any amounts held by the
Administrative Agent pursuant to Section 2.18.

 

(c)           Recovery of Payments. If the Administrative Agent pays any amount
to a Secured Party in the expectation that a related payment will be received by
the Administrative Agent from a Loan Party and such related payment is not
received, then the Administrative Agent may recover such amount from each
Secured Party that received it. If the Administrative Agent determines at any
time that an amount received under any Loan Document must be returned to a Loan
Party or paid to any other Person pursuant to Applicable Law or otherwise, then,
notwithstanding any other term of any Loan Document, the Administrative Agent
shall not be required to distribute such amount to any Lender. If any amounts
received and applied by the Administrative Agent to any Obligations are later
required to be returned by the Administrative Agent pursuant to Applicable Law,
each Lender shall pay to the Administrative Agent, on demand, such Lender’s Pro
Rata share of the amounts required to be returned.

 

Section 8.10          The Administrative Agent in its Individual Capacity. As a
Lender, Franchise Group, Inc. shall have the same rights and remedies under the
other Loan Documents as any other Lender, and the terms “Lenders,” “Required
Lenders” or any similar term shall include Franchise Group, Inc. in its capacity
as a Lender. Franchise Group, Inc. and its Affiliates may accept deposits from,
lend money to, act as financial or other advisor to, and generally engage in any
kind of business with, Loan Parties and their Affiliates, as if Franchise Group,
Inc. were not the Administrative Agent hereunder, without any duty to account
therefor to the Lenders. In their individual capacities, Franchise Group, Inc.
and its Affiliates may receive information regarding Loan Parties, their
Affiliates and their Account Debtors (including information subject to
confidentiality obligations), and each Secured Party agrees that Franchise
Group, Inc. and its Affiliates shall be under no obligation to provide such
information to any Secured Party, if acquired in such individual capacity.

 

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Section 8.11          Administrative Agent Titles. Each Lender, other than
Franchise Group, Inc., that is designated (on the cover page of this Agreement
or otherwise) by Franchise Group, Inc. as an “agent” of any type shall not have
any right, power, responsibility or duty under any Loan Documents other than
those applicable to all Lenders in their capacity as such, and shall in no event
be deemed to have any fiduciary relationship with any other Lender.

 

Section 8.12          [Reserved].

 

Section 8.13          Survival. This Article VIII shall survive Full Payment of
the Obligations. Other than Sections 8.01, 8.04 and 8.07, this Article VIII does
not confer any rights or benefits upon Borrower or any other Person. As between
Borrower and Administrative Agent, any action that Administrative Agent may take
under any Loan Documents or with respect to any Obligations shall be
conclusively presumed to have been authorized and directed by Secured Parties.

 

Section 8.14          Withholding Tax.

 

To the extent required by any Applicable Law, the Administrative Agent may
withhold from any payment to any Lender an amount equivalent to any applicable
withholding Tax. Without limiting or expanding the provisions of Section 2.15,
each Lender shall indemnify and hold harmless the Administrative Agent against,
within 10 days after written demand therefor, any and all Taxes and any and all
related losses, claims, liabilities and expenses (including reasonable fees,
charges and disbursements of any counsel Administrative Agent) incurred by or
asserted against the Administrative Agent by the IRS or any other Governmental
Authority as a result of the failure of the Administrative Agent to properly
withhold Tax from amounts paid to or for the account of any Lender for any
reason (including, without limitation, because the appropriate form was not
delivered or not properly executed, or because such Lender failed to notify the
Administrative Agent of a change in circumstance that rendered the exemption
from, or reduction of withholding Tax ineffective). A certificate as to the
amount of such payment or liability delivered to any Lender by the
Administrative Agent shall be conclusive absent manifest error. Each Lender
hereby authorizes the Administrative Agent to set off and apply any and all
amounts at any time owing to such Lender under this Agreement or any other Loan
Document against any amount due the Administrative Agent under this
Section 8.14. The agreements in this Section 8.14 shall survive the resignation
and/or replacement of the Administrative Agent, 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.

 

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Section 8.15          Indemnification. The Lenders agree to indemnify
Administrative Agent in its capacity as such (to the extent not reimbursed by
Holdings or the Borrower and without limiting the obligation of Holdings or the
Borrower to do so), each in an amount equal to its pro rata share (based on its
Commitments hereunder (or if such Commitments shall have expired or been
terminated, in accordance with the respective principal amounts of its
applicable outstanding Loans)) thereof, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever that may at any time
(whether before or after the payment of the Loans) be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or arising out
of, the Commitments, this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements that are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the
Administrative Agent’s gross negligence or willful misconduct. The agreements in
this Section 8.15 shall survive the payment of the Loans and all other amounts
payable hereunder.

 

Section 8.16          Certain ERISA Matters.

 

(a)           Each Lender (x) represents and warrants, as of the date such
Person became a Lender party hereto, to, and (y) covenants, from the date such
Person became a Lender party hereto to the date such Person ceases being a
Lender party hereto, for the benefit of, the Administrative Agent and not, for
the avoidance of doubt, to or for the benefit of the Borrower or any other Loan
Party, that at least one of the following is and will be true:

 

(i)       such Lender is not using “plan assets” (within the meaning of the Plan
Asset Regulations) of one or more Benefit Plans with respect to such Lender’s
entrance into, participation in, administration of and performance of the Loans,
the Commitments or this Agreement,

 

(ii)      the transaction exemption set forth in one or more PTEs, such as PTE
84-14 (a class exemption for certain transactions determined by independent
qualified professional asset managers), PTE 95-60 (a class exemption for certain
transactions involving insurance company general accounts), PTE 90-1 (a class
exemption for certain transactions involving insurance company pooled separate
accounts), PTE 91-38 (a class exemption for certain transactions involving bank
collective investment funds) or PTE 96-23 (a class exemption for certain
transactions determined by in-house asset managers), is applicable with respect
to such Lender’s entrance into, participation in, administration of and
performance of the Loans, the Commitments and this Agreement,

 

(iii)     (A) such Lender is an investment fund managed by a “Qualified
Professional Asset Manager” (within the meaning of Part VI of PTE 84-14),
(B) such Qualified Professional Asset Manager made the investment decision on
behalf of such Lender to enter into, participate in, administer and perform the
Loans, the Commitments and this Agreement, (C) the entrance into, participation
in, administration of and performance of the Loans, the Commitments and this
Agreement satisfies the requirements of sub-sections (b) through (g) of Part I
of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of
subsection (a) of Part I of PTE 84-14 are satisfied with respect to such
Lender’s entrance into, participation in, administration of and performance of
the Loans, the Commitments and this Agreement, or

 

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(iv)     such other representation, warranty and covenant as may be agreed in
writing between the Administrative Agent, in its sole discretion, and such
Lender.

 

(b)           In addition, unless either (1) sub-clause (i) in the immediately
preceding clause (a) is true with respect to a Lender or (2) a Lender has
provided another representation, warranty and covenant in accordance with
sub-clause (iv) in the immediately preceding clause (a), such Lender further
(x) represents and warrants, as of the date such Person became a Lender party
hereto, to, and (y) covenants, from the date such Person became a Lender party
hereto to the date such Person ceases being a Lender party hereto, for the
benefit of, the Administrative Agent and not, for the avoidance of doubt, to or
for the benefit of the Borrower or any other Loan Party, that the Administrative
Agent is not a fiduciary with respect to the assets of such Lender involved in
such Lender’s entrance into, participation in, administration of and performance
of the Loans, the Commitments and this Agreement (including in connection with
the reservation or exercise of any rights by the Administrative Agent under this
Agreement, any Loan Document or any documents related hereto or thereto).

 

Section 8.17          Flood Laws. The Administrative Agent has adopted internal
policies and procedures that address requirements placed on federally regulated
lenders under the National Flood Insurance Reform Act of 1994 and related
legislation (the “Flood Laws”). The Administrative Agent will post on the
applicable electronic platform (or otherwise distribute to each Lender in the
syndicate) documents that it receives in connection with the Flood Laws.
However, the Administrative Agent reminds each Lender and Participant in the
facility that, pursuant to the Flood Laws, each federally regulated Lender
(whether acting as a Lender or Participant in the facility) is responsible for
assuring its own compliance with the flood insurance requirements.

 

ARTICLE IX

 

Miscellaneous

 

Section 9.01          Notices.

 

(a)           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 fax or other electronic transmission,
(including by “.pdf” or “.tif”) pursuant to the terms of this Agreement, as
follows:

 

(i)       if to any Loan Party, to Tuesday Morning, Inc., 6250 LBJ Freeway,
Dallas, Texas 75240, Attention: Stacie Shirley, Telecopier: (972) 934-7231,
Electronic Address: sshirley@tuesdaymorning.com, with a copy to Tuesday Morning,
Inc., 6250 LBJ Freeway, Dallas, Texas 75240, Attention: Steven R. Becker,
Electronic Address: sbecker@tuesdaymorning.com, with a copy to Haynes and Boone
LLP, 2323 Victory Ave. Suite 700, Dallas, Texas 75219, Attention: Ian Peck,
Electronic Address: ian.peck@haynesboone.com, and a copy to the Official
Committee of Unsecured Creditors, c/o Montgomery McCracken Walker & Rhoads LLP,
437 Madison Ave., 24th Floor, New York, NY 10022, Attention: Gilbert R. Saydah,
Jr., Edward L. Schnitzer, David M. Banker, gsaydah@mmwr.com,
eschnitzer@mmwr.com, and dbanker@mmwr.com and Munsch Hardt Kopf & Harr, P.C.,
500 N. Akard Street, Suite 3800, Dallas, Texas 75201-6659, Attention Kevin M.
Lippman, Deborah M. Perry, klippman@munsch.com, dperry@munsch.com;

 

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(ii)      if to the Administrative Agent, to Franchise Group, Inc., 4705 S.
Apopka Vineland Road, Suite 206, Orlando, FL 32819, Attention: Brian Kahn,
Electronic Address: bkahn@vintcap.com, Telecopier: (208) 728-8007, with a copy
to each of: (a) Franchise Group, Inc., 627 Harland Street, Milton, MA 02186,
Attention: Andrew Lawrence, Electronic Address: alaurence@vintcap.com and (b)
Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, NY 10019, Attention:
John C. Longmire and Daniel Durschlag, Electronic Addresses:
JLongmire@willkie.com and DDurschlag@willkie.com; or

 

(iii)     if to a Lender, to it at the address, fax number or electronic address
set forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to which
such Lender becomes a party hereto.

 

(b)           Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Article II unless otherwise agreed by the
Administrative Agent and the applicable Lender. Each of the Administrative Agent
and the 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, further, that approval of such procedures
may be limited to particular notices or communications.

 

(c)           All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt if delivered by hand or overnight courier service,
sent by fax or (to the extent permitted by paragraph (b) above) electronic means
or on the date five (5) Business Days after dispatch by certified or registered
mail if mailed, in each case delivered, sent or mailed (properly addressed) to
such party as provided in this Section 9.01 or in accordance with the latest
unrevoked direction from such party given in accordance with this Section 9.01.

 

(d)           Any party hereto may change its address or fax number for notices
and other communications hereunder by notice to the other parties hereto.

 

Section 9.02           Survival of Agreement. All representations and warranties
made by the Loan Parties herein and in the other Loan Documents shall be
considered to have been relied upon by the Lenders and shall survive the making
of the Loans, the execution and delivery of the Loan Documents, and shall
continue in full force and effect until the Termination Date. Without prejudice
to the survival of any other agreements contained herein, obligations for taxes,
costs, indemnifications, reimbursements, damages and other contingent
liabilities contained herein (including pursuant to Sections 2.12, 2.14 and
9.05) shall survive the payment in full of the principal and interest hereunder
and the termination of the Commitments or this Agreement, limited in the manner
set forth herein.

 

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Section 9.03           Binding Effect. This Agreement shall become effective on
the later of (a) when it shall have been executed by Holdings, the Borrower and
the Administrative Agent and when the Administrative Agent shall have received
copies hereof which, when taken together, bear the signatures of each of the
other parties hereto, and thereafter shall be binding upon and inure to the
benefit of Holdings, the Borrower, the Administrative Agent and each Lender and
their respective permitted successors and assigns, and (b) it receives Court
approval.

 

Section 9.04           Successors and Assigns.

 

(a)           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 (i) except as otherwise permitted by Section 6.05
the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section 9.04. 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 paragraph (c) of this
Section 9.04), and, to the extent expressly contemplated hereby, the Related
Parties of the Administrative Agent and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

 

(b)           Subject to the conditions set forth in clause (ii) below, any
Lender may assign to one (1) or more Eligible Assignees (other than to any
natural person) all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitments and the Loans at the
time owing to it) (provided, however, that pro rata assignments shall not be
required and each assignment shall be of a uniform, and not varying, percentage
of all rights and obligations under and in respect of any applicable Loan and
any related Commitment) with the prior written consent (such consent not to be
unreasonably withheld or delayed) of the Administrative Agent, provided that no
consent of the Administrative Agent shall be required if such assignment is to a
Lender, an Affiliate of a Lender or a Related Fund in respect of a Lender.

 

(c)           Assignments shall be subject to the following additional
conditions:

 

(i)       except in the case of an assignment to a Lender, an affiliate of a
Lender or Related Fund or an assignment of the entire remaining amount of the
assigning Lender’s Commitments or Loans, the amount of the Commitments or Loans
of the assigning Lender subject to each such assignment (determined as of the
date the Assignment and Acceptance with respect to such assignment is delivered
to the Administrative Agent) shall not be less than $5.0 million, unless the
Administrative Agent otherwise consents, provided that such amounts shall be
aggregated in respect of each Lender and its Affiliates or Related Funds, if
any;

 

(ii)      the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance together with a processing and
recordation fee of $3,500; and

 

(iii)      the Eligible Assignee, if it shall not be a Lender, shall deliver to
the Administrative Agent an Administrative Questionnaire (to the extent
requested by the Administrative Agent) and all applicable tax forms.

 

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(d)           Subject to acceptance and recording thereof pursuant to clause (f)
below and subject to clause (k) below, from and after the effective date
specified in each Assignment and Acceptance the Eligible Assignee thereunder
shall be a party hereto and, to the extent of the interest assigned by such
Assignment and Acceptance, 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 Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance 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 2.12, 2.14 and 9.05 as well as any
fees accrued for its account and not yet paid). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this Section 9.04 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
paragraph (c) of this Section 9.04.

 

(e)           The Administrative Agent, acting for this purpose as a
non-fiduciary agent of the Borrower, shall maintain at one of its offices a copy
of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amount (and stated interest) of the Loans owing to, each Lender,
pursuant to the terms hereof from time to time (the “Register”). The entries in
the Register shall be conclusive absent manifest error, and the Borrower, the
Administrative 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 Borrower and any Lender (with
respect to any entry related to such Lender’s Loans), at any reasonable time and
from time to time upon reasonable prior notice.

 

(f)            Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an Eligible Assignee (subject to clause
(f)), the Eligible Assignee’s completed Administrative Questionnaire (if
requested by the Administrative Agent) (unless the Eligible Assignee shall
already be a Lender hereunder) and any applicable tax forms, and any written
consent to such assignment required by clause (i) above, the Administrative
Agent shall accept such Assignment and Acceptance and record the information
contained therein in the Register. No assignment, whether or not evidenced by a
promissory note, shall be effective for purposes of this Agreement unless it has
been recorded in the Register as provided in this clause (f).

 

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(g)           Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one (1) or more banks or other
entities (a “Participant”) in all or a portion of such Lender’s rights and
obligations under this Agreement (including all or a portion of its Commitments
and the Loans owing to it); provided that (A) such Lender’s obligations under
this Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement. Any agreement pursuant to
which a Lender sells such a participation shall provide that such Lender shall
retain the sole right to enforce this Agreement and the other Loan Documents and
to approve any amendment, modification or waiver of any provision of this
Agreement and the other Loan Documents; provided that such agreement may provide
that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver that requires the consent of each Lender
directly affected thereby pursuant to Section 9.04(a)(i) or clauses (i) through
(vi) of the first proviso to Section 9.08(b). Subject to paragraph (h) of this
Section 9.04, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.12 and 2.14 (subject to the requirements and limitations
with respect thereto it being understood that the documentation required under
Section 2.14(e) shall be delivered to the participating Lender) to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section 9.04. To the extent permitted by law,
each Participant also shall be entitled to the benefits of Section 9.06 as
though it were a Lender, provided such Participant shall be subject to
Section 2.15(d) as though it were a Lender. Each Lender that sells a
participation shall, acting solely for this purpose as a non-fiduciary agent of
the Borrower, maintain a register on which it enters the name and address of
each Participant and the principal amounts (and stated interest) of each
Participant’s interest in the Loans or other obligations under the Loan
Documents (the “Participant Register”); provided that no Lender shall have any
obligation to disclose all or any portion of the Participant Register to any
Person (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) except to the extent that such disclosure is necessary
to establish that such Commitment, Loan or other obligation is in registered
form under Section 5f.103-1(c) of the United States Treasury Regulations. The
entries in the Participant Register shall be conclusive absent manifest error,
and such Lender shall treat each Person whose name is recorded in the
Participant Register as the owner of such participation for all purposes of this
Agreement notwithstanding any notice to the contrary. For the avoidance of
doubt, the Administrative Agent (in its capacity as Administrative Agent) shall
have no responsibility for maintaining a Participant Register.

 

(h)           A Participant shall not be entitled to receive any greater payment
under Section 2.12 or 2.14 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, except to
the extent such entitlement to receive a greater payment results from a change
in Applicable Law that occurs after the Participant acquired the participation.
A Participant shall not be entitled to the benefits of Section 2.14 to the
extent such Participant fails to comply with Section 2.14(e) as though it were a
Lender (it being understood that the documentation required under
Section 2.14(e) shall be delivered to the participating Lender).

 

(i)            Any Lender may at any time, without the consent of or notice to
the Administrative Agent or the Borrower, pledge or assign a security interest
in all or any portion of its rights under this Agreement (other than to a
natural person) to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this
Section 9.04 shall not apply to any such pledge or assignment of a security
interest; provided that no such pledge or assignment of a security interest
shall release a Lender from any of its obligations hereunder or substitute any
such pledgee (including any Eligible Assignee) for such Lender as a party
hereto.

 

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(j)            The Borrower, upon receipt of written notice from the relevant
Lender, agrees to issue Notes to any Lender requiring Notes to facilitate
transactions of the type described in paragraph (d) above.

 

(k)           If any assignment or participation under this Section 9.04 is made
(or attempted to be made) to the extent the Borrower’s consent is required under
the terms of this Section 9.04, to any other Person without the Borrower’s
consent, then the Borrower may, at its sole expense and effort, upon notice to
such Lender and the Administrative Agent, (A) terminate the Commitments of such
Lender and repay all obligations of the Borrower owing to such Lender relating
to the Loans and participations held by such Lender or participant as of such
termination date (in the case of any participation in any Loan, to be applied to
such participation), or (B) require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in this
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) such Lender
shall have received payment of an amount equal to the lesser of par or the
amount such Lender paid for such Loans, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder, from the assignee (to the extent
of such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts), (ii) [reserved], and (iii) such assignment shall
otherwise comply with this Section 9.04 (provided that no registration and
processing fee referred to in this Section 9.04 shall be owing in connection
with any assignment pursuant to this paragraph). Each Lender hereby grants to
the Administrative Agent an irrevocable power of attorney (which power is
coupled with an interest) to execute and deliver, on behalf of such Lender, as
assignor, any Assignment and Acceptance necessary to effectuate any assignment
of such Lender’s interests hereunder to an assignee as contemplated hereby in
the circumstances contemplated by this Section 9.04(k). Nothing in this
Section 9.04(k) shall be deemed to prejudice any rights or remedies the Borrower
may otherwise have at law or equity.

 

(l)            If the Borrower wishes to replace all of the Loans or Commitments
with ones having different terms, it shall have the option, with the consent of
the Administrative Agent and subject to at least three (3) Business Days’
advance notice to the Lenders, instead of prepaying the Loans or reducing or
terminating the Commitments to be replaced to (i) require the Lenders to assign
the Loans or Commitments to the Administrative Agent or its designees and
(ii) amend the terms thereof in accordance with Section 9.08. Pursuant to any
such assignment, all Loans or Commitments to be replaced shall be purchased at
par (allocated among the Lenders in the same manner as would be required if such
Loans were being optionally prepaid or such Commitments were being optionally
reduced or terminated by the Borrower), accompanied by payment of any accrued
interest and fees thereon and any amounts owing pursuant to Section 9.05(b). By
receiving such purchase price, the Lenders shall automatically be deemed to have
assigned the Loans or Commitments pursuant to the terms of the form of
Assignment and Acceptance attached hereto as Exhibit A, and accordingly no other
action by such Lenders shall be required in connection therewith. The provisions
of this paragraph (l) are intended to facilitate the maintenance of the
perfection and priority of existing security interests in the Collateral during
any such replacement.

 

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Section 9.05           Expenses; Indemnity.

 

(a)           The Borrower agrees to pay within thirty (30) days of demand
thereof (together with backup documentation supporting such request) (i) all
reasonable and documented (in summary format) expenses (including Other Taxes)
incurred by the Administrative Agent in connection with the preparation of this
Agreement and the other Loan Documents, or by the Administrative Agent in
connection with the syndication of the Commitments or the administration of this
Agreement (including expenses incurred in connection with due diligence and
initial and ongoing Collateral examination to the extent incurred with the
reasonable prior approval of the Borrower and the reasonable and documented (in
summary format) fees, disbursements and charges for no more than one (1) outside
counsel and, if necessary one (1) local counsel in each material jurisdiction
where Collateral is located for such Persons, taken as a whole) or in connection
with the administration of this Agreement and any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the Transactions
hereby contemplated shall be consummated) and (ii) all reasonable and documented
(in summary format) expenses incurred by the Administrative Agent or any Lender
in connection with the enforcement or protection of their rights in connection
with this Agreement and the other Loan Documents, in connection with the Loans
made (but limited, in the case of legal fees and expenses, to the actual
reasonable and documented (in summary format) fees, charges and disbursements of
Willkie Farr & Gallagher LLP, counsel for the Administrative Agent, and, if
reasonably necessary (x) the reasonable and documented (in summary format) fees,
charges and disbursements of one (1) local counsel per relevant local
jurisdiction and (y) in the case of an actual or potential conflict of interest,
the reasonable and documented (in summary format) fees, charges and
disbursements of one (1) additional counsel to all affected Persons, taken as a
whole).

 

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(b)           The Borrower agrees to indemnify, on a joint and several basis,
the Administrative Agent, each Lender and each of their respective Affiliates,
successors and assigns and the directors, trustees, officers, employees,
advisors, controlling Persons and agents of each of the foregoing (each such
Person being called an “Indemnitee”) against, and to hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and reasonable
and documented (in summary format) costs and related expenses (including
reasonable and documented (in summary format) documented fees, charges and
disbursements of Willkie Farr & Gallagher LLP and, if necessary, one (1) local
counsel in each relevant local jurisdiction to the Administrative Agent, and, in
the case of an actual or potential conflict of interest, one (1) additional
counsel to all affected Indemnitees, taken as a whole) incurred by or asserted
against any Indemnitee arising out of, relating to, or as a result of (i) the
execution or delivery of this Agreement or any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto and thereto of their respective obligations thereunder or the
consummation of the Transactions (including the payment of the Transaction
Costs) and the other transactions contemplated hereby, (ii) the use of the
proceeds of the Loans or (iii) any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not any Indemnitee is a
party thereto, provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or costs
or related expenses (x) are determined by a judgment of a court of competent
jurisdiction to have resulted by reason of the gross negligence, bad faith or
willful misconduct of, or material breach by, such Indemnitee, (y) arise out of
any claim, litigation, investigation or proceeding brought by such Indemnitee
(or its Related Parties) against another Indemnitee (or its Related Parties)
(other than any claim, litigation, investigation or proceeding brought by or
against the Administrative Agent, acting in its capacity as Administrative
Agent) that does not involve any act or omission of the Borrower or any of its
Subsidiaries and arises out of disputes among the Lenders and/or their
transferees. The Borrower shall not be liable for any settlement of any
proceeding referred to in this Section 9.05 effected without the Borrower’s
written consent (such consent not to be unreasonably withheld or delayed);
provided, however, that the Borrower shall indemnify the Indemnitees from and
against any loss or liability by reason of such settlement if the Borrower was
offered the right to assume the defense of such proceeding and did not assume
such defense or such proceeding was settled with the written consent of the
Borrower, subject to, in each case, the Borrower’s right in this Section 9.05 to
claim an exemption from such indemnity obligations. The Borrower shall indemnify
the Indemnitees from and against any final judgment for the plaintiff in any
proceeding referred to in this Section 9.05, subject to the Borrower’s right in
this Section 9.05 to claim an exemption from such indemnity obligations. The
Borrower shall not, without the prior written consent of any Indemnitee, effect
any settlement of any pending or threatened proceeding in respect of which such
Indemnitee is a party and indemnity could have been sought hereunder by such
Indemnitee unless such settlement (i) includes an unconditional release of such
Indemnitee (and its Related Parties) from all liability or claims that are the
subject matter of such proceeding and (ii) does not include a statement as to or
an admission of fault, culpability or a failure to act by or on behalf of any
Indemnitee (or its Related Parties). To the extent permitted by Applicable Law,
each party hereto hereby waives for itself (and, in the case of the Borrower,
for each other Loan Party) any claim against any Loan Party, any Lender, any
Administrative Agent, any Lender Party, and their respective affiliates,
directors, employees, attorneys, agents or sub-agents, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) (whether or not the claim therefor is based on
contract, tort or duty imposed by any applicable legal requirement) arising out
of, in connection with, as a result of, or in any way related to, this Agreement
or any Loan Document or any agreement or instrument contemplated hereby or
thereby or referred to herein or therein, the transactions contemplated hereby
or thereby, any Loan or the use of the proceeds thereof or any act or omission
or event occurring in connection therewith, and each party hereto (and in the
case of the Borrower on behalf of each other Loan Party) hereby waive, release
and agree not to sue upon any such claim or any such damages, whether or not
accrued and whether or not known or suspected to exist in its favor; provided
that nothing contained in this sentence shall limit the Borrower’s indemnity
obligations to the extent such special, indirect, consequential or punitive
damages are included in any third party claim in connection with which such
indemnified Person is entitled to indemnification hereunder. The provisions of
this Section 9.05 shall remain operative and in full force and effect regardless
of the expiration of the term of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Obligations, the
termination of the Commitments, the invalidity or unenforceability of any term
or provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Administrative Agent or any Lender. All amounts due
under this Section 9.05 shall be payable on written demand therefor accompanied
by reasonable documentation with respect to any reimbursement, indemnification
or other amount requested.

 

(c)           Except as expressly provided in Section 9.05(a) with respect to
Other Taxes, which shall not be duplicative with any amounts paid pursuant to
Section 2.14, this Section 9.05 shall not apply to Taxes other than Taxes
arising from a non-Tax claim.

 

(d)           Notwithstanding the foregoing paragraphs in this Section 9.05, if
it is found by a final, non-appealable judgment of a court of competent
jurisdiction in any such action, proceeding or investigation that any loss,
claim, damage, liability or cost or related expense of any Indemnitee has
resulted from the gross negligence, bad faith or willful misconduct of such
Indemnitee (or any of its Related Parties) or a material breach of the Loan
Documents by such Indemnitee (or any of its Related Parties), such Indemnitee
will repay such portion of the reimbursed amounts previously paid to such
Indemnitee under this Section 9.05 that is attributable to expenses incurred in
relation to the set or omission of such Indemnitee which is the subject of such
finding.

 

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Section 9.06           Right of Set-off. If an Event of Default shall have
occurred and be continuing, upon the written consent of the Administrative Agent
or the Required Lenders, each Lender is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender to or for
the credit or the account of Holdings, the Borrower or any Subsidiary Guarantor
(and such Lender will provide prompt notice to such Loan Party) against any of
and all the obligations of Holdings or the Borrower now or hereafter existing
under this Agreement or any other Loan Document held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement or such other Loan Document and although the obligations may be
unmatured. The rights of each Lender under this Section 9.06 are in addition to
other rights and remedies (including other rights of set-off) that such Lender
may have.

 

Section 9.07          Applicable Law. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
AND, TO THE EXTENT APPLICABLE, THE BANKRUPTCY CODE.

 

Section 9.08           Waivers; Amendment.

 

(a)           No failure or delay of the Administrative Agent or any Lender in
exercising any right or power hereunder or under any Loan Document shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right
or power, or any abandonment or discontinuance of steps to enforce such a right
or power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Administrative Agent and
the Lenders hereunder and under the other Loan Documents are cumulative and are
not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or any other Loan Document or consent
to any departure by Holdings, the Borrower or any other Loan Party therefrom
shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice or demand
on Holdings, the Borrower or any other Loan Party in any case shall entitle such
Person to any other or further notice or demand in similar or other
circumstances.

 

(b)           Subject to Section 2.11(b), neither this Agreement nor any other
Loan Document nor any provision hereof or thereof may be waived, amended or
modified except (A) in the case of this Agreement, pursuant to an agreement or
agreements in writing entered into by Holdings, the Borrower and the Required
Lenders and (B) in the case of any other Loan Document, pursuant to an agreement
or agreements in writing entered into by each party thereto and the
Administrative Agent; provided, however, that the Official Committee of
Unsecured Creditors shall be provided with the proposed waiver, amendment or
modification and if the Official Committee of Unsecured Creditors has objections
thereto, the Official Committee of Unsecured Creditors may seek to have such
objection addressed on an expedited basis by the Court with notice to the Loan
Parties and the Administrative Agent, and such proposed modifications to this
Agreement or other Loan Document shall not become effective until the Court
rules on the Official Committee of Unsecured Creditors’ objection; provided,
further, that no such agreement shall:

 

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(i)       decrease or forgive the principal amount of, or extend the final
maturity date of, or decrease the rate of interest on, any Loan, without the
prior written consent of each Lender directly and adversely affected thereby;
provided, that (x) consent of Required Lenders shall not be required for any
waiver, amendment or modification contemplated by this clause (i), and (y) that
waiver or reduction of a post-default increase in interest shall be effective
with the consent of the Required Lenders (and shall not require the consent of
each directly and adversely affected Lender),

 

(ii)      increase the Commitment of any Lender,

 

(iii)     extend the Commitment of any Lender without the prior written consent
of such Lender (it being understood that waivers or modifications of conditions
precedent, covenants, Defaults or Events of Default, mandatory prepayments or of
a mandatory reduction in the aggregate Commitments shall not constitute an
increase or extension of maturity); provided, that consent of Required Lenders
shall not be required for any waiver, amendment or modification contemplated by
this clause (iii),

 

(iv)     except to the extent necessary to give effect to the express intentions
of this Agreement (including Section 9.04), which, in respect of any amendment
or modification to effect such express intentions, shall be effective with the
consent of the Required Lenders, amend or modify any provision of Section 2.15
of this Agreement in a manner that would by its terms alter the pro rata sharing
of payments required thereby, without the prior written consent of each Lender,

 

(v)      amend or modify the provisions of Section 7.02, Sections 9.08(a), (b)
or (c) or reduce the voting percentage set forth in the definition of “Required
Lenders”, without the prior written consent of each Lender directly and
adversely affected thereby (it being understood that any additional extensions
of credit pursuant to this Agreement may be included in the determination of the
Required Lenders on substantially the same basis as the Loans and Commitments
are included on the Closing Date),

 

(vi)     (x) release all or substantially all the Collateral (it being
understood that a transaction permitted under Section 6.05 shall not constitute
a release of all or substantially all of the Collateral), or release all or
substantially all of the value of the Guarantees (except as otherwise permitted
herein (including in connection with a transaction permitted under Section 6.05)
or in the other Loan Documents) under the Security Documents, or (y) subordinate
the Liens of the Administrative Agent under the Security Documents with respect
to all or substantially all of the Collateral or subordinate the Obligations
hereunder, without the prior written consent of each Lender,

 

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provided, further, that no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent hereunder without the
prior written consent of the Administrative Agent acting as such at the
effective date of such agreement. Each Lender shall be bound by any waiver,
amendment or modification authorized by this Section 9.08 and any consent by any
Lender pursuant to this Section 9.08 shall bind any successor or assignee of
such Lender. Notwithstanding anything to the contrary herein, no Defaulting
Lender shall have any right to approve or disapprove any amendment, waiver or
consent hereunder, except that (x) the Commitments of such Lender may not be
increased or extended without the consent of such Lender and (y) the principal
and accrued and unpaid interest of such Lender’s Loans shall not be reduced or
forgiven without the consent of such Lender.

 

(c)           Without the consent of the Administrative Agent or Lender and
approval of the Court, the Loan Parties and the Administrative Agent may (in
their respective sole discretion, or shall, to the extent required by any Loan
Document) enter into any amendment, modification or waiver of any Loan Document,
or enter into any new agreement or instrument, to effect the granting,
perfection, protection, expansion or enhancement of any security interest in any
Collateral or additional property to become Collateral for the benefit of the
Secured Parties, or as required by local law to give effect to, or protect any
security interest for the benefit of the Secured Parties, in any property or so
that the security interests therein comply with Applicable Law.

 

(d)           Notwithstanding anything to the contrary contained in this
Section 9.08 or any Loan Document, (i) the Borrower and the Administrative Agent
may, without the input or consent of any other Lender, effect amendments to this
Agreement and the other Loan Documents as may be necessary in the reasonable
opinion of the Borrower and the Administrative Agent to effect the provisions of
Sections 2.18 or 9.04(f), (ii) if the Administrative Agent and the Borrower have
jointly identified an obvious error or any error or omission of a technical
nature, in each case, in any provision of the Loan Documents, then the
Administrative Agent and the Borrower shall be permitted to amend such provision
and (iii) guarantees, collateral security documents and related documents
executed by Holdings or Subsidiaries in connection with this Agreement may be in
a form reasonably determined by the Administrative Agent and may be amended,
supplemented or waived without the consent of any Lender if such amendment,
supplement or waiver is delivered in order to (x) comply with local law or
advice of local counsel, (y) cure ambiguities, omissions, mistakes or defects or
(z) cause such guarantee, collateral security document or other document to be
consistent with this Agreement and the other Loan Documents.

 

Section 9.09          Interest Rate Limitation. Notwithstanding anything herein
to the contrary, if at any time the applicable interest rate on any Loan,
together with all fees and charges that are treated as interest under Applicable
Law (collectively, the “Charges”), as provided for herein or in any other
document executed in connection herewith, or otherwise contracted for, charged,
received, taken or reserved by any Lender shall exceed the maximum lawful rate
(the “Maximum Rate”) that may be contracted for, charged, taken, received or
reserved by such Lender in accordance with Applicable Law, the rate of interest
payable hereunder, together with all Charges payable to such Lender shall be
limited to the Maximum Rate, provided that such excess amount shall be paid to
such Lender on subsequent payment dates to the extent not exceeding the legal
limitation.

 

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Section 9.10          Entire Agreement. This Agreement and the other Loan
Documents constitute the entire contract between the parties relative to the
subject matter hereof. Any previous agreement among or representations from the
parties or their Affiliates with respect to the subject matter hereof is
superseded by this Agreement and the other Loan Documents. Notwithstanding the
foregoing, the Fee Letter shall survive the execution and delivery of this
Agreement and remain in full force and effect. Nothing in this Agreement or in
the other Loan Documents, expressed or implied, is intended to confer upon any
party other than the parties hereto and thereto, and their respective successors
and assigns permitted hereunder, any rights, remedies, obligations or
liabilities under or by reason of this Agreement or the other Loan Documents.

 

Section 9.11           WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER LOAN DOCUMENTS
OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN
TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND
ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT
THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT
EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH
PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION
9.11 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY
OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO
THE LOANS MADE HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

Section 9.12           Severability. In the event any one (1) or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby. The parties shall endeavor
in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.

 

Section 9.13           Counterparts. This Agreement may be executed in two (2)
or more counterparts, each of which shall constitute an original but all of
which, when taken together, shall constitute but one (1) contract, and shall
become effective as provided in Section 9.03. Delivery of an executed
counterpart to this Agreement by facsimile transmission or other electronic
transmission (including by “.pdf” or “.tif”) shall be as effective as delivery
of a manually signed original.

 

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Section 9.14           Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

 

Section 9.15           Jurisdiction; Consent to Service of Process.

 

(a)           Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the exclusive jurisdiction of the
Court, in any action or proceeding arising out of or relating to this Agreement
or the other Loan Documents, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such Court. Each of the parties hereto 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.

 

(b)           Each of the parties hereto hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in such Court. Each of the 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 such Court.

 

(c)           Each of the parties hereto agrees that service of all process in
any such proceeding in any such court may be made by registered or certified
mail, return receipt requested at its address provided in Section 9.01 agrees
that service as so provided in is sufficient to confer personal jurisdiction
over the applicable credit party in any such proceeding in any such court, and
otherwise constitutes effective and binding service in every respect; and agrees
that agents and lenders retain the right to serve process in any other manner
permitted by law or to bring proceedings against any credit party in the courts
of any other jurisdiction.

 

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Section 9.16           Confidentiality. Each of the Lenders and the
Administrative Agent agree that it shall maintain in confidence any information
relating to Holdings, the Borrower and the other Loan Parties furnished to it by
or on behalf of Holdings, the Borrower or the other Loan Parties (other than
information that (a) has become generally available to the public other than as
a result of a disclosure by any such party, (b) was already in possession on a
non-confidential basis for a person not known to the recipient to be bound by
confidentiality obligations to Parent or any Subsidiary thereof or has been
independently developed by such Lender or the Administrative Agent without
violating this Section 9.16 or relying on any such information, (c) was
available to such Lender or the Administrative Agent from a third party having,
to such Person’s knowledge, no obligations of confidentiality to Holdings, the
Borrower or any other Loan Party) and shall not reveal the same other than to
its directors, trustees, officers, employees and advisors with a need to know or
to any Person that approves or administers the Loans on behalf of such Lender
(so long as each such Person shall have been instructed to keep the same
confidential in accordance with this Section 9.16 and such Lender and the
Administrative Agent shall be responsible for its Affiliates’ compliance with
this Section 9.16 except to the extent such Affiliate shall sign a written
confidentiality agreement in favor of the Borrower), except: (i) to the extent
necessary to comply with law or any legal process or the requirements of any
Governmental Authority, self-regulatory authorities (including the National
Association of Insurance Commissioners) or of any securities exchange on which
securities of the disclosing party or any affiliate of the disclosing party are
listed or traded (in which case such Lender or the Administrative Agent will
promptly notify the Borrower, in advance, to the extent permitted by Applicable
Law or the rules governing the process requiring such disclosure (except with
respect to any routine or ordinary course audit or examination conducted by bank
accountants or any governmental bank regulatory authority exercising examination
or regulatory authority) and shall use its commercially reasonable efforts to
ensure that any such information so disclosed is accorded confidential
treatment), (ii) as part of the reporting or review procedures to, or
examinations by, Governmental Authorities or self-regulatory authorities,
including the National Association of Insurance Commissioners or the National
Association of Securities Dealers, Inc., (iii) to its parent companies,
affiliates, auditors, assignees, transferees and participants (so long as each
such Person shall have been instructed to keep the same confidential in
accordance with provisions not less restrictive than this Section 9.16 and such
Lender and the Administrative Agent shall be responsible for its Affiliates’
compliance with this Section 9.16), (iv) in order to enforce its rights under
any Loan Document in a legal proceeding (in which case it shall use commercially
reasonable efforts to ensure that any such information so disclosed is accorded
confidential treatment), (v) to any pledgee under Section 9.04(d) or any other
existing or prospective assignee of, or existing or prospective Participant in,
any of its rights under this Agreement (so long as such Person shall have been
instructed to keep the same confidential in accordance with this Section 9.16 or
other provisions at least as restrictive as this Section 9.16), and (vi) with
the consent of the Borrower. In addition, Administrative Agent and each Lender
may disclose the existence of this Agreement and the information about this
Agreement to market data collectors, similar services providers to the lending
industry, and service providers to the Administrative Agent and the Lenders in
connection with the administration and management of this Agreement and the
other Loan Documents to which a Lender Party is a party.

 

Section 9.17           [Reserved].

 

Section 9.18           USA PATRIOT Act. Each Lender hereby notifies the Loan
Parties that pursuant to the requirements of the USA PATRIOT Act, it is required
to obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information
that will allow such Lender to identify the Borrower in accordance with the USA
PATRIOT Act.

 

Section 9.19           Marshalling; Payments Set Aside. Neither the
Administrative Agent nor any Lender shall be under any obligation to marshal any
assets in favor of any Loan Party or any other Person or against or in payment
of any or all of the Obligations. To the extent that any Loan Party makes a
payment or payments to the Administrative Agent or the Lenders (or to the
Administrative Agent, on behalf of the Lenders), or the Administrative Agent or
the Lenders enforce any security interests or exercise their rights of setoff,
and such payment or payments or the proceeds of such enforcement or setoff or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law, common
law or any equitable cause, then, to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor or related thereto, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.

 

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Section 9.20           Obligations Several; Independent Nature of Lenders’
Rights. The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitment of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out hereof and it shall not be necessary for any other Lender to
be joined as an additional party in any proceeding for such purpose.

 

Section 9.21          Electronic Execution of Assignments. The words
“execution,” “signed,” “signature,” and words of like import in any assignment
agreement shall be deemed to include electronic signatures 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.

 

Section 9.22          Acknowledgements. Each of Loan Party hereby acknowledges
and agrees that (a) no fiduciary, advisory or agency relationship between the
Loan Parties and the Lender Parties is intended to be or has been created in
respect of any of the transactions contemplated by this Agreement or the other
Loan Documents, irrespective of whether the Lender Parties have advised or are
advising the Loan Parties on other matters, and the relationship between the
Lender Parties, on the one hand, and the Loan Parties, on the other hand, in
connection herewith and therewith is solely that of creditor and debtor, (b) the
Lender Parties, on the one hand, and the Loan Parties, on the other hand, have
an arm’s length business relationship that does not directly or indirectly give
rise to, nor do the Loan Parties rely on, any fiduciary duty to the Loan Parties
or their affiliates on the part of the Lender Parties, (c) the Loan Parties are
capable of evaluating and understanding, and the Loan Parties understand and
accept, the terms, risks and conditions of the transactions contemplated by this
Agreement and the other Loan Documents, (d) the Loan Parties have been advised
that the Lender Parties are engaged in a broad range of transactions that may
involve interests that differ from the Loan Parties’ interests and that the
Lender Parties have no obligation to disclose such interests and transactions to
the Loan Parties, (e) the Loan Parties have consulted their own legal,
accounting, regulatory and tax advisors to the extent the Loan Parties have
deemed appropriate in the negotiation, execution and delivery of this Agreement
and the other Loan Documents, (f) each Lender Party has been, is, and will be
acting solely as a principal and, except as otherwise expressly agreed in
writing by it and the relevant parties, has not been, is not, and will not be
acting as an advisor, agent or fiduciary for the Loan Parties, any of their
affiliates or any other Person, (g) none of the Lender Parties has any
obligation to the Loan Parties or their affiliates with respect to the
transactions contemplated by this Agreement or the other Loan Documents except
those obligations expressly set forth herein or therein or in any other express
writing executed and delivered by such Lender Party and the Loan Parties or any
such affiliate and (h) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Lender Parties or among the Loan Parties and the Lender Parties.

 

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Section 9.23          Lender Action. Notwithstanding anything to the contrary
contained herein or in any other Loan Document, (i) the authority to enforce
rights and remedies hereunder and under the other Security 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 Administrative Agent for the benefit of the
Lenders, (ii) no Secured Party shall have any right individually to realize upon
any of the Collateral under any Security Document or to enforce the Guarantee,
it being understood and agreed that all powers, rights and remedies under the
Security Documents may be exercised solely by the Administrative Agent for the
benefit of the Secured Parties in accordance with the terms thereof and (iii) in
the event of a foreclosure by the Administrative Agent on any of the Collateral
pursuant to a public or private sale, the Administrative Agent or any Lender may
be the purchaser of any or all of such Collateral at any such sale and the
Administrative Agent, as agent for and representative of the Lenders (but not
any Lender or Lenders in its or their respective individual capacities unless
the Required Lenders shall otherwise agree in writing), shall be entitled, for
the purpose of bidding and making settlement or payment of the purchase price
for all or any portion of the Collateral sold in any such public sale, to use
and apply any of the Obligations as a credit on account of the purchase price
for any Collateral payable by the Administrative Agent at such sale.

 

Section 9.24          Judgment Currency. If, for the purposes of obtaining
judgment in any court, it is necessary to convert a sum due hereunder or any
other Loan Document in one currency into another currency, the rate of exchange
used shall be that at which in accordance with normal banking procedures the
Administrative Agent could purchase the first currency with such other currency
on the Business Day preceding that on which final judgment is given. The
obligation of the Borrower in respect of any such sum due from it to the
Administrative Agent or any Lender hereunder or under the other Loan Documents
shall, notwithstanding any judgment in a currency (the “Judgment Currency”)
other than that in which such sum is denominated in accordance with the
applicable provisions of this Agreement (the “Agreement Currency”), be
discharged only to the extent that on the Business Day following receipt by the
Administrative Agent or such Lender, as the case may be, of any sum adjudged to
be so due in the Judgment Currency, the Administrative Agent or such Lender, as
the case may be, may in accordance with normal banking procedures purchase the
Agreement Currency with the Judgment Currency. If the amount of the Agreement
Currency so purchased is less than the sum originally due to the Administrative
Agent or any Lender from the Borrower in the Agreement Currency, the Borrower
agrees, as a separate obligation and notwithstanding any such judgment, to
indemnify the Administrative Agent or such Lender, as the case may be, against
such loss. If the amount of the Agreement Currency so purchased is greater than
the sum originally due to the Administrative Agent or any Lender in such
currency, the Administrative Agent or such Lender, as the case may be, agrees to
return the amount of any excess to the Borrower (or to any other Person who may
be entitled thereto under Applicable Law).

 

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Section 9.25          Acknowledgement 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 EEA Financial
Institution arising under any Loan Document 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 party hereto 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 entity,
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.

 

Section 9.26          Force Majeure. In no event shall the Administrative Agent
be responsible or liable for any failure or delay in the performance of its
obligations hereunder arising out of or caused by, directly or indirectly,
forces beyond its control, including, without limitation, strikes, work
stoppages, accidents, acts of war or terrorism, civil or military disturbances,
nuclear or natural catastrophes or acts of God, and interruptions, loss or
malfunctions of utilities, communications or computer (software and hardware)
services, it being understood that the Administrative Agent shall use reasonable
best efforts which are consistent with accepted practices in the banking
industry to resume performance as soon as practicable under the circumstances.

 

Section 9.27           Conforming Amendments.

 

(a)           Subject to Section 9.08(b), any change to this Agreement which is
more restrictive on the Loan Parties or more beneficial to the Lenders, material
or otherwise, that the Administrative Agent determines in its Permitted
Discretion is necessary or appropriate to conform this Agreement to the terms of
the ABL DIP Credit Agreement (an “Other Facility Change”) shall modify the terms
of this Agreement pursuant to an amendment (a “Conforming Amendment”) to this
Agreement, and, as appropriate, the other Loan Documents, executed by the Loan
Parties and the Administrative Agent.

 

(b)           Each of the parties hereto hereby agrees that, upon the
effectiveness of any Conforming Amendment, this Agreement and the other Loan
Documents, as applicable, will be amended to the extent necessary or appropriate
to reflect the existence and terms of the Other Facility Changes evidenced
thereby.

 

102

 

 

ARTICLE X

 

[Reserved].

 

ARTICLE XI

 

Guaranty

 

Section 11.01         Guaranty; Limitation of Liability.

 

(a)            Each Guarantor, jointly and severally, hereby absolutely,
unconditionally and irrevocably guarantees the performance and punctual payment
when due, whether at scheduled maturity or on any date of a required prepayment
or by acceleration, demand or otherwise, of all Obligations of each other Loan
Party now or hereafter existing under or in respect of the Loan Documents,
whether direct or indirect, absolute or contingent, and whether for principal,
interest, premiums, fees, indemnities, contract causes of action, costs,
expenses or otherwise (such Obligations being the “Guaranteed Obligations”), and
agrees to pay any and all reasonable out-of-pocket expenses (including
reasonable out-of-pocket fees and expenses of counsel to the extent reimbursable
pursuant to Section 9.05 but excluding allocated costs of in-house counsel)
incurred by the Administrative Agent in enforcing any rights under this Guaranty
or any other Loan Document. Without limiting the generality of the foregoing,
each Guarantor’s liability shall extend to all amounts that constitute part of
the Guaranteed Obligations and would be owed by any other Loan Party to the
Administrative Agent or any Lender under or in respect of the Loan Documents but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization, winding-up or similar proceeding involving such
other Loan Party.

 

(b)           Each Guarantor hereby unconditionally and irrevocably agrees that
in the event any payment shall be required to be made to the Administrative
Agent or any Lender under this Guaranty, such Guarantor will contribute, to the
maximum extent permitted by law, such amounts to each other Guarantor so as to
maximize the aggregate amount paid to the Administrative Agent and the Lenders
under or in respect of the Loan Documents.

 

Section 11.02         Guaranty Absolute. Each Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Administrative Agent or any Lender with respect thereto. The Obligations of each
Guarantor under or in respect of this Guaranty are independent of the Guaranteed
Obligations or any other Obligations of any other Loan Party under or in respect
of the Loan Documents, and a separate action or actions may be brought and
prosecuted against each Guarantor to enforce this Guaranty, irrespective of
whether any action is brought against the Borrower or any other Loan Party or
whether the Borrower or any other Loan Party is joined in any such action or
actions. The liability of each Guarantor under this Guaranty shall be
irrevocable, absolute and unconditional irrespective of, and each Guarantor
hereby irrevocably waives any defenses it may now have or hereafter acquire in
any way relating to, any or all of the following:

 

(a)            any lack of validity or enforceability of any provision under
this Agreement, any Loan Document or any agreement or instrument relating
thereto;

 

103

 

 

(b)           any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations or any other Obligations
of any other Loan Party under or in respect of the Loan Documents, or any other
amendment or waiver of or any consent to departure from any Loan Document,
including any increase in the Guaranteed Obligations resulting from the
extension of additional credit to any Loan Party or otherwise;

 

(c)            any taking, exchange, release or non-perfection of any
Collateral, or any taking, release or amendment or waiver of, or consent to
departure from, any other guaranty, for all or any of the Guaranteed
Obligations;

 

(d)           any manner of application of Collateral, or proceeds thereof, to
all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations or
any other Obligations of any Loan Party under the Loan Documents or any other
assets of any Loan Party;

 

(e)            any change, restructuring or termination of the corporate
structure or existence of any Loan Party;

 

(f)            any failure of the Administrative Agent or any Lender to disclose
to any Loan Party any information relating to the business, condition (financial
or otherwise), operations, performance, properties or prospects of any other
Loan Party now or hereafter known to the Administrative Agent or such Lender, as
the case may be (each Guarantor waiving any duty on the part of the
Administrative Agent and the Lenders to disclose such information);

 

(g)           the failure of any other Person to execute or deliver this
Guaranty or the release or reduction of liability of any Guarantor or surety
with respect to the Guaranteed Obligations; or

 

(h)           any other circumstance (including any statute of limitations) or
any existence of or reliance on any representation by the Administrative Agent
or any Lender that might otherwise constitute a defense available to, or a
discharge of, any Loan Party or any other guarantor or surety, in its capacity
as a guarantor or surety (other than payment or performance).

 

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Administrative Agent or any Lender or any
other Person, for whatever reason, all as though such payment had not been made.

 

Section 11.03         Waivers and Acknowledgments.

 

(a)            Each Guarantor hereby unconditionally and irrevocably waives (to
the extent permitted by Applicable Law) any right to revoke this Guaranty and
acknowledges that this Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.

 

(b)           Each Guarantor hereby unconditionally and irrevocably waives (to
the extent permitted by Applicable Law) (i) any defense arising by reason of any
claim or defense based upon an election of remedies by the Administrative Agent
or any Lender that in any manner impairs, reduces, releases or otherwise
adversely affects the subrogation, reimbursement, exoneration, contribution or
indemnification rights of such Guarantor or other rights of such Guarantor to
proceed against any of the other Loan Parties, any other guarantor or any other
Person or any Collateral and (ii) any defense based on any right of set-off or
counterclaim against or in respect of the Obligations of such Guarantor
hereunder.

 

104

 

 

(c)            Each Guarantor acknowledges that the Administrative Agent may, to
the extent permitted by Applicable Law and the Final Order, without notice to or
demand upon such Guarantor and without affecting the liability of such Guarantor
under this Guaranty, foreclose under any Loan Document by non-judicial sale, and
each Guarantor hereby waives (to the extent permitted by Applicable Law) any
defense to the recovery by the Administrative Agent and the Lenders against such
Guarantor of any deficiency after such non-judicial sale and any defense or
benefits that may be afforded by Applicable Law.

 

(d)           Each Guarantor hereby unconditionally and irrevocably waives any
duty on the part of the Administrative Agent or any Lender to disclose to such
Guarantor any matter, fact or thing relating to the business, condition
(financial or otherwise), operations, performance, properties or prospects of
any other Loan Party or any of its Subsidiaries now or hereafter known by the
Administrative Agent or such Lender, as the case may be.

 

(e)            Each Guarantor acknowledges that it will receive substantial
direct and indirect benefits from the financing arrangements contemplated by the
Loan Documents and that the waivers set forth in Section 9.08 and this
Section 11.03 are knowingly made in contemplation of such benefits.

 

Section 11.04        Subrogation. Each Guarantor hereby unconditionally and
irrevocably agrees not to exercise any rights that it may now have or hereafter
acquire against the Borrower or any other Loan Party that arise from the
existence, payment, performance or enforcement of such Guarantor’s Obligations
under or in respect of this Guaranty or any other Loan Document, including any
right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of the
Administrative Agent or any Lender against the Borrower or any other Loan Party,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including the right to take or receive from the Borrower
or any other Loan Party, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such claim,
remedy or right, unless and until all of the Guaranteed Obligations (other than
inchoate indemnity obligations and similar obligations that survive the
termination of this Agreement) and all other amounts payable under this Guaranty
(other than inchoate indemnity obligations and similar obligations that survive
the termination of this Agreement) shall have been paid in full in cash and the
Commitments shall have expired or been terminated. If any amount shall be paid
to any Guarantor in violation of the immediately preceding sentence at any time
prior to the later of (a) the payment in full in cash of the Guaranteed
Obligations and all other amounts payable under this Guaranty (other than
inchoate indemnity obligations and similar obligations that survive the
termination of this Agreement) and (b) the Termination Date, such amount shall
be received and held in trust for the benefit of the Administrative Agent and
the Lenders, shall be segregated from other property and funds of such Guarantor
and shall forthwith be paid or delivered to the Administrative Agent in the same
form as so received (with any necessary endorsement or assignment) to be
credited and applied to the Guaranteed Obligations and all other amounts payable
under this Guaranty, whether matured or unmatured, in accordance with the terms
of the Loan Documents, or to be held as Collateral for any Guaranteed
Obligations or other amounts payable under this Guaranty thereafter arising. If
(i) any Guarantor shall make payment to the Administrative Agent of all or any
part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and
all other amounts payable under this Guaranty (other than inchoate indemnity
obligations and similar obligations that survive the termination of this
Agreement) shall have been paid in full in cash and (iii) the Termination Date
shall have occurred, the Administrative Agent and the Lenders will, at such
Guarantor’s request and expense, execute and deliver to such Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to such Guarantor of an
interest in the Guaranteed Obligations resulting from such payment made by such
Guarantor pursuant to this Guaranty.

 

105

 

 

Section 11.05         Continuing Guaranty; Assignments. This Guaranty is a
continuing guaranty and shall (a) remain in full force and effect until the
payment in full in cash of the Guaranteed Obligations (other than inchoate
indemnity obligations and similar obligations that survive the termination of
this Agreement) and all other amounts payable under this Guaranty (other than
inchoate indemnity obligations and similar obligations that survive the
termination of this Agreement) and the termination or expiration of all
Commitments, (b) be binding upon each Guarantor, its successors and assigns and
(c) inure to the benefit of and be enforceable by the Administrative Agent and
the Lenders and their respective successors, transferees and assigns. Without
limiting the generality of clause (c) of the immediately preceding sentence, any
Eligible Assignee that has been assigned or transferred all or any portion of a
Lender’s Loans, Commitments or rights and obligations under this Agreement in
accordance with Section 9.04, shall thereupon become vested with all the
benefits granted to such transferring Lender under this Guaranty. No Guarantor
shall have the right to assign its rights hereunder or any interest herein or
delegate any of its duties, liabilities or obligations hereunder or under any
other Loan Document without the prior written consent of the Required Lenders,
except as otherwise permitted hereby.

 

[Signature Pages Follow]

 

106

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
written above.

 

BORROWER: TUESDAY MORNING, INC.       By: /s/ Steven R. Becker   Name: Steven R.
Becker   Title: Chief Executive Officer and President     GUARANTORS: TUESDAY
MORNING CORPORATION       By: /s/ Steven R. Becker   Name: Steven R. Becker  
Title: Chief Executive Officer and President       TMI HOLDINGS, INC.       By:
/s/ Steven R. Becker   Name: Steven R. Becker   Title: Chief Executive Officer
and President       FRIDAY MORNING, LLC       By: Tuesday Morning, Inc., as Sole
Member       By: /s/ Steven R. Becker   Name: Steven R. Becker   Title: Chief
Executive Officer and President       DAYS OF THE WEEK, INC.       By: /s/
Steven R. Becker   Name: Steven R. Becker   Title: Chief Executive Officer      
NIGHTS OF THE WEEK, INC.       By: /s/ Steven R. Becker   Name: Steven R. Becker
  Title: Chief Executive Officer

 

[Signature Page to DIP Term Loan Agreement – Tuesday Morning] 

 

 

 

 

  TUESDAY MORNING PARTNERS, LTD.       By: Days of the Week, Inc., as General
Partner       By: /s/ Steven R. Becker   Name: Steven R. Becker   Title: Chief
Executive Officer

 

[Signature Page to DIP Term Loan Agreement – Tuesday Morning]

 

 

 

 

  FRANCHISE GROUP, INC., as Administrative Agent and a Lender       By: /s/
Brian Kahn     Name: Brian Kahn     Title: President/CEO

 

[Signature Page to DIP Term Loan Agreement – Tuesday Morning]