Document:

a6531008ex10-94.htm

Exhibit 10.9.4

 

 

CONN’S, INC.

 

as Parent and Guarantor

 

and

 

CONN APPLIANCES, INC.,

 

CONN CREDIT I, LP, and

 

CONN CREDIT CORPORATION, INC.

 

as Borrowers

 

 

AMENDED AND RESTATED

 

LOAN AND SECURITY AGREEMENT

 

Dated as of November 30, 2010

 

$375,000,000

 

 

CERTAIN FINANCIAL INSTITUTIONS,

 

as Lenders,

 

BANK OF AMERICA, N.A.,

 

as Administrative Agent and Collateral Agent,

 

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, and

 

WELLS FARGO PREFERRED CAPITAL, INC.,

 

as Co-Syndication Agent,

 

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, and

 

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,

 

as Joint Book Runner, and Co-Lead Arranger,

 

and

 

CAPITAL ONE, N.A., and

 

REGIONS BUSINESS CAPITAL, a division of REGIONS BANK,

 

as Co-Documentation Agent

  

  

  

 

TABLE OF CONTENTS

 

 

	 	  Page

	
SECTION 1.     DEFINITIONS; RULES OF CONSTRUCTION

	
1

	
1.1

	
Definitions

	
1

	
1.2

	
Accounting Terms

	
32

	
1.3

	
Uniform Commercial Code

	
32

	
1.4

	
Certain Matters of Construction

	
32

	
SECTION 2.     CREDIT FACILITIES

	
33

	
2.1

	
Revolver Commitment

	
33

	
2.2

	
Increase in Revolver Commitments.

	
35

	
2.3

	
Letter of Credit Facility

	
36

	
SECTION 3.     INTEREST, FEES AND CHARGES

	
39

	
3.1

	
Interest

	
39

	
3.2

	
Fees

	
40

	
3.3

	
Computation of Interest, Fees, Yield Protection

	
40

	
3.4

	
Reimbursement Obligations

	
41

	
3.5

	
Illegality

	
41

	
3.6

	
Inability to Determine Rates

	
41

	
3.7

	
Increased Costs; Capital Adequacy

	
42

	
3.8

	
Mitigation; Replacement of Foreign Lender

	
43

	
3.9

	
Funding Losses

	
44

	
3.10

	
Maximum Interest

	
44

	
SECTION 4.     LOAN ADMINISTRATION

	
44

	
4.1

	
Manner of Borrowing and Funding Revolver Loans

	
44

	
4.2

	
Defaulting Lender

	
46

	
4.3

	
Number and Amount of LIBOR Revolver Loans; Determination of Rate

	
46

	
4.4

	
Borrower Agent

	
46

	
4.5

	
One Obligation

	
47

	
4.6

	
Effect of Termination

	
47

	
SECTION 5.     PAYMENTS

	
47

	
5.1

	
General Payment Provisions

	
47

	
5.2

	
Repayment of Revolver Loans

	
47

	
5.3

	
Curative Equity

	
48

	
5.4

	
Payment of Other Obligations

	
48

	
5.5

	
Marshaling; Payments Set Aside

	
48

	
5.6

	
Post-Default Allocation of Payments

	
48

	
5.7

	
Application of Payments

	
49

	
5.8

	
Loan Account; Account Stated

	
49

	
5.9

	
Taxes

	
50

	
5.10

	
Lender Tax Information

	
50

	
5.11

	
Nature and Extent of Each Borrower’s Liability

	
51

 

 

  

i

  

 

TABLE OF CONTENTS

(continued)

 

	 	Page

	
SECTION 6.     CONDITIONS PRECEDENT

	
53

	
6.1

	
Conditions Precedent to Initial Revolver Loans

	
53

	
6.2

	
Conditions Precedent to All Credit Extensions

	
55

	
6.3

	
Conditions Subsequent

	
56

	
SECTION 7.     COLLATERAL

	
56

	
7.1

	
Grant of Security Interest

	
56

	
7.2

	
Lien on Deposit Accounts; Cash Collateral

	
57

	
7.3

	
Real Estate Collateral

	
58

	
7.4

	
Other Collateral

	
58

	
7.5

	
No Assumption of Liability

	
59

	
7.6

	
Further Assurances

	
59

	
7.7

	
Foreign Subsidiary Stock

	
59

	
7.8

	
Contract Legend

	
59

	
SECTION 8.     COLLATERAL ADMINISTRATION

	
59

	
8.1

	
Collateral Reports

	
59

	
8.2

	
Administration of Contracts

	
60

	
8.3

	
Administration of Inventory

	
61

	
8.4

	
Administration of Equipment

	
62

	
8.5

	
Administration of Deposit Accounts

	
63

	
8.6

	
Administration of Credit Card Accounts

	
63

	
8.7

	
General Provisions

	
63

	
8.8

	
Power of Attorney

	
64

	
SECTION 9.     REPRESENTATIONS AND WARRANTIES

	
65

	
9.1

	
General Representations and Warranties

	
65

	
9.2

	
Complete Disclosure

	
69

	
SECTION 10.     COVENANTS AND CONTINUING AGREEMENTS

	
69

	
10.1

	
Affirmative Covenants

	
69

	
10.2

	
Negative Covenants

	
73

	
10.3

	
Financial Covenants

	
78

	
10.4

	
Curative Equity

	
78

	
10.5

	
Contract Forms

	
79

	
10.6

	
Credit and Collection Guidelines

	
79

	
10.7

	
Minimum Cash Recovery Percent

	
79

	
SECTION 11.     EVENTS OF DEFAULT; REMEDIES ON DEFAULT

	
79

	
11.1

	
Events of Default

	
79

	
11.2

	
Remedies upon Default

	
81

	
11.3

	
License

	
82

 

 

  

ii

  

 

 

TABLE OF CONTENTS

(continued)

 

	 	 	Page

	
11.4

	
Setoff

	
82

	
11.5

	
Remedies Cumulative; No Waiver

	
82

	
SECTION 12.     AGENT

	
83

	
12.1

	
Appointment, Authority and Duties of Agent

	
83

	
12.2

	
Agreements Regarding Collateral and Field Examination Reports

	
84

	
12.3

	
Reliance By Agent

	
85

	
12.4

	
Action Upon Default

	
85

	
12.5

	
Ratable Sharing

	
85

	
12.6

	
Indemnification of Agent Indemnitees

	
85

	
12.7

	
Limitation on Responsibilities of Agent

	
86

	
12.8

	
Successor Agent and Co-Agents

	
86

	
12.9

	
Due Diligence and Non-Reliance

	
87

	
12.10

	
Replacement of Certain Lenders

	
87

	
12.11

	
Remittance of Payments and Collections

	
87

	
12.12

	
Agent in its Individual Capacity

	
88

	
12.13

	
Agent Titles

	
88

	
12.14

	
Bank Product Providers

	
88

	
12.15

	
No Third Party Beneficiaries

	
89

	
SECTION 13.     BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS

	
89

	
13.1

	
Successors and Assigns

	
89

	
13.2

	
Participations

	
89

	
13.3

	
Assignments

	
90

	
SECTION 14.     MISCELLANEOUS

	
90

	
14.1

	
Consents, Amendments and Waivers

	
90

	
14.2

	
Indemnity

	
91

	
14.3

	
Notices and Communications

	
91

	
14.4

	
Performance of Borrowers’ Obligations

	
92

	
14.5

	
Credit Inquiries

	
92

	
14.6

	
Severability

	
92

	
14.7

	
Cumulative Effect; Conflict of Terms

	
93

	
14.8

	
Counterparts

	
93

	
14.9

	
Entire Agreement

	
93

	
14.10

	
Relationship with Lenders

	
93

	
14.11

	
No Advisory or Fiduciary Responsibility

	
93

	
14.12

	
Confidentiality

	
94

	
14.13

	
Intentionally Omitted

	
94

	
14.14

	
GOVERNING LAW

	
94

	
14.15

	
Consent to Forum; Arbitration

	
94

	
14.16

	
Waivers by Borrowers

	
96

	
14.17

	
Patriot Act Notice

	
96

 

 

  

iii

  

 

 

TABLE OF CONTENTS

(continued)

 

	 	 	Page

	
14.18

	
No Novation

	
96

	
14.19

	
Intercreditor Agreement

	
97

	  	  	  

 

 

 

LIST OF EXHIBITS AND SCHEDULES

	
Exhibit A

	
Revolver Note

	
Exhibit B

	
Assignment and Acceptance

	
Exhibit C

	
Assignment Notice

	
Exhibit D

	
Officer’s Certificate

	
Exhibit E

	
Borrowing Base Certificate

	  	  
	
Schedule 1.1

	
Revolver Commitments of Lenders

	
Schedule 1.1E(1)

	
Existing Bank Products

	
Schedule 1.1E(2)

	
Existing Letters of Credit

	
Schedule 1.1L

	
Leasehold Mortgages

	
Schedule 7.1(j)

	
Equity Interests

	
Schedule 7.3

	
Real Estate

	
Schedule 8.5

	
Deposit Accounts

	
Schedule 8.6.1

	
Credit Card Agreements

	
Schedule 8.7.1

	
Business Locations

	
Schedule 9.1.4

	
Names and Capital Structure

	
Schedule 9.1.5

	
Former Names and Companies

	
Schedule 9.1.11

	
Patents, Trademarks, Copyrights and Licenses

	
Schedule 9.1.14

	
Environmental Matters

	
Schedule 9.1.15

	
Restrictive Agreements

	
Schedule 9.1.16

	
Litigation

	
Schedule 9.1.18

	
Pension Plans

	
Schedule 9.1.20

	
Labor Contracts

	
Schedule 10.2.2

	
Existing Liens

	
Schedule 10.2.17

	
Existing Affiliate Transactions

 

 

  

iv  

  

 

AMENDED AND RESTATED

 

LOAN AND SECURITY AGREEMENT

 

THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is dated as of November 30, 2010, among CONN’S, INC., a Delaware corporation, as parent and guarantor (“Parent”), CONN APPLIANCES, INC., a Texas corporation (“CAI”), CONN CREDIT I, LP, a Texas limited partnership (“CCI”), and CONN CREDIT CORPORATION, INC., a Texas corporation (“CCCI”, and together with CAI and CCI, collectively, “Borrowers”), the financial institutions party to this Agreement from time to time as lenders (collectively, “Lenders”), BANK OF AMERICA, N.A., a national banking association, as Administrative Agent and Collateral Agent for the Lenders (“Agent”) JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as Co-Syndication Agent, Joint Book Runner and Co-Lead Arranger for the Lenders (“JPMorgan”), WELLS FARGO PREFERRED CAPITAL, INC., as Co-Syndication Agent for the Lenders (“WFPC”), MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as Joint Book Runner and Co-Lead Arranger for the Lenders (“BAS”), CAPITAL ONE, N.A., as Co-Documentation Agent for the Lenders (“Capital One”), and REGIONS BUSINESS CAPITAL, a division of REGIONS BANK, as Co-Documentation Agent for the Lenders (“Regions Bank”).

 

R E C I T A L S:

 

WHEREAS, Borrowers, Agent and various other lenders have previously entered into a Loan and Security Agreement, dated as of August 14, 2008 (as amended, the “Original Loan Agreement”);

 

WHEREAS, Borrowers have requested that Agent and Lenders amend and restate the Original Loan Agreement to, among other things, make available to Borrowers a revolving line of credit for loans and letters of credit in an aggregate amount not to exceed $375,000,000, which extensions of credit Borrowers will use for the purposes permitted hereunder;

 

WHEREAS, Agent and Lenders have agreed to make available to Borrowers, a revolving credit facility upon the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in this Agreement, and for good and valuable consideration, the receipt of which is hereby acknowledged, Lenders, Agent, Parent and Borrowers hereby agree to amend and restate the Original Loan Agreement as follows:

 

SECTION 1.     DEFINITIONS; RULES OF CONSTRUCTION

 

1.1           Definitions.  As used herein, the following terms have the meanings set forth below:

 

Account: as defined in the UCC, including all rights to payment for goods sold or leased, or for services rendered.

 

Adjusted Borrowing Base:  the Borrowing Base minus the Availability Covenant Amount.

 

Adjusted Tangible Assets: all assets of Parent and Borrowers on a consolidated basis, except (a) patents, copyrights, trademarks, trade names, franchises, goodwill, and other similar intangibles; (b) assets constituting intercompany Accounts; (c) assets located and notes and receivables due from obligors domiciled outside the United States of America or Canada; and (d) fixed assets to the extent of any write-up in the book value thereof.

 

 

  

1

  

 

 

Affiliate: with respect to any 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.  “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have correlative meanings.

 

Agent Indemnitees: Agent and its officers, directors, employees, Affiliates, agents and attorneys.

 

Agent Professionals: attorneys, accountants, appraisers, auditors, business valuation experts, environmental engineers or consultants, turnaround consultants, and other professionals and experts retained by Agent.

 

Allocable Amount: as defined in Section 5.11.3(b).

 

Anti-Terrorism Laws: any laws relating to terrorism or money laundering, including the Patriot Act.

 

Applicable Law: all laws, rules, regulations and governmental guidelines applicable to the Person, conduct, transaction, agreement or matter in question, 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: with respect to any Type of Revolver Loan, the margin set forth in the chart below, as determined by the Leverage Ratio for the last Fiscal Quarter:

 

	

Level

	
Leverage 

Ratio

	
Base Rate 

Revolver Loans

	
LIBOR 

Revolver Loans

	  	  	  	  
	
I

	
< 1.25:1.00

	
2.75%

	
3.75%

	
II

	
> 1.25:1.00

	
3.00%

	
4.00%

	  	  	  	  

Until March 31, 2011, margins shall be determined as if Level II were applicable.  Thereafter, the margins shall be subject to increase or decrease upon receipt by Agent of the financial statements and corresponding Compliance Certificate for the most recently ended Fiscal Quarter delivered pursuant to Section 10.1.2(d), which change shall be effective on the first day of the calendar month following receipt.  If any financial statements and Compliance Certificate due in the preceding Fiscal Quarter have not been received on the due dates thereof, then the margins shall be determined as if Level II were applicable, from such day until the first day of the calendar month following actual receipt.

 

Approved Fund: 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 its ordinary course of activities, and is administered or managed by a Lender, an entity that administers or manages a Lender, or an Affiliate of either.

 

 

  

2

  

 

 

Asset Disposition: a sale, lease, license, consignment, transfer or other disposition of Property of an Obligor, including a disposition of Property in connection with a sale-leaseback transaction or synthetic lease.

 

Assignment and Acceptance: an assignment agreement between a Lender and Eligible Assignee, in the form of Exhibit B.

 

Availability: the Borrowing Base minus the principal balance of all Revolver Loans.

 

Availability Covenant Amount: $25,000,000 so long as any obligations under the Term Loan Facility remain outstanding, and $0 at all times thereafter.

 

Bank of America: Bank of America, N.A., a national banking association, and its successors and assigns.

 

Bank of America Indemnitees: Bank of America and its officers, directors, employees, Affiliates, agents and attorneys.

 

Bank Product: any of the following products, services or facilities extended to any Borrower or its Subsidiary by a Lender or any of its Affiliates: (a) Cash Management Services; (b) products under Hedging Agreements; (c) commercial credit card and merchant card services; and (d) leases and other banking products or services as may be requested by any Borrower or its Subsidiary, other than Letters of Credit.

 

Bank Product Debt: Debt and other obligations of an Obligor relating to Bank Products.

 

Bank Product Reserve: the aggregate amount of reserves established by Agent from time to time in its reasonable discretion in respect of Secured Bank Product Obligations.

 

Bankruptcy Code: Title 11 of the United States Code.

 

Base Rate: for any day, a per annum rate equal to the greater of (a) the Prime Rate for such day; (b) the Federal Funds Rate for such day, plus 0.50%; or (c) LIBOR for a 30-day interest period as determined on such day, plus 1.0%.

 

Base Rate Revolver Loan: a Revolver Loan that bears interest based on the Base Rate.

 

Board of Governors: the Board of Governors of the Federal Reserve System.

 

Borrowed Money: with respect to any Obligor, without duplication, its (a) Debt that (i) arises from the lending of money by any Person to such Obligor, (ii) is evidenced by notes, drafts, bonds, debentures, credit documents or similar instruments, (iii) accrues interest or is a type upon which interest charges are customarily paid (excluding trade payables owing in the Ordinary Course of Business and obligations owing to Flooring Lenders), or (iv) was issued or assumed as full or partial payment for Property; (b) Capital Leases; (c) reimbursement obligations with respect to letters of credit; and (d) guaranties of any Debt of the foregoing types owing by another Person.

 

 

  

3

  

 

 

Borrower: as defined in the preamble of this Agreement.

 

Borrower Agent: as defined in Section 4.4.

 

Borrowing: a group of Revolver Loans of one Type that are made on the same day or are converted into Revolver Loans of one Type on the same day.

 

Borrowing Availability: the Adjusted Borrowing Base minus the principal balance of all Revolver Loans.

 

Borrowing Base: on any date of determination, an amount equal to the lesser of (a) the aggregate amount of Revolver Commitments, minus the LC Reserve, minus the Term Loan Borrowing Base Reserve; or (b) (i) the sum of the CCI Borrowing Base, plus the CAI Borrowing Base, minus the Term Loan Borrowing Base Reserve.

 

Borrowing Base Certificate: a certificate, in form and substance satisfactory to Agent (a form acceptable as of the Closing Date is attached as Exhibit E) by which Borrowers certify calculation of the Borrowing Base, Adjusted Borrowing Base and the Term Loan Borrowing Base.

 

Business Day: any day other than a Saturday, Sunday or any other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, North Carolina, Texas and California, and if such day relates to a LIBOR Revolver Loan, any such day on which dealings in Dollar deposits are conducted between banks in the London interbank Eurodollar market.

 

CAI Availability Reserve:  the sum of (without duplication when taken into account with the CCI Availability Reserve) (a) the Inventory Reserve; (b) the Rent and Charges Reserve; (c) the LC Reserve; (d) the Bank Product Reserve; (e) the Sales Tax Reserve; (f) the Gift Card Reserve; (g) the Customer Deposit Reserve; (h) the aggregate amount of liabilities secured by Liens upon Collateral that are senior to Agent’s Liens, other than the Liens of Term Agent upon the Real Estate listed on Schedule 7.3 (but imposition of any such reserve shall not waive an Event of Default arising therefrom); and (i) such additional reserves, in such amounts and with respect to such matters, as Agent in its reasonable judgment may elect to impose from time to time.

 

CAI Borrowing Base:  the sum of the Credit Card Account Formula Amount, plus the Inventory Formula Amount, minus any CAI Availability Reserve.

 

CAIC: CAI Credit Insurance Agency, Inc., a Louisiana corporation.

 

CAIH: CAI Holding Co., a Delaware corporation.

 

Capital Expenditures: all liabilities incurred, expenditures made or payments due (whether or not made) by any Borrower or any of its Subsidiaries for the acquisition of any fixed assets, or any improvements, replacements, substitutions or additions thereto with a useful life of more than one year, including the principal portion of Capital Leases.

 

Capital Lease: any lease that is required to be capitalized for financial reporting purposes in accordance with GAAP, except those Leases existing as of the date of any change in GAAP that requires all leases to be capitalized for financial statement purposes.

 

 

  

4

  

 

 

Cash Collateral: cash, and any interest or other income earned thereon, that is delivered to Agent to Cash Collateralize any Obligations.

 

Cash Collateral Account: a demand deposit, money market or other account established by Agent at such financial institution as Agent may select in its discretion, which account shall be subject to Agent’s Liens for the benefit of Secured Parties.

 

Cash Collateralize: the delivery of cash to Agent, as security for the payment of Obligations, in an amount equal to (a) with respect to LC Obligations, 105% of the aggregate LC Obligations, and (b) with respect to other Obligations (including Secured Bank Product Obligations), Agent’s good faith estimate of the amount due or to become due, including all fees and other amounts relating to such Obligations.  “Cash Collateralization” has a correlative meaning.

 

Cash Equivalents: (a) marketable obligations issued or unconditionally guaranteed by, and backed by the full faith and credit of, the United States government, maturing within 12 months of the date of acquisition; (b) certificates of deposit, time deposits and bankers’ acceptances maturing within 12 months of the date of acquisition, and overnight bank deposits, in each case which are issued by Bank of America or a commercial bank organized under the laws of the United States or any state or district thereof, rated A-1 (or better) by S&P or P-1 (or better) by Moody’s at the time of acquisition, and (unless issued by a Lender) not subject to offset rights; (c) repurchase obligations with a term of not more than 30 days for underlying investments of the types described in clauses (a) and (b) entered into with any bank meeting the qualifications specified in clause (b); (d) commercial paper issued by Bank of America or rated A-1 (or better) by S&P or P-1 (or better) by Moody’s, and maturing within nine months of the date of acquisition; and (e) shares of any money market fund that has substantially all of its assets invested continuously in the types of investments referred to above, has net assets of at least $500,000,000 and has the highest rating obtainable from either Moody’s or S&P.

 

Cash Management Services: any services provided from time to time by any Lender or any of its Affiliates to any Borrower or any its Subsidiaries in connection with operating, collections, payroll, trust, or other depository or disbursement accounts, including automated clearinghouse, e-payable, electronic funds transfer, wire transfer, controlled disbursement, overdraft, depository, information reporting, lockbox and stop payment services.

 

Cash Recovery Percent: the percent, calculated as of the end of the last day of each month, equal to the amount determined by dividing (i) the actual Gross Cash Collections received by Borrowers from payments made by Contract Debtors during the previous three (3) months by (ii) the sum of the Gross Contract Payments outstanding as of the beginning of the first day of each of the previous three (3) months.

 

CCI Availability Reserve:  the sum of (without duplication when taken into account with the CAI Availability Reserve) (a) the Rent and Charges Reserve; (b) the LC Reserve; (c) the Bank Product Reserve; (d) the Sales Tax Reserve; (e) the Service Maintenance Program Reserve; (f) the aggregate amount of liabilities secured by Liens upon Collateral that are senior to Agent’s Liens, other than the Liens of Term Agent upon the Real Estate listed on Schedule 7.3 (but imposition of any such reserve shall not waive an Event of Default arising therefrom); and (g) such additional reserves, in such amounts and with respect to such matters, as Agent in its reasonable judgment may elect to impose from time to time.

 

 

  

5

  

 

 

CCI Borrowing Base:  the sum of the Contract Formula Amount, minus any CCI Availability Reserve.

 

CCI Originator Notes:  the revolving subordinated promissory notes made by CCI in favor of CAI evidencing that portion of the purchase price represented by Debt incurred by CCI in connection with its purchase of contracts from CAI pursuant to the CCI Receivables Purchase Agreement.

 

CCI Receivables Purchase Agreement: that certain Contract Receivables Purchase Agreement entered into as of the Closing Date between CCI, as purchaser, CAI, as originator and seller, together with all amendments, modifications and supplements thereto, which agreement shall be in form and substance substantially similar to the CCCI Receivables Purchase Agreement.

 

CCCI Originator Notes:  the revolving subordinated promissory notes made by CCI in favor of CCCI evidencing that portion of the purchase price represented by Debt incurred by CCI in connection with its purchase of contracts from CCCI pursuant to the CCCI Receivables Purchase Agreement.

 

CCCI Receivables Purchase Agreement: that certain Contract Receivables Purchase Agreement dated as of August 14, 2008 between CCI, as purchaser, CCCI, as originator and seller, together with all amendments, modifications and supplements thereto.

 

CERCLA: the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. § 9601 et seq.).

 

CFII Originator Note: the subordinated promissory note made by CCI in favor of Conn Funding II, L.P., and transferred to CAI, evidencing that portion of the purchase price represented by Debt incurred by CCI in connection with its purchase of Contracts from Conn Funding II, L.P. pursuant to the CFII Receivables Purchase Agreement.

 

CFII Receivables Purchase Agreement: that certain Receivables Purchase Agreement dated as of the Closing Date between CCI, as purchaser, and Conn Funding II, L.P., as seller, together with all amendments, modifications and supplements thereto.

 

Change in Law: the occurrence, after the date hereof, of (a) the adoption or taking effect of any law, rule, regulation or treaty; (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority; or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.

 

Change of Control: (a) Parent ceases to own and control, beneficially and of record, directly or indirectly, all Equity Interests in CAI; (b) CAI ceases to own and control, beneficially and of record, directly or indirectly, all Equity Interests of CAIH, CCCI, CAIC, CCI and CLL; (c) a change in the majority of directors of Parent, CAI, CAI Holding Co. or CCCI, unless approved by the then majority of directors of such entity; or (d) all or substantially all of a Borrower’s assets are sold or transferred, other than a sale or transfer to another Borrower. 

 

 

  

6

  

 

 

Claims: all claims, liabilities, obligations, losses, damages, penalties, judgments, proceedings, interest, costs and expenses of any kind (including remedial response costs, reasonable attorneys’ fees and Extraordinary Expenses) at any time (including after Full Payment of the Obligations, resignation or replacement of Agent, or replacement of any Lender) incurred by or asserted against any Indemnitee in any way relating to (a) any Revolver Loans, Letters of Credit, Loan Documents, or the use thereof or transactions relating thereto, (b) any action taken or omitted to be taken by any Indemnitee in connection with any Loan Documents, (c) the existence or perfection of any Liens, or realization upon any Collateral, (d) the exercise of any rights or remedies under any Loan Documents or Applicable Law, or (e) the failure by any Obligor 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.

 

CLL: Conn Lending, LLC, a Delaware limited liability company.

 

Closing Date: as defined in Section 6.1.

 

Code: the Internal Revenue Code of 1986.

 

Collateral: all Property described in Section 7.1, all Property described in any Security Documents as security for any Obligations, and all other Property that now or hereafter secures (or is intended to secure) any Obligations.

 

Collateral Adjustment Percentage:  calculated as of the first day of each month, the sum of the Past Due Percent and the Net Charge-Off Percent.

 

Compliance Certificate: a certificate, in form and substance satisfactory to Agent, by which Borrowers certify compliance with Sections 10.2.3 and 10.3 and calculate the applicable level for the Applicable Margin.

 

Contingent Obligation: any obligation of a Person (without duplication) arising from a guaranty, indemnity or other assurance of payment or performance of any Debt, lease, dividend or other obligation (“primary obligations”) of another obligor (“primary obligor”) in any manner, whether directly or indirectly, including any obligation of such Person under any (a) guaranty, endorsement, co-making or sale with recourse of an obligation of a primary obligor; (b) obligation to make take-or-pay or similar payments regardless of nonperformance by any other party to an agreement; and (c) arrangement (i) to purchase any primary obligation or security therefor, (ii) to supply funds for the purchase or payment of any primary obligation, (iii) to maintain or assure working capital, equity capital, net worth or solvency of the primary obligor, (iv) to purchase Property or services for the purpose of assuring the ability of the primary obligor to perform a primary obligation, or (v) otherwise to assure or hold harmless the holder of any primary obligation against loss in respect thereof.  The amount of any Contingent Obligation shall be deemed to be the stated or determinable amount of the primary obligation (or, if less, the maximum amount for which such Person may be liable under the instrument evidencing the Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto.

 

Contract Advance Rate Amount:  75% of Net Eligible Contract Payments; provided, that the Contract Advance Rate Amount shall be subject to reduction as of the first day of each month, based on the then existing Collateral Adjustment Percentage and Cash Recovery Percent (whichever results in the lower Contract Advance Rate Amount), as follows:

 

 

  

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(a)           the Contract Advance Rate Amount shall be reduced by 1% for each whole percentage or fraction thereof that the Collateral Adjustment Percentage exceeds 15%; and

 

(b)           the Contract Advance Rate Amount shall be reduced based on the Cash Recovery Percentage as set forth below:

 

	
Cash Recovery Percent

	
Contract Advance Rate Amount

	
< 4.99% > 4.94%

	
74% of Net Eligible Contract Payments

	
< 4.94% > 4.89%

	
73% of Net Eligible Contract Payments

	
< 4.89% > 4.84%

	
72% of Net Eligible Contract Payments

	
< 4.84% > 4.79%

	
71% of Net Eligible Contract Payments

	
< 4.79% > 4.74%

	
70% of Net Eligible Contract Payments

 

Contract Allocation Agreement: an agreement in form and substance satisfactory to Agent between a Borrower and the Securitization Subsidiary, pursuant to which certain Contracts are randomly designated as Securitized Contracts and are allocated to the Securitization Subsidiary.

 

Contract Debtor: each Person who is obligated to a Borrower to perform any duty under or to make any payment pursuant to the terms of a Contract.

 

Contract Formula Amounts: the lesser of (i) the Contract Advance Rate Amount, and (ii) 85% of the appraised value of Gross Contract Payments as set forth in the most recent appraisal of Borrowers’ Contracts performed by an appraiser and on terms satisfactory to Agent; provided, that the limitation set forth in clause (ii) hereof shall be applicable only so long as any obligations under the Term Loan Facility remain outstanding.  Notwithstanding the above, the portion of the Contract Formula Amount supported by Eligible Revolving Contracts shall at no time exceed 10% of the CCI Borrowing Base.

 

Contracts: all of each Borrower’s now owned and hereafter acquired loan agreements, accounts, revolving credit agreements, installment sale contracts, Instruments, notes, documents, chattel paper, and all other forms of obligations owing to such Borrower, including any collateral for any of the foregoing, including all rights under any and all security documents and merchandise returned to or repossessed by such Borrower. For the avoidance of doubt, all Contracts shall include the Contracts assigned to a Borrower pursuant to the Intercompany Assignment Agreement.

 

Credit Card Account: Accounts together with all income, payments and proceeds thereof, owed by a Credit Card Issuer or Credit Card Processor to a Borrower resulting from charges by a retail customer of a Borrower on credit or debit cards in connection with the sale of goods by a Borrower, or services performed by a Borrower, in each case in the Ordinary Course of Business.

 

Credit Card Account Formula Amount: 75% of the Value of Eligible Credit Card Accounts.

 

Credit Card Agreements: with respect to each Borrower, all agreements now or hereafter entered into by such Borrower with any Credit Card Issuer or any Credit Card Processor, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

 

 

  

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Credit Card Issuers: any person (other than a Borrower) who issues or whose members issue credit cards, including, MasterCard or VISA bank credit or debit cards or other bank credit or debit cards issued through MasterCard International, Inc., VISA, U.S.A., Inc. or Visa International and American Express, Discover, Diners Club, Carte Blanche and other non-bank credit or debit cards.

 

Credit Card Processor Notifications: with respect to each Borrower, individually and collectively, the letter agreements executed by such Borrower and delivered to such Borrower’s Credit Card Issuers or Credit Card Processors who are parties to Credit Card Agreements, acknowledging Agent’s first priority Lien and the Term Agent’s second priority Lien in the monies due and to become due to such Borrower under the Credit Card Agreements of such Borrower, and instructing such Credit Card Issuers or Credit Card Processors to transfer all such amounts to the Dominion Accounts, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

 

Credit Card Processors: with respect to each Borrower, any servicing or processing agent or any financial intermediary who facilitates, services, processes or manages the credit authorization, billing transfer and/or payment procedures with respect to any of such Borrower’s sales transactions involving credit card or debit card purchases by customers using credit cards or debit cards issued by any Credit Card Issuer.

 

Credit and Collection Guidelines: Borrowers’ guidelines (which have previously been reviewed and approved by the Agent) which state in detail the credit criteria used by Borrowers in determining the creditworthiness of Contract Debtors and the collection criteria used by Borrowers in collection of amounts due from Contract Debtors.

 

Curative Equity: common equity contributions made to Parent which Parent contributes as additional common equity contributions to any Borrower and which is designated “Curative Equity” by Borrower Agent under Section 10.4 at the time it is contributed.

 

Customer Deposit Reserve:  as of any measurement date, a reserve equal to the aggregate amount of deposits paid by the customers of any Borrower for the purchase of goods.

 

CWA: the Clean Water Act (33 U.S.C. §§ 1251 et seq.).

 

Debt: as applied to any Person, without duplication, (a) all items that would be included as liabilities on a balance sheet in accordance with GAAP, including Capital Leases, but excluding trade payables, accrued expenses and deferred revenues incurred and being paid in the Ordinary Course of Business and amounts owed to Flooring Lenders on account of flooring arrangements paid in the Ordinary Course of Business; (b) all Contingent Obligations; (c) all reimbursement obligations in connection with letters of credit issued for the account of such Person; and (d) in the case of a Borrower, the Obligations.  The Debt of a Person shall include any recourse Debt of any partnership in which such Person is a general partner or joint venturer.

 

Default: an event or condition that, with the lapse of time or giving of notice, would constitute an Event of Default.

 

Default Rate: for any Obligation (including, to the extent permitted by law, interest not paid when due), 2% plus the interest rate otherwise applicable thereto.

 

 

  

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Defaulting Lender: any Lender that, as determined by Agent, (a) has failed to perform any funding obligations hereunder, and such failure is not cured within three Business Days; (b) has notified Agent or any Borrower that such Lender does not intend to comply with its funding obligations hereunder or has made a public statement to the effect that it does not intend to comply with its funding obligations hereunder or under any other credit facility; (c) has failed, within three Business Days following request by Agent, to confirm in a manner satisfactory to Agent that such Lender will comply with its funding obligations hereunder; or (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.

 

Deposit Account Control Agreements:  the Deposit Account control agreements to be executed by each institution maintaining a Deposit Account for a Borrower, in favor of Agent and Term Agent, as security for the Obligations.

 

Distribution: any declaration or payment of a distribution, interest or dividend on any Equity Interest (other than payment-in-kind); any distribution, advance or repayment of Debt to a holder of Equity Interests; or any purchase, redemption, or other acquisition or retirement for value of any Equity Interest.

 

Dollars: lawful money of the United States.

 

Dominion Accounts: special accounts established by Borrowers at Bank of America or other banks acceptable to Agent, over which Agent has exclusive control for withdrawal purposes.

 

Dominion Trigger Period: the period (a) commencing on the day that (i) an Event of Default occurs; (ii) average Availability during a month (as reflected in the Loan Account) is less than 15% of the amount of aggregate outstanding Revolver Loans and stated amount of Letters of Credit; or (iii) Availability is at any time less than 10% amount of aggregate outstanding Revolver Loans and stated amount of Letters of Credit, and (b) ending on the day (i) on which, during the preceding 90 consecutive days, (x) no Event of Default has existed, (y) Availability has at all times been greater than 10% of the amount of aggregate outstanding Revolver Loans and stated amount of Letters of Credit, and (z) average Availability has at all times been greater than 15% of the amount of aggregate outstanding Revolver Loans and stated amount of Letters of Credit; provided, that this clause (b)(i) shall only be applicable to the first commencement of such period hereunder, and (ii) determined by Agent in its sole discretion for any subsequent commencement of such period; provided, that with respect to any subsequent commencement of such period in order for the period to end the requirements in clause (b)(i) shall be satisfied.

 

EBITDAR: as of any date of determination, on a trailing 12-month basis and determined on a consolidated basis for Parent and its Subsidiaries derived from financial statements prepared in accordance with GAAP, net income, calculated before interest expense, provision for income taxes, depreciation and amortization expense, stock based compensation, book rent expense, gains or losses arising from the sale of capital assets, any extraordinary gains or losses (in each case, to the extent included in determining net income) (except that net cash extraordinary gains or losses included in the determination of EBITDAR will not exceed $5,000,000 in any trailing twelve month period; provided, that this parenthetical shall be applicable only so long as any obligations under the Term Loan Facility remain outstanding), and reduced on a Fiscal Quarter basis or such other determination date by an amount equal to (if a positive result) the sum of the EBITDAR Loss Reserve measured as of the end of any Fiscal Quarter or such other determination date, minus Borrowers’ recorded loss reserve measured as of the end of the same Fiscal Quarter or such other determination date.

 

 

  

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EBITDAR Loss Reserve: at any date is the sum of (i) Net Charge-Offs for the 12-month period ending on the measurement date, plus (ii) the net change in Net Balances over 180 days past due for the 12-month period ending on the measurement date.

 

Eligible Assignee: a Person that is (a) a Lender, U.S.-based Affiliate of a Lender or Approved Fund or a Term Lender under the Term Loan Agreement; (b) any other financial institution approved by Agent and Borrower Agent (which approval by Borrower Agent shall not be unreasonably withheld or delayed, and shall be deemed given if no objection is made within two Business Days after notice of the proposed assignment), that is organized under the laws of the United States or any state or district thereof, has total assets in excess of $5 billion, extends asset-based lending facilities in its ordinary course of business and whose becoming an assignee would not constitute a prohibited transaction under Section 4975 of the Code or any other Applicable Law; and (c) during any Event of Default, any Person acceptable to Agent in its discretion; provided, that none of Parent or its Subsidiaries may be an Eligible Assignee.

 

Eligible Contracts: those Contracts owned by a Borrower that Agent, in its reasonable judgment, deems to be Eligible Contracts.  Without limiting the foregoing, no Contract shall be an Eligible Contract unless:

 

(a)           Such Contract is owned by a Borrower and such Borrower has good and marketable title to such Contract free and clear of any Lien of any Person other than Agent and Term Agent;

 

(b)           the Contract complies in all material respects with all of Borrowers’ warranties and representations contained herein;

 

(c)           no payment due under the Contract is more than 60 days contractually delinquent;

 

(d)           neither a Borrower nor the Contract Debtor is in default under the terms of the Contract;

 

(e)           no Borrower has within any 12-month period granted to the Contract Debtor more than 2 extensions of time (each not longer than 1 month) for the payment of any sum due under the Contract;

 

(f)           the Contract or payments due thereunder are not subject to any defense, counterclaim, offset, discount, or allowance other than discounts provided in connection with promotional credit, such as same as cash offerings or deferred interest programs;

 

(g)           the terms of the Contract and all related documents and Instruments comply in all respects with all Requirement of Law;

 

(h)           the Contract Debtor is not an Affiliate or an employee of an Obligor;

 

(i)           the creditworthiness of the Contract Debtor is acceptable to Agent and the Contract and Contract Debtor conform to the Credit and Collection Guidelines in all material respects;

 

 

  

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(j)           the Contract Debtor is not subject to an active or pending Insolvency Proceeding under Federal law or any similar proceeding under state law and the applicable Borrower is able to bring suit or enforce remedies against such Contract Debtor through judicial process;

 

(k)           the first scheduled payment pursuant to the terms of the Contract is, or was, due within 45 days following the execution of the Contract and all other payments are scheduled to be made on the same date of each month thereafter;

 

(l)           the payment schedule for such Contract is fully amortizing on a monthly basis;

 

(m)           with respect to installment Contracts only, the original term of the Contract is not more than 48 months;

 

(n)           repayment of the Contract is secured by a first priority interest in any merchandise sold in connection therewith;

 

(o)           to the extent that the balance of the Contract includes sums representing the financing of “service maintenance plans,” such plans are in compliance with all applicable consumer credit laws, including any and all special insurance laws relating thereto;

 

(p)           the Contract is not a Modified Contract;

 

(q)           the Contract is originated or acquired in the Ordinary Course of Business;

 

(r)           Agent has a first priority perfected Lien in the Contract; and

 

(s)           the merchandise, if any, which secures the Contract has been delivered to the Contract Debtor and has not been repossessed by a Borrower or returned by the Contract Debtor to a Borrower.

 

Eligible Credit Card Accounts: Credit Card Accounts that Agent, in its discretion, deems to be Eligible Credit Card Accounts.  Without limiting the foregoing, no Credit Card Account shall be an Eligible Credit Card Account unless:

 

(a)           such Credit Card Account is owned by a Borrower and such Borrower has good and marketable title to such Credit Card Account free and clear of any Lien of any Person other than Agent and Term Agent;

 

(b)           such Credit Card Account constitutes an “Account” (as defined in the UCC) and such Credit Card Account has not been outstanding for more than 5 Business Days;

 

(c)           the Credit Card Issuer or Credit Card Processor of the applicable credit card with respect to such Credit Card Account is not the subject of any bankruptcy or insolvency proceedings;

 

(d)           such Credit Card Account is a valid, legally enforceable obligation of the applicable issuer with respect thereto;

 

(e)           such Credit Card Account is subject to a properly perfected first priority Lien in favor of Agent;

 

 

  

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(f)           the Credit Card Account conforms to all representations, warranties or other provisions in the Loan Documents relating to Credit Card Account;

 

(g)           such Credit Card Account is owed by a Person that has executed a Credit Card Processor Notification;

 

(h)           such Credit Card Account is not evidenced by “chattel paper” or an “instrument” of any kind unless such “chattel paper” or “instrument” is in the possession of Agent, and to the extent necessary or appropriate, endorsed to Agent;

 

(i)           such Credit Card Account indicates no Person other than a Borrower as payee or remittance party;

 

(j)           such Credit Card Account has been earned and represents the bona fide amounts due to a Borrower from a Credit Card Processor and/or Credit Card Issuer, and in each case originated in the Ordinary Course of Business; or

 

(k)           such Credit Card Account has not been disputed, is without recourse, and with respect to which no claim, counterclaim, offset, or chargeback has been asserted (to the extent of such claim, counterclaim, offset, or chargeback).

 

Eligible Inventory: Inventory owned by a Borrower that Agent, in its reasonable judgment, deems to be Eligible Inventory.  Without limiting the foregoing, no Inventory shall be Eligible Inventory unless it (a) is finished goods and not raw materials, work-in-process, packaging or shipping materials, labels, samples, display items, bags, replacement parts or manufacturing supplies; (b) is not held on consignment, nor subject to any deposit or downpayment; (c) is in new and saleable condition and is not damaged, defective, shopworn or otherwise unfit for sale; (d) is not slow-moving, obsolete or unmerchantable, and does not constitute returned or repossessed goods; (e) meets all standards imposed by any Governmental Authority, and does not constitute hazardous materials under any Environmental Law; (f) conforms with the covenants and representations herein; (g) is subject to Agent’s duly perfected, first priority Lien, and no other Lien (including Liens in favor of Flooring Lenders) other than the Lien in favor of Term Agent; (h) is within the continental United States, is not in transit except between locations of Borrowers, is not consigned to any Person and is not located in a clearance center or service center; (i) is not subject to any warehouse receipt or negotiable Document; (j) is not subject to any License or other arrangement that restricts such Borrower’s or Agent’s right to dispose of such Inventory (other than the Term Loan Documents, with respect to the Borrowers, and the Intercreditor Agreement, with respect to Agent), unless Agent has received an appropriate Lien Waiver; (k) is not located on leased premises or in the possession of a warehouseman, processor, repairman, mechanic, shipper, freight forwarder or other Person, unless the lessor or such Person has delivered a Lien Waiver or an appropriate Rent and Charges Reserve has been established as set forth in Section 6.4.1; (l) is reported net of internal load amount or shrinkage accrual; (m) is reflected in the details of a current perpetual inventory report of Borrowers; and (n) is insured in compliance with the provisions of Section 8.7.2 hereof.

 

Eligible Revolving Contract:  Eligible Contract under which the applicable Contract Debtor may borrow, repay and re-borrow up to the credit limit thereunder.

 

 

  

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Enforcement Action: any action to enforce any Obligations (other than Secured Bank Product Obligations) or Loan Documents or to exercise any rights or remedies relating to any Collateral (whether by judicial action, self-help, notification of Contract Debtors, exercise of setoff or recoupment, exercise of any right to vote or act in an Obligor’s Insolvency Proceeding or otherwise).

 

Environmental Agreement: each agreement of Borrowers with respect to any Real Estate subject to a Mortgage, pursuant to which Borrowers agree to indemnify and hold harmless Agent and Lenders from liability under any Environmental Laws.

 

Environmental Laws: all Applicable Laws (including all programs, permits and guidance promulgated by regulatory agencies), relating to public health (but excluding occupational safety and health, to the extent regulated by OSHA) or the protection or pollution of the environment, including CERCLA, RCRA and CWA.

 

Environmental Notice: a notice (whether written or oral) from any Governmental Authority or other Person of any possible noncompliance with, investigation of a possible violation of, litigation relating to, or potential fine or liability under any Environmental Law, or with respect to any Environmental Release, environmental pollution or hazardous materials, including any complaint, summons, citation, order, claim, demand or request for correction, remediation or otherwise.

 

Environmental Release: a release as defined in CERCLA or under any other Environmental Law.

 

Equity Interest: the interest of any (a) shareholder in a corporation; (b) partner in a partnership (whether general, limited, limited liability or joint venture); (c) member in a limited liability company; or (d) other Person having any other form of equity security or ownership interest.

 

Equity Interest Pledge Agreement: a pledge agreement, in form and substance satisfactory to Agent, executed by Parent, CAIH and CLL, granting a security interest in the Equity Interests in each of such grantor’s Subsidiaries in favor of Agent for the benefit of the Lenders.

 

ERISA: the Employee Retirement Income Security Act of 1974.

 

ERISA Affiliate: any trade or business (whether or not incorporated) under common control with an Obligor within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

 

ERISA Event: (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by any Obligor or ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by any Obligor or ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) any Obligor or ERISA Affiliate fails to meet any funding obligations with respect to any Pension Plan or Multiemployer Plan, or requests a minimum funding waiver; (f) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (g) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Obligor or ERISA Affiliate.

 

 

  

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Event of Default: as defined in Section 11.

 

Excluded Subsidiary: Conn Funding II, L.P., a Texas limited partnership, Conn Appliances, LLC, a Delaware limited liability company, and Conn Funding GP II, L.L.C., a Texas limited liability company.

 

Excluded Tax: with respect to Agent, any Lender, Issuing Bank or any other recipient of a payment to be made by or on account of any Obligation, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes by the United States or any State or political subdivision thereof), by the jurisdiction (or any political subdivision thereof) 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; (b) any branch profits taxes imposed by the United States or any similar tax imposed by any State or any other jurisdiction in which a Borrower is located, (c) any backup withholding tax that is required by the Code to be withheld from amounts payable to a Lender that has failed to comply with Section 5.10, and (d) in the case of a Foreign Lender, any State or United States withholding tax that (i) is required to be imposed on amounts payable to such Foreign Lender pursuant to the laws in force at the time such Foreign Lender becomes a party hereto (or designates a new Lending Office) hereunder or (ii) is attributable to such Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 5.10, except to the extent that such Foreign 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 the Borrower with respect to such withholding tax pursuant to Section 5.9.1 or (iii) and which withholding tax may not be eliminated or reduced by complying with Section 5.10.

 

Existing Bank Products: Bank Products provided under the Original Loan Agreement and in existence on the Closing Date consisting of those listed on Schedule 1.1E(1).

 

Existing Letters of Credit: the issued and outstanding letters of credit set forth in Schedule 1.1E(2).

 

Existing Securitization Facility:  the asset backed security facility established pursuant to the Base Indenture dated September 1, 2002 between Conn Funding II, L.P. and Wells Fargo Bank, National Association, together with all amendments, modifications and supplements thereto.

 

Extraordinary Expenses: all costs, expenses or advances that Agent or any Lender may incur during a Default or Event of Default, or during the pendency of an Insolvency Proceeding of an Obligor, including those relating to (a) any audit, inspection, repossession, storage, repair, appraisal, insurance, manufacture, preparation or advertising for sale, sale, collection, or other preservation of or realization upon any Collateral; (b) any action, arbitration or other proceeding (whether instituted by or against Agent, any Lender, any Obligor, any representative of creditors of an Obligor or any other Person) in any way relating to any Collateral (including the validity, perfection, priority or avoidability of Agent’s Liens with respect to any Collateral), Loan Documents, Letters of Credit or Obligations, including any lender liability or other Claims; (c) the exercise, protection or enforcement of any rights or remedies of Agent in, or the monitoring of, any Insolvency Proceeding; (d) settlement or satisfaction of any taxes, charges or Liens with respect to any Collateral; (e) any Enforcement Action; (f) negotiation and documentation of any 

 

 

 

15

 

 

 

modification, waiver, workout, restructuring or forbearance with respect to any Loan Documents or Obligations; and (g) Protective Advances.  Such costs, expenses and advances include transfer fees, Other Taxes, storage fees, insurance costs, permit fees, utility reservation and standby fees, legal fees, appraisal fees, brokers’ fees and commissions, auctioneers’ fees and commissions, accountants’ fees, environmental study fees, wages and salaries paid to employees of any Obligor or independent contractors in liquidating any Collateral, and travel expenses.

 

Federal Funds Rate: (a) the weighted average of interest rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on the applicable Business Day (or on the preceding Business Day, if the applicable day is not a Business Day), as published by the Federal Reserve Bank of New York on the next Business Day; or (b) if no such rate is published on the next Business Day, the average rate (rounded up, if necessary, to the nearest 1/8 of 1%) charged to Bank of America on the applicable day on such transactions, as determined by Agent.

 

Fee Letter: (a) the fee letter agreement between Agent, BAS and Borrowers dated as of even date herewith, and (b) the fee letter agreement between JPMorgan, J.P. Morgan Securities Inc. and Borrowers dated as of even date herewith.

 

Fiscal Quarter: each period of three months, commencing on the first day of a Fiscal Year.

 

Fiscal Year: the fiscal year of Parent and its Subsidiaries for accounting and tax purposes, ending on January 31 of each year.

 

Fixed Charge Coverage Ratio: the ratio, determined monthly on a consolidated basis for Parent and its Subsidiaries for the most recently ended 12-month period, of (a) EBITDAR minus unfinanced Net Capital Expenditures (but, as long as any obligations under the Term Loan Facility remain outstanding, only to the extent that a positive result would occur), to (b) Fixed Charges; provided, that the Fixed Charge Coverage Ratio shall be determined quarterly on a consolidated basis for Parent and its Subsidiaries for the most recently ended four Fiscal Quarters after all obligations under the Term Loan Facility have been terminated.

 

Fixed Charges: without double counting, the sum of interest expense (other than payment-in-kind and original issue discount), scheduled/amortized principal payments made on Borrowed Money, un-scheduled principal payments made on Borrowed Money (other than payments on account of the Obligations or any other revolving Debt permitted hereunder), book rent expense, cash income taxes paid, and Distributions made, excluding amortization of closing costs and expenses incurred in connection with the Loan Documents, Existing Securitization Facility, Permitted ABS Facility and the Term Loan Facility.

 

Flooring Intercreditor Agreement: each intercreditor agreement entered into by Agent and a Flooring Lender, in form and substance satisfactory to Agent.

 

Flooring Lender: any lender which provides financing for the purchase of Inventory by a Borrower.

 

 

  

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FLSA: the Fair Labor Standards Act of 1938.

 

Foreign Lender: any Lender that is organized under the laws of a jurisdiction other than the laws of the United States, or any state or district thereof.

 

Foreign Plan: any employee benefit plan or arrangement (a) maintained or contributed to by any Obligor or its Subsidiary that is not subject to the laws of the United States; or (b) mandated by a government other than the United States for employees of any Obligor or its Subsidiary.

 

Foreign Subsidiary: a Subsidiary of Parent that is a “controlled foreign corporation” under Section 957 of the Code, such that a guaranty by such Subsidiary of the Obligations or a Lien on the assets of such Subsidiary to secure the Obligations would result in material tax liability to Borrowers.

 

Full Payment: with respect to any Obligations, (a) the full and indefeasible cash payment thereof, including any interest, fees and other charges accruing during an Insolvency Proceeding (whether or not allowed in the proceeding); (b) if such Obligations are LC Obligations or inchoate or contingent in nature, Cash Collateralization thereof (or delivery of a standby letter of credit acceptable to Agent in its discretion, in the amount of required Cash Collateral); and (c) a release of any Claims of Obligors against Agent, Lenders and Issuing Bank arising on or before the payment date.  No Revolver Loans shall be deemed to have been paid in full until all Revolver Commitments related to such Revolver Loans have expired or been terminated.

 

GAAP: generally accepted accounting principles in effect in the United States from time to time.

 

Gift Card Reserve: a reserve equal to 50% of the face amount of gift cards which are issued by a Borrower and are outstanding as of any measurement date.

 

Governmental Approvals: all authorizations, consents, approvals, licenses and exemptions of, registrations and filings with, and required reports to, all Governmental Authorities.

 

Governmental Authority: any federal, state, municipal, foreign or other governmental department, agency, commission, board, bureau, court, tribunal, instrumentality, political subdivision, or other entity or officer exercising executive, legislative, judicial, regulatory or administrative functions for or pertaining to any government or court, in each case whether associated with the United States, a state, district or territory thereof, or a foreign entity or government.

 

Gross Cash Collections:  total Contracts payments received from Contract Debtors and applied to such Contracts during any applicable period.

 

Gross Contract Payments: as of the date of determination, (i) with respect to an interest bearing Contract the outstanding balance thereof including all accrued but unpaid interest, fees, and other charges, but excluding late charges, owing by the Contract Debtor and (ii) with respect to a precomputed Contract the outstanding balance thereof including all unearned interest, fees, and charges, but excluding late charges, owing by the Contract Debtor.

 

Guarantor Payment: as defined in Section 5.11.3(b).

 

 

  

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Guarantors:  Parent, CAIH, CAIC, CLL, CAIAir, Inc., a Delaware corporation, and each other Person who guarantees payment or performance of any Obligations.

 

Guaranty: each guaranty agreement executed by a Guarantor in favor of Agent.

 

Hedging Agreement: an agreement relating to any swap, cap, floor, collar, option, forward, cross right or obligation, or combination thereof or similar transaction, with respect to interest rate, foreign exchange, currency, commodity, credit or equity risk.

 

Increased Reporting Period:  any time (i) a Default or Event of Default exists, (ii) average Availability during any month (as reflected in the Loan Account) is less than 20% of the amount of aggregate outstanding Revolver Loans and stated amount of Letters of Credit, or (iii) Availability is at any time less than $50,000,000; provided, that the limitation set forth in clause (iii) hereof shall be applicable only so long as any obligations under the Term Loan Facility remain outstanding.  When in place, such Increased Reporting Period shall be deemed continuing so long as (a) such Event of Default has not been waived, and/or (ii) if the Increased Reporting Period arises as a result of Borrowers’ failure to achieve Availability as required hereunder, until Availability has exceeded $50,000,000 for ninety (90) consecutive days, in which case an Increased Reporting Period shall no longer be deemed to be continuing for purposes of this Agreement; provided, that an Increased Reporting Period shall be deemed continuing (even if an Event of Default is no longer continuing and/or Availability exceeds the required amount for ninety (90) consecutive days) at all times after an Increased Reporting Period has occurred and been discontinued on two (2) occasions after the Closing Date.

 

Indemnified Taxes: Taxes other than Excluded Taxes.

 

Indemnitees: Agent Indemnitees, Lender Indemnitees, Issuing Bank Indemnitees and Bank of America Indemnitees.

 

Insolvency Proceeding: any case or proceeding commenced by or against a Person under any state, federal 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, debtor relief or debt adjustment law; (b) the appointment of a receiver, trustee, liquidator, administrator, conservator or other custodian for such Person or any part of its Property; or (c) an assignment or trust mortgage for the benefit of creditors.

 

Intellectual Property: all intellectual and similar Property of a Person, including inventions, designs, patents, copyrights, trademarks, service marks, trade names, trade secrets, confidential or proprietary information, customer lists, know-how, software and databases; all embodiments or fixations thereof and all related documentation, applications, registrations and franchises; all licenses or other rights to use any of the foregoing; and all books and records relating to the foregoing.

 

Intellectual Property Claim: any claim or assertion (whether in writing, by suit or otherwise) that a Borrower’s or its Subsidiary’s ownership, use, marketing, sale or distribution of any Inventory, Equipment, Intellectual Property or other Property violates another Person’s Intellectual Property.

 

 

  

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Intercompany Assignment Agreement:  (i) an assignment from each Excluded Subsidiary to a Borrower, assigning to such Borrower all of the assets of such Excluded Subsidiary free and clear of any Liens, which agreement shall be in form and substance satisfactory to Agent, and (ii) an assignment pursuant to which the assets transferred under clause (i) above are assigned to CCI free and clear of any Liens, which agreement shall be in form and substance satisfactory to Agent.

 

Intercreditor Agreement:  an intercreditor agreement entered into by Agent, Term Agent, Parent, and Borrowers, in form and substance satisfactory to Agent.

 

Interest Period: as defined in Section 3.1.3.

 

Inventory: as defined in the UCC, including all goods intended for sale, lease, display or demonstration; all work in process; and all raw materials, and other materials and supplies of any kind that are or could be used in connection with the manufacture, printing, packing, shipping, advertising, sale, lease or furnishing of such goods, or otherwise used or consumed in a Borrower’s business (but excluding Equipment).

 

Inventory Formula Amount: the lesser of (i) $80,000,000; (ii) 75% of the Value of Eligible Inventory; or (iii) 85% of the NOLV Percentage of the Value of Eligible Inventory.

 

Inventory Reserve: reserves established by Agent to reflect factors that may negatively impact the Value of Inventory, including change in salability, obsolescence, seasonality, theft, shrinkage, imbalance, change in composition or mix, markdowns and vendor chargebacks.

 

Investment: any acquisition of all or substantially all assets of a Person; any acquisition of record or beneficial ownership of any Equity Interests of a Person; or any advance or capital contribution to or other investment in a Person.

 

IRS: the United States Internal Revenue Service.

 

Issuing Bank: Bank of America or an Affiliate of Bank of America and any other Lender which has issued an Existing Letter of Credit but only with respect to such Existing Letter of Credit.

 

Issuing Bank Indemnitees: Issuing Bank and its officers, directors, employees, Affiliates, agents and attorneys.

 

LC Application: an application by Borrower Agent to Issuing Bank for issuance of a Letter of Credit, in form and substance satisfactory to Issuing Bank.

 

LC Conditions: the following conditions, the satisfaction of which is necessary for issuance of a Letter of Credit by Issuing Bank: (a) each of the conditions set forth in Section 6; (b) after giving effect to such issuance, total LC Obligations do not exceed the Letter of Credit Subline, no Overadvance exists and, if no Revolver Loans are outstanding, the LC Obligations do not exceed the Adjusted Borrowing Base (without giving effect to the LC Reserve for purposes of this calculation); (c) the expiration date of such Letter of Credit is (i) no more than 365 days from issuance, in the case of standby Letters of Credit, (ii) no more than 120 days from issuance, in the case of documentary Letters of Credit, and (iii) at least 30 Business Days prior to the Revolver Termination Date; (d) the Letter of Credit and payments thereunder are denominated in Dollars; and (e) the purpose and form of the proposed Letter of Credit is satisfactory to Agent and Issuing Bank in their discretion.

 

 

  

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LC Documents: all documents, instruments and agreements (including LC Requests and LC Applications) delivered by Borrowers or any other Person to Issuing Bank or Agent in connection with issuance, amendment or renewal of, or payment under, any Letter of Credit.

 

LC Obligations: the sum (without duplication) of (a) all amounts owing by Borrowers for any drawings under Letters of Credit; (b) the stated amount of all outstanding Letters of Credit; and (c) all fees and other amounts owing with respect to Letters of Credit.

 

LC Request: a request for issuance of a Letter of Credit, to be provided by Borrower Agent to Issuing Bank, in form satisfactory to Agent and Issuing Bank.

 

LC Reserve: the aggregate of all LC Obligations, other than (a) those that have been Cash Collateralized; and (b) if no Default or Event of Default exists, those constituting charges owing to the Issuing Bank.

 

Leasehold Mortgages: each of the mortgages and deeds of trust, in form and substance reasonably acceptable to Agent, executed by a Borrower in favor of Agent, for the benefit of the Lenders, with respect to the leasehold interests of Borrowers in the Real Estate identified on Schedule 1.1L.

 

Leasehold Mortgage Consent: each consent signed by the land owner for each Real Estate subject to a Leasehold Mortgage, in form and substance reasonably acceptable to Agent.

 

Lender Indemnitees: Lenders and their officers, directors, employees, Affiliates, agents and attorneys.

 

Lenders: as defined in the preamble to this Agreement, including Agent in its capacity as a provider of Swingline Loans and any other Person who hereafter becomes a “Lender” pursuant to an Assignment and Acceptance.

 

Lending Office: the office designated as such by the applicable Lender at the time it becomes party to this Agreement or thereafter by notice to Agent and Borrower Agent.

 

Letter of Credit: any standby or documentary letter of credit issued by Issuing Bank for the account of a Borrower, including the Existing Letters of Credit, or any indemnity, guarantee, exposure transmittal memorandum or similar form of credit support issued by Agent or Issuing Bank for the benefit of a Borrower.

 

Letter of Credit Subline:  $40,000,000.

 

Leverage Ratio: the ratio, determined as of the end of any Fiscal Quarter for the Parent and its Subsidiaries, on a consolidated basis, of (a) all items that would be included as liabilities on a balance sheet in accordance with GAAP as of the last day of such Fiscal Quarter, to (b) Tangible Net Worth as of the last day of such Fiscal Quarter.

 

LIBOR: for any Interest Period with respect to a LIBOR Revolver Loan, the per annum rate of interest (rounded up, if necessary, to the nearest 1/100th of 1%), determined by Agent at approximately 11:00 a.m. (London time) two Business Days prior to commencement of such Interest Period, for a term comparable to such Interest Period, equal to (a) the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other 

 

 

 

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commercially available source designated by Agent); or (b) if BBA LIBOR is not available for any reason, the interest rate at which Dollar deposits in the approximate amount of the LIBOR Revolver Loan would be offered by Bank of America’s London branch to major banks in the London interbank Eurodollar market.  If the Board of Governors imposes a Reserve Percentage with respect to LIBOR deposits, then LIBOR shall be the foregoing rate, divided by 1 minus the Reserve Percentage.

 

LIBOR Revolver Loan: a Revolver Loan that bears interest based on LIBOR.

 

License: any license or agreement under which an Obligor is authorized to use Intellectual Property in connection with any manufacture, marketing, distribution or disposition of Collateral, any use of Property or any other conduct of its business.

 

Licensor: any Person from whom an Obligor obtains the right to use any Intellectual Property.

 

Lien: any Person’s interest in Property securing an obligation owed to, or a claim by, such Person, whether such interest is based on common law, statute or contract, including liens, security interests, pledges, hypothecations, statutory trusts, reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting Property.

 

Lien Waiver: an agreement, in form and substance satisfactory to Agent, by which (a) for any material Collateral located on leased premises, the lessor waives or subordinates any Lien it may have on the Collateral, and agrees to permit Agent and Term Agent to enter upon the premises and remove the Collateral or to use the premises to store or dispose of the Collateral; (b) for any Collateral held by a warehouseman, processor, shipper, customs broker or freight forwarder, such Person waives or subordinates any Lien it may have on the Collateral, agrees to hold any Documents in its possession relating to the Collateral as agent for Agent and Term Agent, and agrees to deliver the Collateral to Agent and Term Agent upon request; (c) for any Collateral held by a repairman, mechanic or bailee, such Person acknowledges Agent’s and Term Agent’s Lien, waives or subordinates any Lien it may have on the Collateral, and agrees to deliver the Collateral to Agent and Term Agent upon request; and (d) for any Collateral subject to a Licensor’s Intellectual Property rights, the Licensor grants to Agent and Term Agent the right, vis-à-vis such Licensor, to enforce Agent’s and Term Agent’s Liens with respect to the Collateral, including the right to dispose of it with the benefit of the Intellectual Property, whether or not a default exists under any applicable License.

 

Loan Account: the loan account established by each Lender on its books pursuant to Section 5.8.

 

Loan Documents: this Agreement, Other Agreements, Security Documents, the Intercreditor Agreement and the Flooring Intercreditor Agreements.

 

Loan Year: each 12-month period commencing on the Closing Date and on each anniversary of the Closing Date.

 

Margin Stock: as defined in Regulation U of the Board of Governors.

 

 

  

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Material Adverse Effect: the effect of any event or circumstance that, taken alone or in conjunction with other events or circumstances, (a) has or could be reasonably expected to have a material adverse effect on the business, operations, Properties, prospects or condition (financial or otherwise) of Obligors, on the value of any material Collateral, on the enforceability of any Loan Documents, or on the validity or priority of Agent’s Liens on any Collateral; (b) impairs the ability of the Obligors, collectively, to perform any obligations under the Loan Documents, including repayment of any Obligations; or (c) otherwise materially impairs the ability of Agent or any Lender to enforce or collect any Obligations or to realize upon any Collateral.

 

Material Contract: any agreement or arrangement to which a Borrower or any of its Subsidiaries are a party (other than the Loan Documents) (a) that is deemed to be a material contract under any securities law applicable to such Obligor, including the Securities Act of 1933; (b) for which breach, termination, nonperformance or failure to renew could reasonably be expected to have a Material Adverse Effect; or (c) that relates to Subordinated Debt, or Debt in an aggregate amount of $5,000,000 or more.

 

Modified Contract: a Contract which, at any time, was in payment default for more than 60 days and such payment default was cured by execution of a new Contract in order to adjust, amend, or reduce the payment terms of the original Contract.

 

Moody’s: Moody’s Investors Service, Inc., and its successors.

 

Mortgage: each mortgage, deed of trust or deed to secure debt pursuant to which a Borrower grants to Agent, for the benefit of Secured Parties, Liens upon the Real Estate owned by such Borrower, as security for the Obligations.

 

Multiemployer Plan: any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which any Obligor or ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

 

Net Balance: means, as of the date of determination, the Gross Contract Payments of a Contract less all unearned interest owing by the Contract Debtor.

 

Net Capital Expenditures:  Capital Expenditures less: (i) net proceeds received from the sale of any fixed assets in the ordinary course of business and (ii) net proceeds from the sale of Real Estate to the extent constituting a Capital Expenditure, not to exceed $10,000,000, and only to the extent such Real Estate was acquired in the applicable trailing twelve month period; provided, that after all obligations under the Term Loan Facility have been terminated, Net Capital Expenditures shall mean Capital Expenditures less net proceeds received from the sale of any fixed assets.

 

Net Charge-Off: for any period, the aggregate amount of all unpaid payments due under Contracts which have been charged off by a Borrower during such period, as reduced by the amount of unearned interest, unearned insurance, accrued but unpaid interest, unpaid late charges, repossession recoveries, cash recoveries and amounts recovered in cash from other third parties, with respect to Contracts which had been charged off during previous periods or during such period.

 

 

  

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Net Charge-Off Percent: the percent, calculated on the first day of each month, equal to (a) 4 times the aggregate amount of Net Charge-Offs for the 3 preceding months, divided by (b) the sum of the Net Balance owing under all Contracts outstanding at the end of such month, divided by (c) 3.

 

Net Eligible Contract Payments: means, as of the date of determination, the remainder of (a) the Gross Contract Payments owing under all Eligible Contracts, minus (b) the sum of (i) the aggregate amount, to the extent included within the definition of Gross Contract Payments, all unearned interest, fees, and charges applicable to the Eligible Contracts and (ii) the unearned insurance commissions as presented on the books and records of Borrowers.

 

Net Proceeds: with respect to an Asset Disposition, proceeds (including, when received, any deferred or escrowed payments) received by a Borrower or any of its Subsidiaries in cash from such disposition, net of (a) reasonable and customary costs and expenses actually incurred in connection therewith, including legal fees and sales commissions; (b) amounts applied to repayment of Debt secured by a Permitted Lien senior to Agent’s Liens on Collateral sold; (c) transfer or similar taxes; and (d) reserves for indemnities, until such reserves are no longer needed.

 

NOLV Percentage: the net orderly liquidation value of Inventory, expressed as a percentage, expected to be realized at an orderly, negotiated sale held within a reasonable period of time, net of all liquidation expenses, as determined from the most recent appraisal of Borrowers’ Inventory performed by an appraiser and on terms satisfactory to Agent.

 

Non-Exempt Foreign Lender: as defined in Section 3.8.2(a).

 

Notes: each Revolver Note or other promissory note executed by a Borrower to evidence any Obligations.

 

Notice of Borrowing: a Notice of Borrowing to be provided by Borrower Agent to request a Borrowing of Revolver Loans, in form satisfactory to Agent or through electronic means acceptable to Agent.

 

Notice of Conversion/Continuation: a Notice of Conversion/Continuation to be provided by Borrower Agent to request a conversion or continuation of any Revolver Loans as LIBOR Revolver Loans, in form satisfactory to Agent or through electronic means acceptable to Agent.

 

Noticed Hedge: Secured Bank Product Obligations arising under a Hedging Agreement.

 

Obligations: all (a) principal of and premium, if any, on the Revolver Loans, (b) LC Obligations and other obligations of Obligors with respect to Letters of Credit, (c) interest, expenses, fees and other sums payable by Obligors under Loan Documents, (d) obligations of Obligors under any indemnity for Claims, (e) Extraordinary Expenses, (f) Secured Bank Product Obligations, and (g) other Debts, obligations and liabilities of any kind owing by Obligors pursuant to the Loan Documents, whether now existing or hereafter arising, whether evidenced by a note or other writing, whether allowed in any Insolvency Proceeding, whether arising from an extension of credit, issuance of a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, and whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, or joint or several.

 

 

  

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Obligor: each Borrower, Guarantor, or other Person that is liable for payment of any Obligations or that has granted a Lien in favor of Agent on its assets to secure any Obligations.

 

Ordinary Course of Business: the ordinary course of business of any Borrower or its Subsidiary, consistent with past practices and undertaken in good faith.

 

Organic Documents: with respect to any Person, its charter, certificate or articles of incorporation, bylaws, articles of organization, limited liability agreement, operating agreement, members agreement, shareholders agreement, partnership agreement, certificate of partnership, certificate of formation, voting trust agreement, or similar agreement or instrument governing the formation or operation of such Person.

 

Original Loan Agreement:  as defined in the recitals hereto.

 

OSHA: the Occupational Safety and Hazard Act of 1970.

 

Other Agreement: each Note; LC Document; Fee Letter; Lien Waiver; Borrowing Base Certificate, Compliance Certificate, Permitted ABS Intercreditor Agreement, financial statement or report delivered hereunder; or other document, instrument or agreement (other than this Agreement or a Security Document) now or hereafter delivered by an Obligor or other Person to Agent or a Lender in connection with any transactions relating hereto.

 

Other Taxes: all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.

 

Overadvance: as defined in Section 2.1.5.

 

Overadvance Loan: a Base Rate Revolver Loan made when an Overadvance exists or is caused by the funding thereof.

 

Parent: as defined in the Preamble to this Agreement.

 

Participant: as defined in Section 13.2.

 

Past Due Percent: the percent, calculated as of the beginning of the first day of each month, equal to (a) the Gross Contract Payments owing under all Contracts (excluding Contracts charged-off), as to which any portion of an installment due thereunder is more than 30 days past due as determined on a contractual basis as of the last day of the month immediately preceding the date of calculation, divided by (b) the Gross Contract Payments owing under all Contracts (excluding Contracts charged-off) as of the last day of the month immediately preceding the date of calculation.

 

Patriot Act: the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).

 

Payment Item: each check, draft or other item of payment payable to a Borrower, including those constituting proceeds of any Collateral.

 

PBGC: the Pension Benefit Guaranty Corporation.

 

 

  

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Pension Plan: any employee pension benefit plan (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by any Obligor or ERISA Affiliate or to which the Obligor or ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the preceding five plan years.

 

Permitted ABS Agent: the entity acting as trustee of the Permitted ABS Facility.

 

Permitted ABS Documents: the Permitted ABS Financing Agreement, the Permitted ABS Purchase Agreement and all documents, instruments and agreements executed in connection therewith, as the same may be amended, modified, restated or extended from time to time.

 

Permitted ABS Facility: means a securitization facility, pursuant to which any Borrower will, from time to time, sell and transfer certain Securitized Contracts and related security to a Securitization Subsidiary, pursuant to the Permitted ABS Purchase Agreement, which in turn such Securitization Subsidiary has granted a security interest on such Securitized Contracts and related security to Permitted ABS Agent, for the benefit of certain secured parties, pursuant to the Permitted ABS Financing Agreement.

 

Permitted ABS Financing Agreement: a Securitized Contracts financing agreement by and between a Securitization Subsidiary and the Permitted ABS Agent, as the same may be amended, modified or supplemented from time to time and which prior to its execution by such Securitization Subsidiary, shall be in form and substance approved by Agent and Required Lenders, which approval will not be unreasonably withheld, delayed or conditioned; provided, that the Securitized Contracts financed by such Permitted ABS Financing Agreement shall (A) include no lesser percentage of receivables, the original final maturity date of which has been extended in accordance with the policies of Parent and its Subsidiaries in existence on the Closing Date than in the absence of such Permitted ABS Facility, (B) include no lesser percentage of receivables as to which all or any part of a scheduled payment remains unpaid for 60 days or more from its due date than in the absence of such Permitted ABS Facility and (C) have a weighted average FICO score (based on the relevant obligors on such receivables) that is not greater than the weighted average FICO score of the portfolio in the absence of such Permitted ABS Facility.

 

Permitted ABS Intercreditor Agreement: an intercreditor agreement by and among Permitted ABS Agent and Agent, as may be amended, modified or otherwise restated from time to time and shall be in form and substance reasonably acceptable to Agent and Required Lenders.

 

Permitted ABS Originator Notes:  the subordinated promissory notes, in form and substance reasonably acceptable to Agent, made by Securitization Subsidiary in favor of a Borrower evidencing that portion of the purchase price represented by Debt incurred by Securitization Subsidiary in connection with its purchase of Securitization Contracts and related assets from a Borrower pursuant to the Permitted ABS Purchase Agreement.

 

Permitted ABS Purchase Agreement: a purchase and sale agreement by and between a Borrower and a Securitization Subsidiary, which agreement shall be in form and substance reasonably acceptable to Agent and Required Lenders.

 

 

  

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Permitted Asset Disposition: (i) as long as no Default or Event of Default exists and all Net Proceeds are remitted to the Dominion Account or to Term Agent to prepay the Term Loan if required pursuant to the terms of the Term Loan Agreement, an Asset Disposition that is (a) a sale of Inventory in the Ordinary Course of Business; (b) a disposition of Equipment (other than those set forth in subsection (e) below), that, in the aggregate during any 12-month period, has a fair market or book value (whichever is more) of $5,000,000 or less; (c) a disposition of Inventory that is obsolete, unmerchantable or otherwise unsalable in the Ordinary Course of Business; (d) termination of a lease of real or personal Property that is not necessary for the Ordinary Course of Business, could not reasonably be expected to have a Material Adverse Effect and does not result from an Obligor’s default; (e) a disposition of any Borrower’s Real Estate and related Equipment affixed thereto in connection with a sale or sale-leaseback transaction so long as (x) the Net Proceeds received from the sale of (A) any Real Estate listed on Schedule 7.3 pursuant to such transaction are not less than the liquidation value of such Real Estate, as determined by the most recent appraisal of such Real Estate received by Agent using an appraiser and methodology reasonably acceptable to Agent and (B) any other Real Estate pursuant to such transaction are not less than the amount for which Borrowers purchased such Real Estate, (y) the Net Proceeds received from the sale of such Real Estate listed on Schedule 7.3 (less any amount applied to repay any Debt secured by a Lien on such Real Estate incurred pursuant to a refinancing of such Real Estate listed on Schedule 7.3 permitted pursuant to Section 10.2.1(i) hereof) shall be applied to prepay the Term Loan in accordance with Section 5.2.2 of the Term Loan Agreement (together with any prepayment fee then due, if any, under Section 5.2.3 of the Term Loan Agreement), and (z) the terms of such transaction are otherwise reasonably acceptable to Agent; (ii) a Permitted Contract Transfer, (iii) granting of Liens (subject to the Intercreditor Agreement) to secure the obligations under the Term Loan Documents, or (iv) approved in writing by Agent and Required Lenders, such approval not to be unreasonably withheld, delayed or conditioned; provided, that the limitations in subclauses (i)(x) and (i)(y) shall be applicable only so long as any obligations under the Term Loan Facility remain outstanding.

 

Permitted Contingent Obligations: Contingent Obligations (a) arising from endorsements of Payment Items for collection or deposit in the Ordinary Course of Business; (b) arising from Hedging Agreements permitted hereunder; (c) existing on the Closing Date, and any extension or renewal thereof that does not increase the amount of such Contingent Obligation when extended or renewed; (d) incurred in the Ordinary Course of Business with respect to surety, appeal or performance bonds, or other similar obligations; (e) arising from customary indemnification obligations in favor of purchasers in connection with dispositions of Equipment permitted hereunder; (f) arising under the Loan Documents; or (g) all other Contingent Obligations in an aggregate amount of $10,000,000 or less at any time.

 

Permitted Contract Transfer: (i) a sale by a Borrower to a Securitization Subsidiary of Securitized Contracts pursuant to the Permitted ABS Purchase Agreement, so long as the net proceeds of each such sale of such Contracts exceed the Contract Advance Rate Amount with respect to such Contracts and, unless remitted to the Term Agent to repay the Term Loan as set forth in the Term Loan Agreement, if requested by Agent and the Lenders, remitted directly to Agent from such Securitization Subsidiary or Borrower to be applied to the outstanding Revolver Loans (subject to Section 5.6.1) as set forth hereunder (which application shall not result in a reduction of the Commitments except as permitted by Section 2.1.4), and (ii) the granting by a Securitization Subsidiary to Permitted ABS Agent of a security interest in such Securitized Contracts pursuant to the Permitted ABS Financing Agreement.

 

 

  

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Permitted Distribution: so long as immediately before and after giving effect thereto, (i) no Default or Event of Default exists, (ii) Availability is not less than 20% of the amount of aggregate outstanding Revolver Loans and stated amount of Letters of Credit, (iii) projected Availability for the succeeding 6-month period is greater than 20% of the amount of aggregate outstanding Revolver Loans and stated amount of Letters of Credit, and (iv) Supermajority Lenders have provided written consent thereto, Parent or any Borrower may declare and make Distributions which are approved by Parent’s board of directors so long as the aggregate amount of Distributions made shall at no time exceed $50,000,000.

 

Permitted Lien: as defined in Section 10.2.2.

 

Permitted Purchase Money Debt: Purchase Money Debt of Borrowers and its Subsidiaries that is unsecured or secured only by a Purchase Money Lien, as long as the aggregate amount does not exceed $15,000,000 at any time and its incurrence does not violate Section 10.2.3.

 

Person: any individual, corporation, limited liability company, partnership, joint venture, joint stock company, land trust, business trust, unincorporated organization, Governmental Authority or other entity.

 

Plan: any employee benefit plan (as such term is defined in Section 3(3) of ERISA) established by an Obligor or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, an ERISA Affiliate.

 

Prime Rate: the rate of interest announced by Bank of America from time to time as its prime rate.  Such rate is set by Bank of America on the basis of various factors, including its costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such rate.  Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

 

Pro Rata: with respect to any Lender, a percentage (carried out to the ninth decimal place) determined (a) while Revolver Commitments are outstanding, by dividing the amount of such Lender’s Revolver Commitment by the aggregate amount of all Revolver Commitments; and (b) at any other time, by dividing the amount of such Lender’s Revolver Loans and LC Obligations by the aggregate amount of all outstanding Revolver Loans and LC Obligations.

 

Properly Contested: with respect to any obligation of an Obligor, (a) the obligation is subject to a bona fide dispute regarding amount or the Obligor’s liability to pay; (b) the obligation is being properly contested in good faith by appropriate proceedings promptly instituted and diligently pursued; (c) appropriate reserves have been established in accordance with GAAP; (d) non-payment could not have a Material Adverse Effect, nor result in forfeiture or sale of any material portion of the assets of the Obligor valued greater than $5,000,000 in the aggregate; (e) no Lien is imposed on assets of the Obligor, unless bonded and stayed to the satisfaction of Agent; and (f) if the obligation results from entry of a judgment or other order, such judgment or order is stayed pending appeal or other judicial review.

 

Property: any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

 

 

  

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Protective Advances: as defined in Section 2.1.6.

 

Purchase Money Debt: (a) Debt (other than the Obligations) for payment of any of the purchase price of fixed assets; (b) Debt (other than the Obligations) incurred within 10 days before or after acquisition of any fixed assets, for the purpose of financing any of the purchase price thereof; and (c) any renewals, extensions or refinancings (but not increases) thereof.

 

Purchase Money Lien: a Lien that secures Purchase Money Debt, encumbering only the fixed assets acquired with such Debt and constituting a Capital Lease or a purchase money security interest under the UCC.

 

RCRA: the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).

 

Real Estate: all right, title and interest (whether as owner, lessor or lessee) in any real Property and any buildings, structures, parking areas or other improvements thereon.

 

Related Real Estate Documents: with respect to any Real Estate subject to a Mortgage, the following, in form and substance satisfactory to Agent and received by Agent for review at least 15 days prior to the effective date of the Mortgage:  (a) a mortgagee title policy (or binder therefor) covering Agent’s interest under the Mortgage, in a form and amount and by an insurer acceptable to Agent, which must be fully paid on such effective date; (b) such assignments of leases, estoppel letters, attornment agreements, consents, waivers and releases as Agent may require with respect to other Persons having an interest in the Real Estate; (c) a current, as-built survey of the Real Estate, containing a metes-and-bounds property description and flood plain certification, and certified by a licensed surveyor acceptable to Agent; (d) flood insurance in an amount, with endorsements and by an insurer acceptable to Agent, if the Real Estate is within a flood plain; (e) a current appraisal of the Real Estate, prepared by an appraiser acceptable to Agent, and in form and substance satisfactory to Required Lenders; (f) an environmental assessment, prepared by environmental engineers acceptable to Agent, and accompanied by such reports, certificates, studies or data as Agent may reasonably require, which shall all be in form and substance satisfactory to Required Lenders; and (g) an Environmental Agreement and such other documents, instruments or agreements as Agent may reasonably require with respect to any environmental risks regarding the Real Estate.

 

Refinancing Conditions: the following conditions for Refinancing Debt:  (a) it is in an aggregate principal amount that does not exceed the principal amount of the Debt being extended, renewed or refinanced unless the excess is used to repay the outstanding Revolver Loans and at the election of Agent or Required Lenders the Revolver Commitments are reduced by the amount of the repayment (and if no Revolver Loans are outstanding, at the election of Agent or Required Lenders, the Revolver Commitments are reduced by the excess); (b) it has a final maturity no sooner than, a weighted average life no less than, and an interest rate no greater than, the Debt being extended, renewed or refinanced; (c) it is subordinated to the Obligations at least to the same extent as the Debt being extended, renewed or refinanced; (d) the representations, covenants and defaults applicable to it are no less favorable to Borrowers than those applicable to the Debt being extended, renewed or refinanced; (e) no additional Lien is granted to secure it; (f) no additional Person is obligated on such Debt; (g) with respect to Refinancing Debt related to the Term Loan, it is subject to an intercreditor agreement in form and substance reasonably satisfactory to Agent and Required Lenders; and (h) upon giving effect to it, no Default or Event of Default exists.

 

 

  

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Refinancing Debt: Borrowed Money that is the result of an extension, renewal or refinancing of Debt permitted under Section 10.2.1(b), (d), (f) or (j).

 

Reimbursement Date: as defined in Section 2.3.2.

 

Rent and Charges Reserve: the aggregate of (a) all past due rent and other amounts owing by an Obligor to any landlord, warehouseman, processor, repairman, mechanic, shipper, freight forwarder, broker or other Person who possesses any Collateral or could assert a Lien on any Collateral; and (b) a reserve at least equal to three months rent and other charges that could be payable to any such Person (if any), unless it has executed a Lien Waiver.

 

Report: as defined in Section 12.2.3.

 

Reportable Event: any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30-day notice period has been waived.

 

Required Lenders: Lenders (subject to Section 4.2) having (a) Revolver Commitments in excess of 662⁄3% of the aggregate Revolver Commitments; and (b) if the Revolver Commitments have terminated, Revolver Loans in excess of 662⁄3% of all outstanding Revolver Loans.

 

Requirement of Law: as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject.

 

Reserve Percentage: the reserve percentage (expressed as a decimal, rounded up to the nearest 1/100th of 1%) applicable to member banks under regulations issued from time to time by the Board of Governors for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”).

 

Restricted Investment: any Investment by a Borrower or any of its Subsidiaries, other than (a) Investments in its Subsidiaries to the extent existing on the Closing Date; (b) Cash Equivalents that are subject to Agent’s Lien and control, pursuant to documentation in form and substance satisfactory to Agent; (c) loans and advances permitted under Section 10.2.7;  (d) CCI Originator Notes and CCCI Originator Notes; (e) Permitted ABS Originator Notes; (f) Investments by CAI which are consistent with the corporate investment policy of CAI from time to time in effect, as approved by Agent (such approval not to be unreasonably withheld); (g) Investments in and by a Securitization Subsidiary permitted under the Permitted ABS Facility; and (h) assignment of assets under the Intercompany Assignment Agreement.

 

Restrictive Agreement: an agreement (other than a Loan Document or a Term Loan Document) that conditions or restricts the right of any Borrower, its Subsidiary or other Obligor to incur or repay Borrowed Money, to grant Liens on any assets, to declare or make Distributions, to modify, extend or renew any agreement evidencing Borrowed Money, or to repay any intercompany Debt.

 

 

  

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Revolver Commitment: for any Lender, its obligation to make Revolver Loans and to participate in LC Obligations up to the maximum principal amount shown on Schedule 1.1, or as hereafter determined pursuant to each Assignment and Acceptance to which it is a party.  “Revolver Commitments” means the aggregate amount of such commitments of all Lenders.

 

Revolver Commitment Termination Date: the earliest to occur of (a) the Revolver Termination Date; (b) the date on which Borrowers terminate the Revolver Commitments pursuant to Section 2.1.4; or (c) the date on which the Revolver Commitments are terminated pursuant to Section 11.2.

 

Revolver Loan: a loan made pursuant to Section 2.1, and any Swingline Loan, Overadvance Loan or Protective Advance.

 

Revolver Note: a promissory note to be executed by Borrowers in favor of a Lender in the form of Exhibit A, which shall be in the amount of such Lender’s Revolver Commitment and shall evidence the Revolver Loans made by such Lender.

 

Revolver Termination Date:  November 30, 2013.

 

Royalties: all royalties, fees, expense reimbursement and other amounts payable by a Borrower under a License.

 

S&P: Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.

 

Sales Tax Reserve:  a reserve equal to 100% of the aggregate sales tax obligations of Borrowers as set forth in Borrowers’ books and records as of any measurement date which have not been prepaid by Borrowers.

 

Secured Bank Product Obligations: Bank Product Debt owing to a Secured Bank Product Provider, up to the maximum amount (in the case of any Secured Bank Product Provider other than Bank of America and its Affiliates) specified by such provider in writing to Agent, which amount may be established or increased (by further written notice to Agent from time to time) as long as no Default or Event of Default exists and establishment of a Bank Product Reserve for such amount and all other Secured Bank Product Obligations would not result in an Overadvance.

 

Secured Bank Product Provider: (a) Bank of America or any of its Affiliates; and (b) any Lender or Affiliate of a Lender that is providing a Bank Product, provided the provider delivers written notice to Agent, in form and substance satisfactory to Agent, by the later of the Closing Date or 10 Business Days following creation of the Bank Product, (i) describing the Bank Product and setting forth the maximum amount to be secured by the Collateral and the methodology to be used in calculating such amount, and (ii) agreeing to be bound by Section 12.14.

 

Secured Parties: Agent, Issuing Bank, Lenders and Secured Bank Product Providers.

 

Security Agreement:  a security agreement, in form and substance satisfactory to Agent, executed by each Guarantor pursuant to which Guarantor shall grant to Agent a Lien (for the benefit of the Lenders) in all of such Guarantor’s assets.

 

 

  

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Security Documents: the Guaranties, each Security Agreement, each Leasehold Mortgage, each Leasehold Mortgage Consent, each Mortgage, Deposit Account Control Agreements, Credit Card Processor Notification, Equity Interest Pledge Agreement, and all other documents, instruments and agreements now or hereafter securing (or given with the intent to secure) any Obligations.

 

Securitized Contracts: the Contracts and related security which have been allocated to the Securitization Subsidiary under the Contract Allocation Agreement and sold by a Borrower to a Securitization Subsidiary pursuant to the Permitted ABS Purchase Agreement.

 

Securitization Subsidiary: one or more direct or indirect Subsidiaries of Parent formed for the purposes of entering into a Permitted ABS Facility.

 

Senior Officer: the chairman of the board, president, chief executive officer or chief financial officer of a Borrower or, if the context requires, an Obligor.

 

Service Maintenance Program Reserve: as of any measurement date, a reserve equal to the aggregate in-house service maintenance costs incurred by Borrowers for the previous 12-month period.

 

Settlement Report: a report delivered by Agent to Lenders summarizing the Revolver Loans and participations in LC Obligations outstanding as of a given settlement date, allocated to Lenders on a Pro Rata basis in accordance with their Revolver Commitments.

 

Solvent: as to any Person, such Person (a) owns Property whose fair salable value is greater than the amount required to pay all of its debts (including contingent, subordinated, unmatured and unliquidated liabilities); (b) owns Property whose present fair salable value (as defined below) is greater than the probable total liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of such Person as they become absolute and matured; (c) is able to pay all of its debts as they mature; (d) has capital that is not unreasonably small for its business and is sufficient to carry on its business and transactions and all business and transactions in which it is about to engage; (e) is not “insolvent” within the meaning of Section 101(32) of the Bankruptcy Code; and (f) has not incurred (by way of assumption or otherwise) any obligations or liabilities (contingent or otherwise) under any Loan Documents, or made any conveyance in connection therewith, with actual intent to hinder, delay or defraud either present or future creditors of such Person or any of its Affiliates.  “Fair salable value” means the amount that could be obtained for assets within a reasonable time, either through collection or through sale under ordinary selling conditions by a capable and diligent seller to an interested buyer who is willing (but under no compulsion) to purchase.

 

Subordinated Debt: Debt incurred by a Borrower that is expressly subordinate and junior in right of payment to Full Payment of all Obligations, and is on terms (including maturity, interest, fees, repayment, covenants and subordination) reasonably satisfactory to Agent.

 

Subsidiary: any entity at least 50% of whose voting securities or Equity Interests is owned by a Person (including indirect ownership by such Person through other entities in which the Person directly or indirectly owns 50% of the voting securities or Equity Interests).

 

Substitute Lender: as defined in Section 3.8.2(a).

 

 

  

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Supermajority Lenders: Lenders (subject to Section 4.2) having (a) Revolver Commitments in excess of 90% of the aggregate Revolver Commitments; and (b) if the Revolver Commitments have been terminated, Revolver Loans in excess of 90% of all outstanding Revolver Loans.

 

Swingline Loan: any Borrowing of Base Rate Revolver Loans funded with Agent’s funds, until such Borrowing is settled among Lenders or repaid by Borrowers.

 

Tangible Net Worth: at any date means an amount equal to: (i) the net book value (after deducting related depreciation, obsolescence, amortization, valuation and other proper reserves) at which the Adjusted Tangible Assets of a Person would be shown on a balance sheet at such date in accordance with GAAP, less (ii) the amount at which such Person’s liabilities would be shown on such balance sheet in accordance with GAAP, and including as liabilities all reserves for contingencies and other potential liabilities.

 

Taxes: all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

Term Agent: GA Capital, LLC.

 

Term Loan: as defined in the Term Loan Agreement.

 

Term Loan Agreement: the Term Loan and Security Agreement dated as of November 30, 2010 between Parent and Borrowers, on the one hand, and Term Agent and the Term Lenders party thereto, on the other hand.

 

Term Loan Borrowing Base: has the meaning given in the Term Loan Agreement.

 

Term Loan Borrowing Base Reserve: an amount equal to the result, if a positive number, of (x) the outstanding amount of the Term Loan, minus (y) the amount by which the Term Loan Borrowing Base exceeds the Borrowing Base (without giving effect to the Term Loan Borrowing Base Reserve).

 

Term Loan Documents: the Term Loan Agreement and each other document related to or evidencing the Term Loan Facility including the Loan Documents, as defined in the Term Loan Agreement.

 

Term Loan Facility: the senior secured term loan facility pursuant to the Term Loan Agreement and other Term Loan Documents.

 

Transferee: any actual or potential Eligible Assignee, Participant or other Person acquiring an interest in any Obligations.

 

Type: any type of a Revolver Loan (i.e., Base Rate Revolver Loan or LIBOR Revolver Loan) that has the same interest option and, in the case of LIBOR Revolver Loans, the same Interest Period.

 

UCC: the Uniform Commercial Code as in effect in the State of California or, when the laws of any other jurisdiction govern the perfection or enforcement of any Lien, the Uniform Commercial Code of such jurisdiction.

 

 

  

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Unfunded Pension Liability: the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

 

Unused Line Fee Percentage: a percentage equal to (i) 0.75% per annum if the average daily balance of Revolver Loans and stated amount of Letters of Credit during the immediately preceeding quarter is less than 50% of the Revolver Commitments, and (b) 0.50% per annum if the average daily balance of Revolver Loans and stated amount of Letters of Credit during the immediately preceeding quarter is equal to or greater than 50% of the Revolver Commitments.

 

Upstream Payment: a Distribution by a Subsidiary of a Borrower to such Borrower.

 

Value: (a) for Inventory, its value determined on the basis of the lower of cost or market, calculated on a moving weighted average cost basis, and excluding any portion of cost attributable to intercompany profit among Borrowers and their Affiliates; and (b) for a Credit Card Account, its face amount, reduced by, to the extent not reflected in such face amount, (i) the amount of all accrued and actual discounts, claims, credits or credits pending, promotional program allowances, price adjustments, finance charges or other allowances (including any amount that a Borrower may be obligated to rebate to a customer, a Credit Card Processor, or Credit Card Issuer pursuant to the terms of any Credit Card Agreement or understanding (written or oral)), (ii) the aggregate amount of all cash received in respect of such Credit Card Account but not yet applied by a Borrower to reduce the amount of such Credit Card Account, and (iii) the amount of all accrued and unpaid fees owed to Credit Card Processors or Credit Card Issuers.

 

1.2           Accounting Terms.  Under the Loan Documents (except as otherwise specified herein), all accounting terms shall be interpreted, all accounting determinations shall be made, and all financial statements shall be prepared, in accordance with GAAP applied on a basis consistent with the most recent audited financial statements of Borrowers delivered to Agent before the Closing Date and using the same inventory valuation method as used in such financial statements, except for any change required or permitted by GAAP if Borrowers’ certified public accountants concur in such change, the change is disclosed to Agent, and Section 10.3 is amended in a manner satisfactory to Required Lenders to take into account the effects of the change.

 

1.3           Uniform Commercial Code.  As used herein, the following terms are defined in accordance with the UCC in effect in the State of California from time to time:  “Chattel Paper”, “Commercial Tort Claim”, “Deposit Account”, “Document”, “Equipment”, “General Intangibles”, “Goods”, “Instrument”, “Investment Property”, “Letter-of-Credit Right” and “Supporting Obligation”.

 

1.4           Certain Matters of Construction.  The terms “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision.  Any pronoun used shall be deemed to cover all genders.  In the computation of periods of time from a specified date to a later specified date, “from” means “from and including”, and “to” and “until” each mean “to but excluding”.  The terms “including” and “include” shall mean “including, without limitation” and, for purposes of each Loan Document, the parties agree that the rule of ejusdem generis shall not be applicable to limit any provision.  Section titles appear as a matter of convenience only and shall not affect the interpretation of any Loan Document.  All references to (a) laws or statutes include all related rules, regulations, interpretations, amendments and successor provisions; 

 

 

 

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(b) any document, instrument or agreement includes any amendments, waivers and other modifications, extensions or renewals (to the extent permitted by the Loan Documents); (c) any section means, unless the context otherwise requires, a section of this Agreement; (d) any exhibits or schedules mean, unless the context otherwise requires, exhibits and schedules attached hereto, which are hereby incorporated by reference; (e) any Person includes successors and assigns; (f) time of day means time of day in the Pacific Time Zone; or (g) except as otherwise set forth herein, discretion of Agent, Issuing Bank or any Lender means the reasonable discretion of such Person.  All calculations of Value, fundings of Revolver Loans, issuances of Letters of Credit and payments of Obligations shall be in Dollars and, unless the context otherwise requires, all determinations (including calculations of Borrowing Base and financial covenants) made from time to time under the Loan Documents shall be made in light of the circumstances existing at such time.  Borrowing Base calculations shall be consistent with historical methods of valuation and calculation, and otherwise satisfactory to Agent (and not necessarily calculated in accordance with GAAP).  Borrowers shall have the burden of establishing any alleged negligence, misconduct or lack of good faith by Agent, Issuing Bank or any Lender under any Loan Documents.  No provision of any Loan Documents shall be construed against any party by reason of such party having, or being deemed to have, drafted the provision.  Whenever the phrase “to the best of Borrowers’ knowledge” or words of similar import are used in any Loan Documents, it means actual knowledge of a Senior Officer, or knowledge that a Senior Officer would have obtained if he or she had engaged in good faith and diligent performance of his or her duties, including reasonably specific inquiries of employees or agents and a good faith attempt to ascertain the matter to which such phrase relates.

 

SECTION 2.     CREDIT FACILITIES

 

2.1           Revolver Commitment.

 

2.1.1           Revolver Loans.  Each Lender agrees, severally on a Pro Rata basis up to its Revolver Commitment, on the terms set forth herein, to make Revolver Loans to Borrowers from time to time through the Revolver Commitment Termination Date.  The Revolver Loans may be repaid and reborrowed as provided herein.  In no event shall Lenders have any obligation to honor a request for a Revolver Loan (x) by CAI if the unpaid balance of Revolver Loans made to CAI outstanding at such time (including the requested Revolver Loan) would exceed the CAI Borrowing Base, (y) by CCI or CCCI if the unpaid balance of Revolver Loans made to CCI and CCCI outstanding at such time (including the requested Revolver Loan) would exceed the CCI Borrowing Base, or (z) by any Borrower if the unpaid balance of Revolver Loans outstanding at such time (including the requested Revolver Loan) would exceed the Adjusted Borrowing Base.

 

2.1.2           Revolver Notes.  The Revolver Loans made by each Lender and interest accruing thereon shall be evidenced by the records of Agent and such Lender.  At the request of any Lender, Borrowers shall deliver a Revolver Note to such Lender.

 

2.1.3           Use of Proceeds.  The proceeds of Revolver Loans shall be used by Borrowers solely (a) to satisfy all obligations under the Existing Securitization Facility; (b) to pay fees and transaction expenses associated with the closing of this credit facility; (c) to pay Obligations in accordance with this Agreement; and (d) for working capital and other lawful corporate purposes of Borrowers.

 

 

  

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2.1.4           Voluntary Reduction or Termination of Revolver Commitments.

 

(a)           The Revolver Commitments shall terminate on the Revolver Termination Date, unless sooner terminated in accordance with this Agreement.  Upon at least 30 days prior written notice to Agent, Borrowers may, at their option, terminate the Revolver Commitments and this Agreement.  Any notice of termination given by Borrowers shall be irrevocable.  On the termination date, Borrowers shall make Full Payment of all Obligations.

 

(b)           Borrowers may permanently reduce the Revolver Commitments, on a Pro Rata basis for each Lender, upon at least 30 days prior written notice to Agent, which notice shall specify the amount of the reduction and shall be irrevocable once given; provided, that Borrowers may not permanently reduce the Revolver Commitments to an amount less than $125,000,000.  Each reduction shall be in a minimum amount of $10,000,000, or an increment of $1,000,000 in excess thereof.

 

(c)           Concurrently with any reduction in or termination of the Revolver Commitments, for whatever reason (including an Event of Default), Borrowers shall pay to Agent, for the Pro Rata benefit of Lenders and as liquidated damages for loss of bargain (and not as a penalty), an amount equal to (i) if the reduction or termination occurs during the first Loan Year, 0.50% of the Revolver Commitments being reduced or terminated; and (ii) if it occurs thereafter, 0.25% of the Revolver Commitments being reduced or terminated.  No termination charge shall be payable if termination occurs on the Revolver Termination Date or in connection with a refinancing of this credit facility by Bank of America or any of its Affiliates.

 

2.1.5           Overadvances.  If the aggregate Revolver Loans made to CAI exceed the CAI Borrowing Base or the aggregate Revolver Loans made to CCI and CCCI exceed the CCI Borrowing Base, (in each case, an “Overadvance”) or the aggregate Revolver Loans made to all Borrowers exceed the lesser of the aggregate Revolver Commitments and the Adjusted Borrowing Base at any time, the excess amount shall be payable by Borrowers immediately, but all such Revolver Loans shall nevertheless constitute Obligations secured by the Collateral and entitled to all benefits of the Loan Documents.  Unless its authority has been revoked in writing by Required Lenders, Agent may require Lenders to honor requests for Overadvance Loans and to forbear from requiring Borrowers to cure an Overadvance, (a) when no other Event of Default is known to Agent, as long as (i) the Overadvance does not continue for more than 30 consecutive days (and no Overadvance may exist for at least five consecutive days thereafter before further Overadvance Loans are required), and (ii) the Overadvance is not known by Agent to exceed $10,000,000 in the aggregate; and (b) regardless of whether an Event of Default exists, if Agent discovers an Overadvance not previously known by it to exist, as long as from the date of such discovery the Overadvance (i) is not increased by more than $500,000, and (ii) does not continue for more than 30 consecutive days.  In no event shall Overadvance Loans be made that would cause the outstanding Revolver Loans and LC Obligations to exceed the aggregate Revolver Commitments.  Any funding of an Overadvance Loan or sufferance of an Overadvance shall not constitute a waiver by Agent or Lenders of the Event of Default caused thereby.  In no event shall any Borrower or other Obligor be deemed a beneficiary of this Section nor authorized to enforce any of its terms.

 

2.1.6           Protective Advances.  Agent shall be authorized, in its sole discretion, at any time that any conditions in Section 6 are not satisfied, to make Base Rate Revolver Loans (a) up to an aggregate amount not to exceed at any time the lesser of (i) the aggregate Revolver Commitments, and (ii) the outstanding amount of $5,000,000, if Agent deems such Revolver Loans necessary or desirable to preserve or protect Collateral, or to enhance the 

 

 

 

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collectability or repayment of Obligations; or (b) to pay any other amounts chargeable to Obligors under any Loan Documents, including costs, fees and expenses (such Revolver Loans are referred to herein as “Protective Advances”).  Each Lender shall participate in each Protective Advance on a Pro Rata basis.  Required Lenders may at any time revoke Agent’s authority to make further Protective Advances by written notice to Agent.  Absent such revocation, Agent’s determination that funding of a Protective Advance is appropriate shall be conclusive.

 

2.2           Increase in Revolver Commitments.

 

(a)           Subject to the terms and conditions hereof, at any time after the Closing Date and up to the Revolver Commitment Termination Date, provided that no Default or Event of Default has occurred and is continuing, Borrowers may request that the Lenders increase the Revolver Commitments up to an aggregate amount of $500,000,000 (each such commitment increase, a “Revolver Commitment Increase”) by notifying Agent and each Lender of the amount of the proposed Revolver Commitment Increase.  Notwithstanding anything in this Agreement to the contrary, no Revolver Commitment Increase shall require the approval of any Lender other than any Lender (if any) providing all or part of the Revolver Commitment Increase, no Lender shall be required to provide all or part of any Revolver Commitment Increase unless it agrees to do so in its sole discretion, and no Revolver Commitment Increase shall be in an amount less than $10,000,000.

 

(b)           Any Revolver Commitment Increase shall be offered by Borrowers to the Lenders on a Pro Rata basis on the date that the Revolver Commitment Increase is requested.  The Lenders shall have 15 Business Days to respond to any request for a Revolver Commitment Increase (by notice to Borrowers and Agent) and may elect to accept all, a portion or none of their respective Pro Rata shares of the proposed Revolver Commitment Increase.  Any Lender which fails to respond to a request for a Revolver Commitment Increase by the end of such 15 Business Day period will be deemed to have declined the request for its Pro Rata share of the requested Revolver Commitment Increase.  If any portion of a requested Revolver Commitment Increase is not provided by the Lenders, then Borrowers may request that the other Lenders (without regard to their Pro Rata percentage) or one or more Eligible Assignees provide such Revolver Commitment Increase.  In any such case, each Person providing a portion of the requested Revolver Commitment Increase shall execute and deliver to Agent and Borrowers all such documentation as may be reasonably required by Agent to evidence such Revolver Commitment Increase.

 

(c)           If any requested Revolver Commitment Increase is agreed to in accordance with this Section 2.2, Agent and Borrowers shall determine the effective date of such Revolver Commitment Increase (the “Commitment Increase Effective Date”).  Agent, with the consent and approval of Borrowers, shall promptly confirm in writing to the Lenders the final allocation of such Revolver Commitment Increase and the Commitment Increase Effective Date.  On the Commitment Increase Effective Date:  (i) the Pro Rata shares of the Lenders shall be amended to reflect the reallocated Revolver Commitments; (ii) each Person added as a new Lender pursuant to a Revolver Commitment Increase (a “New Lender”) shall become a Lender hereunder and under the other Loan Documents with a Revolver Commitment as set forth on the Assignment and Acceptance executed by such Lender; (iii) the Revolver Commitment of each existing Lender that increases its Revolver Commitment pursuant to a Revolver Commitment Increase (an “Increasing Lender”) shall be increased as reflected on such Assignment and Acceptance; (iv) Borrowers shall pay (which may be funded with Revolver Loans made under the Revolver Commitment Increase) the principal amount of, and accrued and unpaid interest on, Revolver Loans of the Lenders other than the New Lenders in an 

 

 

 

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amount sufficient (as determined by Agent) to permit the New Lenders and the Increasing Lenders to fund Revolver Loans in an amount equal to the New Lenders’ and the Increasing Lenders’ respective Pro Rata shares of the then outstanding Revolver Loans, and in connection with such payment shall also pay funding losses, if any, on such repayment in accordance with Section 3.9; (v) each New Lender shall fund Revolver Loans in an amount equal to its Pro Rata share of the then outstanding Revolver Loans; and (vi) each Increasing Lender shall fund Revolver Loans in an amount necessary such that, after giving effect to such funding, it shall have funded its Pro Rata share of the entire amount of the then outstanding Revolver Loans.  Any New Lender shall be required to have a Revolver Commitment of not less than $10,000,000.

 

(d)           As a condition precedent to the effectiveness of any such Revolver Commitment Increase, Borrowers shall deliver to Agent a certificate signed by a Senior Officer, dated as of the Commitment Increase Effective Date, that as of the Commitment Increase Effective Date no Default or Event of Default has occurred and is continuing.

 

(e)           In no event shall the Revolver Commitments exceed $500,000,000 without the consent of each Lender.

 

2.3           Letter of Credit Facility.

 

2.3.1           Issuance of Letters of Credit.  Issuing Bank agrees to issue Letters of Credit from time to time until 30 days prior to the Revolver Termination Date (or until the Revolver Commitment Termination Date, if earlier), on the terms set forth herein, including the following:

 

(a)           Each Borrower acknowledges that Issuing Bank’s willingness to issue any Letter of Credit is conditioned upon Issuing Bank’s receipt of a LC Application with respect to the requested Letter of Credit, as well as such other instruments and agreements as Issuing Bank may customarily require for issuance of a letter of credit of similar type and amount.  Issuing Bank shall have no obligation to issue any Letter of Credit unless (i) Issuing Bank receives a LC Request and LC Application at least three Business Days prior to the requested date of issuance; (ii) each LC Condition is satisfied; and (iii) if a Defaulting Lender exists, such Lender or Borrowers have entered into arrangements satisfactory to Agent and Issuing Bank to eliminate any funding risk associated with the Defaulting Lender.  If, in sufficient time to act, Issuing Bank receives written notice from a Lender that any LC Condition has not been satisfied, Issuing Bank shall have no obligation to issue the requested Letter of Credit (or any other) until such notice is withdrawn in writing by the Required Lenders or until Required Lenders have waived such condition in accordance with this Agreement.  Prior to receipt of any such notice, Issuing Bank shall not be deemed to have knowledge of any failure of LC Conditions.

 

(b)           Letters of Credit may be requested by a Borrower only (i) to support obligations of such Borrower incurred in the Ordinary Course of Business; or (ii) for other purposes as Agent and Lenders may approve from time to time in writing.  The renewal or extension of any Letter of Credit shall be treated as the issuance of a new Letter of Credit, except that delivery of a new LC Application shall be required at the discretion of Issuing Bank.

 

 

  

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(c)           Borrowers assume all risks of the acts, omissions or misuses of any Letter of Credit by the beneficiary.  In connection with issuance of any Letter of Credit, none of Agent, Issuing Bank or any Lender shall be responsible for the existence, character, quality, quantity, condition, packing, value or delivery of any goods purported to be represented by any Documents; any differences or variation in the character, quality, quantity, condition, packing, value or delivery of any goods from that expressed in any Documents; the form, validity, sufficiency, accuracy, genuineness or legal effect of any Documents or of any endorsements thereon; the time, place, manner or order in which shipment of goods is made; partial or incomplete shipment of, or failure to ship, any goods referred to in a Letter of Credit or Documents; any deviation from instructions, delay, default or fraud by any shipper or other Person in connection with any goods, shipment or delivery; any breach of contract between a shipper or vendor and a Borrower; errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex, telecopy, e-mail, telephone or otherwise; errors in interpretation of technical terms; the misapplication by a beneficiary of any Letter of Credit or the proceeds thereof; or any consequences arising from causes beyond the control of Issuing Bank, Agent or any Lender, including any act or omission of a Governmental Authority.  The rights and remedies of Issuing Bank under the Loan Documents shall be cumulative.  Issuing Bank shall be fully subrogated to the rights and remedies of each beneficiary whose claims against Borrowers are discharged with proceeds of any Letter of Credit.

 

(d)           In connection with its administration of and enforcement of rights or remedies under any Letters of Credit or LC Documents, Issuing Bank shall be entitled to act, and shall be fully protected in acting, upon any certification, documentation or communication in whatever form believed by Issuing Bank, in good faith, to be genuine and correct and to have been signed, sent or made by a proper Person.  Issuing Bank may consult with and employ legal counsel, accountants and other experts to advise it concerning its obligations, rights and remedies, 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 such experts.  Issuing Bank may employ agents and attorneys-in-fact in connection with any matter relating to Letters of Credit or LC Documents, and shall not be liable for the negligence or misconduct of agents and attorneys-in-fact selected with reasonable care.

 

(e)           All Existing Letters of Credit shall be deemed to have been issued pursuant to this Agreement, and from and after the Closing Date shall be subject to and governed by the terms and conditions set forth herein.

 

2.3.2           Reimbursement; Participations.

 

(a)           If Issuing Bank honors any request for payment under a Letter of Credit, Borrowers shall pay to Issuing Bank, on the same day (“Reimbursement Date”), the amount paid by Issuing Bank under such Letter of Credit, together with interest at the interest rate for Base Rate Revolver Loans from the Reimbursement Date until payment by Borrowers.  The obligation of Borrowers to reimburse Issuing Bank for any payment made under a Letter of Credit shall be absolute, unconditional, irrevocable, and joint and several, and shall be paid without regard to any lack of validity or enforceability of any Letter of Credit or the existence of any claim, setoff, defense or other right that Borrowers may have at any time against the beneficiary.  Whether or not Borrower Agent submits a Notice of Borrowing, Borrowers shall be deemed to have requested a Borrowing of Base Rate Revolver Loans in an amount necessary to pay all amounts due Issuing Bank on any Reimbursement Date and each Lender agrees to fund its Pro Rata share of such Borrowing whether or not the Revolver Commitments have terminated, an Overadvance exists or is created thereby, or the conditions in Section 6 are satisfied.

 

 

  

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(b)           Upon issuance of a Letter of Credit, each Lender shall be deemed to have irrevocably and unconditionally purchased from Issuing Bank, without recourse or warranty, an undivided Pro Rata interest and participation in all LC Obligations relating to the Letter of Credit.  If Issuing Bank makes any payment under a Letter of Credit and Borrowers do not reimburse such payment on the Reimbursement Date, Agent shall promptly notify Lenders and each Lender shall promptly (within one Business Day) and unconditionally pay to Agent, for the benefit of Issuing Bank, the Lender’s Pro Rata share of such payment.  Upon request by a Lender, Issuing Bank shall furnish copies of any Letters of Credit and LC Documents in its possession at such time.

 

(c)           The obligation of each Lender to make payments to Agent for the account of Issuing Bank in connection with Issuing Bank’s payment under a Letter of Credit shall be absolute, unconditional and irrevocable, not subject to any counterclaim, setoff, qualification or exception whatsoever, and shall be made in accordance with this Agreement under all circumstances, irrespective of any lack of validity or unenforceability of any Loan Documents; any draft, certificate or other document presented under a Letter of Credit having been determined to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or the existence of any setoff or defense that any Obligor may have with respect to any Obligations.  Issuing Bank does not assume any responsibility for any failure or delay in performance or any breach by any Borrower or other Person of any obligations under any LC Documents.  Issuing Bank does not make to Lenders any express or implied warranty, representation or guaranty with respect to the Collateral, LC Documents or any Obligor.  Issuing Bank shall not be responsible to any Lender for any recitals, statements, information, representations or warranties contained in, or for the execution, validity, genuineness, effectiveness or enforceability of any LC Documents; the validity, genuineness, enforceability, collectability, value or sufficiency of any Collateral or the perfection of any Lien therein; or the assets, liabilities, financial condition, results of operations, business, creditworthiness or legal status of any Obligor.

 

(d)           No Issuing Bank Indemnitee shall be liable to any Lender or other Person for any action taken or omitted to be taken in connection with any LC Documents except as a result of its actual gross negligence or willful misconduct.  Issuing Bank shall not have any liability to any Lender if Issuing Bank refrains from any action under any Letter of Credit or LC Documents until it receives written instructions from Required Lenders.

 

2.3.3           Cash Collateral.  If any LC Obligations, whether or not then due or payable, shall for any reason be outstanding at any time (a) that an Event of Default exists, (b) that Borrowing Availability is less than zero, (c) after the Revolver Commitment Termination Date, or (d) within 20 Business Days prior to the Revolver Termination Date, then Borrowers shall, at Issuing Bank’s or Agent’s request, Cash Collateralize the stated amount of all outstanding Letters of Credit and pay to Issuing Bank the amount of all other LC Obligations.  Borrowers shall, on demand by Issuing Bank or Agent from time to time, Cash Collateralize the LC Obligations of any Defaulting Lender.  If Borrowers fail to provide any Cash Collateral as required hereunder, Lenders may (and shall upon direction of Agent) advance, as Revolver Loans, the amount of the Cash Collateral required (whether or not the Revolver Commitments have terminated, an Overadvance exists or the conditions in Section 6 are satisfied).

 

 

  

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2.3.4           Resignation of Issuing Bank.  Issuing Bank may resign at any time upon notice to Agent and Borrowers.  On the effective date of such resignation, Issuing Bank shall have no further obligation to issue, amend, renew, extend or otherwise modify any Letter of Credit, but shall continue to have the benefits of Sections 2.3, 12.6 and 14.2 with respect to any Letters of Credit issued or other actions taken while Issuing Bank.  Agent shall promptly appoint a replacement Issuing Bank and, as long as no Default or Event of Default exists, such replacement shall be reasonably acceptable to Borrowers.

 

SECTION 3.     INTEREST, FEES AND CHARGES

 

3.1           Interest.

 

3.1.1           Rates and Payment of Interest.

 

(a)           The Obligations shall bear interest (i) if a Base Rate Revolver Loan, at the Base Rate in effect from time to time, plus the Applicable Margin; (ii) if a LIBOR Revolver Loan, at LIBOR for the applicable Interest Period, plus the Applicable Margin; and (iii) if any other Obligation (including, to the extent permitted by law, interest not paid when due), at the Base Rate in effect from time to time, plus the Applicable Margin for Base Rate Revolver Loans.  Interest shall accrue from the date the Revolver Loan is advanced or the Obligation is incurred or payable, until paid by Borrowers.  If a Revolver Loan is repaid on the same day made, one day’s interest shall accrue.

 

(b)           During an Insolvency Proceeding with respect to any Borrower, or during any other Event of Default if Agent or Required Lenders in their discretion so elect, Obligations shall bear interest at the Default Rate (whether before or after any judgment).  Each Borrower acknowledges that the cost and expense to Agent and Lenders due to an Event of Default are difficult to ascertain and that the Default Rate is a fair and reasonable estimate to compensate Agent and Lenders for this.

 

(c)           Interest accrued on the Revolver Loans shall be due and payable in arrears, (i) on the first day of each month; (ii) on any date of prepayment, with respect to the principal amount of Revolver Loans being prepaid; and (iii) on the Revolver Commitment Termination Date.  Interest accrued on any other Obligations shall be due and payable as provided in the Loan Documents and, if no payment date is specified, shall be due and payable on demand.  Notwithstanding the foregoing, interest accrued at the Default Rate shall be due and payable on demand.

 

3.1.2           Application of LIBOR to Outstanding Revolver Loans.

 

(a)           Borrowers may on any Business Day, subject to delivery of a Notice of Conversion/Continuation, elect to convert any portion of the Base Rate Revolver Loans to, or to continue any LIBOR Revolver Loan at the end of its Interest Period as, a LIBOR Revolver Loan.  During any Default or Event of Default, Agent may (and shall at the direction of Required Lenders) declare that no Revolver Loan may be made, converted or continued as a LIBOR Revolver Loan.

 

(b)           Whenever Borrowers desire to convert or continue Revolver Loans as LIBOR Revolver Loans, Borrower Agent shall give Agent a Notice of Conversion/Continuation, no later than 11:00 a.m. at least three Business Days before the requested conversion or continuation date.  Promptly after receiving any such notice, Agent shall notify each Lender thereof.  Each Notice of Conversion/Continuation shall be irrevocable, and shall specify the amount of Revolver Loans to be converted or continued, the conversion or continuation date (which shall be a Business Day), and the duration of the Interest Period (which shall be deemed to be 30 days if not specified).  If, upon 

 

 

 

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the expiration of any Interest Period in respect of any LIBOR Revolver Loans, Borrowers shall have failed to deliver a Notice of Conversion/Continuation, they shall be deemed to have elected to convert such Revolver Loans into Base Rate Revolver Loans.

 

3.1.3           Interest Periods.  In connection with the making, conversion or continuation of any LIBOR Revolver Loans, Borrowers shall select an interest period (“Interest Period”) to apply, which interest period shall be one, two or three months; provided, however, that:

 

(a)           the Interest Period shall commence on the date the Revolver Loan is made or continued as, or converted into, a LIBOR Revolver Loan, and shall expire on the numerically corresponding day in the calendar month at its end;

 

(b)           if any Interest Period commences on a day for which there is no corresponding day in the calendar month at its end or if such corresponding day falls after the last Business Day of such month, then the Interest Period shall expire on the last Business Day of such month; and if any Interest Period would expire on a day that is not a Business Day, the period shall expire on the next Business Day; and

 

(c)           no Interest Period shall extend beyond the Revolver Termination Date.

 

3.1.4           Interest Rate Not Ascertainable.  If Agent shall determine that on any date for determining LIBOR, due to any circumstance affecting the London interbank market, adequate and fair means do not exist for ascertaining such rate on the basis provided herein, then Agent shall immediately notify Borrowers of such determination.  Until Agent notifies Borrowers that such circumstance no longer exists, the obligation of Lenders to make LIBOR Revolver Loans shall be suspended, and no further Revolver Loans may be converted into or continued as LIBOR Revolver Loans.

 

3.2           Fees.

 

3.2.1           Unused Line Fee.  Borrowers shall pay to Agent, for the Pro Rata benefit of Lenders, a fee equal to the Unused Line Fee Percentage times the amount by which the Revolver Commitments exceed the average daily balance of Revolver Loans and stated amount of Letters of Credit during the immediately preceding month.  Such fee shall be payable in arrears, on the first day of each month and on the Revolver Commitment Termination Date.

 

3.2.2           LC Facility Fees.  Borrowers shall pay (a) to Agent, for the Pro Rata benefit of Lenders, a fee equal to the Applicable Margin in effect for LIBOR Revolver Loans times the average daily stated amount of Letters of Credit, which fee shall be payable monthly in arrears, on the first day of each month; (b) to Agent, for its own account, a fronting fee equal to 0.125% per annum on the stated amount of each Letter of Credit, which fee shall be payable monthly in arrears, on the first day of each month; and (c) to Issuing Bank, for its own account, all customary charges associated with the issuance, amending, negotiating, payment, processing, transfer and administration of Letters of Credit, which charges shall be paid as and when incurred.  During an Event of Default, the fee payable under clause (a) shall be increased by 2% per annum.

 

 

  

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3.2.3           Agent Fees.  In consideration of arrangement and syndication of the Revolver Commitments and other services provided hereunder, Borrowers shall pay to Agent the fees described in the Fee Letter.

 

3.3           Computation of Interest, Fees, Yield Protection.  All interest, as well as fees and other charges calculated on a per annum basis, shall be computed for the actual days elapsed, based on a year of 360 days.  Each determination by Agent of any interest, fees or interest rate hereunder shall be final, conclusive and binding for all purposes, absent manifest error.  All fees shall be fully earned when due and shall not be subject to rebate, refund or proration.  All fees payable under Section 3.2 are compensation for services and are not, and shall not be deemed to be, interest or any other charge for the use, forbearance or detention of money.  A certificate as to amounts payable by Borrowers under Section 3.4, 3.6, 3.7, 3.9 or 5.9, submitted to Borrower Agent by Agent or the affected Lender, as applicable, shall be final, conclusive and binding for all purposes, absent manifest error, and Borrowers shall pay such amounts to the appropriate party within 10 days following receipt of the certificate.

 

3.4           Reimbursement Obligations.  Borrowers shall reimburse Agent and Lenders for all Extraordinary Expenses.  Borrowers shall also reimburse Agent for all legal, accounting, appraisal, consulting, and other reasonable fees, costs and expenses incurred by it in connection with (a) negotiation and preparation of any Loan Documents, including any amendment or other modification thereof; (b) administration of and actions relating to any Collateral, Loan Documents and transactions contemplated thereby, including any actions taken to perfect or maintain priority of Agent’s Liens on any Collateral, to maintain any insurance required hereunder or to verify Collateral; and (c) subject to the limits of Section 10.1.1(b), each inspection, audit or appraisal with respect to any Obligor or Collateral, whether prepared by Agent’s personnel or a third party.  All reasonable legal, accounting and consulting fees shall be charged to Borrowers by Agent’s professionals.  If, for any reason (including inaccurate reporting on financial statements or a Compliance Certificate), it is determined that a higher Applicable Margin should have applied to a period than was actually applied, then the proper margin shall be applied retroactively and Borrowers shall immediately pay to Agent, for the Pro Rata benefit of Lenders, an amount equal to the difference between the amount of interest and fees that would have accrued using the proper margin and the amount actually paid.  All amounts payable by Borrowers under this Section shall be due on demand.

 

3.5           Illegality.  If any Lender determines that any Applicable Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund LIBOR Revolver Loans, or to determine or charge interest rates based upon LIBOR, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to Agent, any obligation of such Lender to make or continue LIBOR Revolver Loans or to convert Base Rate Revolver Loans to LIBOR Revolver Loans shall be suspended until such Lender notifies Agent that the circumstances giving rise to such determination no longer exist.  Upon delivery of such notice, Borrowers shall prepay or, if applicable, convert all LIBOR Revolver Loans of such Lender to Base Rate Revolver Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such LIBOR Revolver Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such LIBOR Revolver Loans.  Upon any such prepayment or conversion, Borrowers shall also pay accrued interest on the amount so prepaid or converted.

 

 

  

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3.6           Inability to Determine Rates.  If Required Lenders notify Agent for any reason in connection with a request for a Borrowing of, or conversion to or continuation of, a LIBOR Revolver Loan that (a) Dollar deposits are not being offered to banks in the London interbank Eurodollar market for the applicable amount and Interest Period of such Revolver Loan, (b) adequate and reasonable means do not exist for determining LIBOR for the requested Interest Period, or (c) LIBOR for the requested Interest Period does not adequately and fairly reflect the cost to such Lenders of funding such Revolver Loan, then Agent will promptly so notify Borrower Agent and each Lender.  Thereafter, the obligation of Lenders to make or maintain LIBOR Revolver Loans shall be suspended until Agent (upon instruction by Required Lenders) revokes such notice.  Upon receipt of such notice, Borrower Agent may revoke any pending request for a Borrowing of, conversion to or continuation of a LIBOR Revolver Loan or, failing that, will be deemed to have submitted a request for a Base Rate Revolver Loan.

 

3.7           Increased Costs; Capital Adequacy.

 

3.7.1           Change in Law.  If any Change in Law shall:

 

(a)           impose modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in LIBOR) or Issuing Bank;

 

(b)           subject any Lender or Issuing Bank to any Tax with respect to any Revolver Loan, Loan Document, Letter of Credit or participation in LC Obligations, or change the basis of taxation of payments to such Lender or Issuing Bank in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 5.9 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or Issuing Bank); or

 

(c)           impose on any Lender or Issuing Bank or the London interbank market any other condition, cost or expense affecting any Revolver Loan, Loan Document, Letter of Credit or participation in LC Obligations;

 

and the result thereof shall be to increase the cost to such Lender of making or maintaining any LIBOR Revolver Loan (or of maintaining its obligation to make any such Revolver Loan), or to increase the cost to such Lender or Issuing Bank of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or Issuing Bank hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or Issuing Bank, Borrowers will pay to such Lender or Issuing Bank, as applicable, such additional amount or amounts as will compensate such Lender or Issuing Bank, as applicable, for such additional costs incurred or reduction suffered.

 

3.7.2           Capital Adequacy.  If any Lender or Issuing Bank determines that any Change in Law affecting such Lender or Issuing Bank or any Lending Office of such Lender or such Lender’s or Issuing Bank’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s, Issuing Bank’s or holding company’s capital as a consequence of this Agreement, or such Lender’s or Issuing Bank’s Revolver Commitments, Revolver Loans, Letters of Credit or participations in LC Obligations, to a level below that which such Lender, Issuing Bank or holding company could have achieved but for such 

 

 

 

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Change in Law (taking into consideration such Lender’s, Issuing Bank’s and holding company’s policies with respect to capital adequacy), then from time to time Borrowers will pay to such Lender or Issuing Bank, as the case may be, such additional amount or amounts as will compensate it or its holding company for any such reduction suffered.

 

3.7.3           Compensation.  Failure or delay on the part of any Lender or Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of its right to demand such compensation, but Borrowers shall not be required to compensate a Lender or Issuing Bank for any increased costs incurred or reductions suffered more than nine months prior to the date that the Lender or Issuing Bank notifies Borrower Agent of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or Issuing Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

 

3.8           Mitigation; Replacement of Foreign Lender.

 

3.8.1           Mitigation.  If any Lender gives a notice under Section 3.5 or requests compensation under Section 3.7, or if Borrowers are required to pay additional amounts with respect to a Lender under Section 5.9, then such Lender shall use reasonable efforts to designate a different Lending Office or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment (a) would eliminate the need for such notice or reduce amounts payable or to be withheld in the future, as applicable; and (b) would not subject the Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to it.  Borrowers shall pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

 

3.8.2           Replacement of Foreign Lender.

 

(a)           If Borrowers are obligated to make any material payments under Section 5.9 to any Foreign Lender (a “Non-Exempt Foreign Lender”), then Borrower Agent, upon at least 5 Business Days prior irrevocable notice to Agent and the Non-Exempt Foreign Lender, may permanently replace the Non-Exempt Foreign Lender with one or more Eligible Assignees with the consent of Agent (which shall not be unreasonably withheld or delayed) (each, a “Substitute Lender”), and the Non-Exempt Foreign Lender shall have no right to refuse to be replaced hereunder.  Such notice to replace the Non-Exempt Foreign Lender shall specify an effective date for such replacement, which date shall not be later than 15 Business Days after the date such notice is given.

 

(b)           Prior to the effective date of such replacement, the Non-Exempt Foreign Lender and each Substitute Lender shall execute and deliver an Assignment and Acceptance, subject only to the Non-Exempt Foreign Lender being repaid its Pro Rata share of the outstanding Obligations without any premium or penalty of any kind whatsoever.  If the Non-Exempt Foreign Lender shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such replacement, the Non-Exempt Foreign Lender shall be deemed to have executed and delivered such Assignment and Acceptance.  The replacement of any Non-Exempt Foreign Lender 

 

 

 

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shall be made in accordance with the terms of Section 13.3.  Until such time as the Substitute Lender shall have acquired all of the Obligations, the Commitments, and the other rights and obligations of the Non-Exempt Foreign Lender hereunder and under the other Loan Documents, the Non-Exempt Foreign Lender shall remain obligated to make the Non-Exempt Foreign Lender’s Pro Rata share of Revolver Loans and to purchase a participation in each Letter of Credit, according to its Pro Rata share.

 

3.9           Funding Losses.  If for any reason (other than default by a Lender) (a) any Borrowing of, or conversion to or continuation of, a LIBOR Revolver Loan does not occur on the date specified therefor in a Notice of Borrowing or Notice of Conversion/Continuation (whether or not withdrawn), (b) any repayment or conversion of a LIBOR Revolver Loan occurs on a day other than the end of its Interest Period, or (c) Borrowers fail to repay a LIBOR Revolver Loan when required hereunder, then Borrowers shall pay to Agent its customary administrative charge and to each Lender all losses and expenses that it sustains as a consequence thereof, including loss of anticipated profits and any loss or expense actually incurred arising from liquidation or redeployment of funds or from fees payable to terminate deposits of matching funds.  Lenders shall not be required to purchase Dollar deposits in the London interbank market or any other offshore Dollar market to fund any LIBOR Revolver Loan, but the provisions hereof shall be deemed to apply as if each Lender had purchased such deposits to fund its LIBOR Revolver Loans.

 

3.10           Maximum Interest.  Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by Applicable Law (“maximum rate”).  If Agent or any Lender shall receive interest in an amount that exceeds the maximum rate, the excess interest shall be applied to the principal of the Obligations or, if it exceeds such unpaid principal, refunded to Borrowers.  In determining whether the interest contracted for, charged or received by Agent or a Lender exceeds the maximum rate, such Person may, to the extent permitted by Applicable Law, (a) characterize any payment that is not principal as an expense, fee or premium rather than interest; (b) exclude voluntary prepayments and the effects thereof; and (c) amortize, prorate, allocate and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

 

SECTION 4.      LOAN ADMINISTRATION

 

4.1           Manner of Borrowing and Funding Revolver Loans.

 

4.1.1           Notice of Borrowing.

 

(a)           Whenever a Borrower desires funding of a Borrowing of Revolver Loans, Borrower Agent shall give Agent a Notice of Borrowing.  Such notice must be received by Agent no later than 11:00 a.m. (i) on the Business Day of the requested funding date, in the case of Base Rate Revolver Loans, and (ii) at least three Business Days prior to the requested funding date, in the case of LIBOR Revolver Loans.  Notices received after 11:00 a.m. shall be deemed received on the next Business Day.  Each Notice of Borrowing shall be irrevocable and shall specify (A) which Borrower is requesting a Revolver Loan, (B) the amount of the Borrowing, (C) the requested funding date (which must be a Business Day), (D) whether the Borrowing is to be made as Base Rate Revolver Loans or LIBOR Revolver Loans, and (E) in the case of LIBOR Revolver Loans, the duration of the applicable Interest Period (which shall be deemed to be 30 days if not specified).

 

 

  

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(b)           Unless payment is otherwise timely made by Borrowers, the becoming due of any Obligations (whether principal, interest, fees or other charges, including Extraordinary Expenses, LC Obligations, Cash Collateral and Secured Bank Product Obligations) shall be deemed to be a request for Base Rate Revolver Loans on the due date, in the amount of such Obligations.  The proceeds of such Revolver Loans shall be disbursed as direct payment of the relevant Obligation.  In addition, Agent may, at its option, charge such Obligations against any operating, investment or other account of a Borrower maintained with Agent or any of its Affiliates.

 

(c)           If Borrowers establish a controlled disbursement account with Agent or any Affiliate of Agent, then the presentation for payment of any check or other item of payment drawn on such account at a time when there are insufficient funds to cover it shall be deemed to be a request for Base Rate Revolver Loans on the date of such presentation, in the amount of the check and items presented for payment.  The proceeds of such Revolver Loans may be disbursed directly to the controlled disbursement account or other appropriate account.

 

4.1.2           Fundings by Lenders.  Each Lender shall timely honor its Revolver Commitment by funding its Pro Rata share of each Borrowing of Revolver Loans that is properly requested hereunder.  Except for Borrowings to be made as Swingline Loans, Agent shall endeavor to notify Lenders of each Notice of Borrowing (or deemed request for a Borrowing) by 12:00 noon on the proposed funding date for Base Rate Revolver Loans or by 3:00 p.m. at least two Business Days before any proposed funding of LIBOR Revolver Loans.  Each Lender shall fund to Agent such Lender’s Pro Rata share of the Borrowing to the account specified by Agent in immediately available funds not later than 2:00 p.m. on the requested funding date, unless Agent’s notice is received after the times provided above, in which event Lender shall fund its Pro Rata share by 11:00 a.m. on the next Business Day.  Subject to its receipt of such amounts from Lenders, Agent shall disburse the proceeds of the Revolver Loans as directed by Borrower Agent.  Unless Agent shall have received (in sufficient time to act) written notice from a Lender that it does not intend to fund its Pro Rata share of a Borrowing, Agent may assume that such Lender has deposited or promptly will deposit its share with Agent, and Agent may disburse a corresponding amount to Borrowers.  If a Lender’s share of any Borrowing or of any settlement pursuant to Section 4.1.3(b) is not received by Agent, then Borrowers agree to repay to Agent on demand the amount of such share, together with interest thereon from the date disbursed until repaid, at the rate applicable to such Borrowing.

 

4.1.3           Swingline Loans; Settlement.

 

(a)           Agent may, but shall not be obligated to, advance Swingline Loans to Borrowers, up to an aggregate outstanding amount not to exceed 10% of the Revolving Commitments, unless the funding is specifically required to be made by all Lenders hereunder.  Each Swingline Loan shall constitute a Revolver Loan for all purposes, except that payments thereon shall be made to Agent for its own account.  The obligation of Borrowers to repay Swingline Loans shall be evidenced by the records of Agent and need not be evidenced by any promissory note.

 

(b)           To facilitate administration of the Revolver Loans, Lenders and Agent agree (which agreement is solely among them, and not for the benefit of or enforceable by any Borrower) that settlement among them with respect to Swingline Loans and other Revolver Loans may take place periodically on a date determined from time to time by Agent, which shall occur at least twice each month.  On each settlement date, settlement shall be made with each Lender in accordance with the Settlement Report delivered by Agent to Lenders.  Between settlement dates, Agent may in its discretion apply payments on Revolver Loans to Swingline Loans, regardless of any designation 

 

 

 

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by Borrower or any provision herein to the contrary.  Each Lender’s obligation to make settlements with Agent is absolute and unconditional, without offset, counterclaim or other defense, and whether or not the Revolver Commitments have terminated, an Overadvance exists or the conditions in Section 6 are satisfied.  If, due to an Insolvency Proceeding with respect to a Borrower or otherwise, any Swingline Loan may not be settled among Lenders hereunder, then each Lender shall be deemed to have purchased from Agent a Pro Rata participation in each unpaid Swingline Loan and shall transfer the amount of such participation to Agent, in immediately available funds, within one Business Day after Agent’s request therefor.

 

4.1.4           Notices.  Each Borrower authorizes Agent and Lenders to extend, convert or continue Revolver Loans, effect selections of interest rates, and transfer funds to or on behalf of Borrowers based on telephonic or e-mailed instructions.  Borrowers shall confirm each such request by prompt delivery to Agent of a Notice of Borrowing or Notice of Conversion/Continuation, if applicable, but if it differs in any material respect from the action taken by Agent or Lenders, the records of Agent and Lenders shall govern.  Neither Agent nor any Lender shall have any liability for any loss suffered by a Borrower as a result of Agent or any Lender acting upon its understanding of telephonic or e-mailed instructions from a person believed in good faith by Agent or any Lender to be a person authorized to give such instructions on a Borrower’s behalf.

 

4.2           Defaulting Lender.  Agent may (but shall not be required to), in its discretion, retain any payments or other funds received by Agent that are to be provided to a Defaulting Lender hereunder, and may apply such funds to such Lender’s defaulted obligations or readvance the funds to Borrowers in accordance with this Agreement.  The failure of any Lender to fund a Revolver Loan, to make any payment in respect of LC Obligations or to otherwise perform its obligations hereunder shall not relieve any other Lender of its obligations, and no Lender shall be responsible for default by another Lender.  Lenders and Agent agree (which agreement is solely among them, and not for the benefit of or enforceable by any Borrower) that, solely for purposes of determining a Defaulting Lender’s right to vote on matters relating to the Loan Documents and to share in payments, fees and Collateral proceeds thereunder, a Defaulting Lender shall not be deemed to be a “Lender” until all its defaulted obligations have been cured.

 

4.3           Number and Amount of LIBOR Revolver Loans; Determination of Rate.  Each Borrowing of LIBOR Revolver Loans when made shall be in a minimum amount of $5,000,000, or an increment of $1,000,000 in excess thereof.  No more than 8 Borrowings of LIBOR Revolver Loans may be outstanding at any time, and all LIBOR Revolver Loans having the same length and beginning date of their Interest Periods shall be aggregated together and considered one Borrowing for this purpose.  Upon determining LIBOR for any Interest Period requested by Borrowers, Agent shall promptly notify Borrowers thereof by telephone or electronically and, if requested by Borrowers, shall confirm any telephonic notice in writing.

 

4.4           Borrower Agent.  Each Borrower hereby designates CAI (“Borrower Agent”) as its representative and agent for all purposes under the Loan Documents, including requests for Revolver Loans and Letters of Credit, designation of interest rates, delivery or receipt of communications, preparation and delivery of Borrowing Base Certificates and financial reports, receipt and payment of Obligations, requests for waivers, amendments or other accommodations, actions under the Loan Documents (including in respect of compliance with covenants), and all other dealings with Agent, Issuing Bank or any Lender.  Borrower Agent hereby accepts such appointment.  Agent 

 

 

 

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and Lenders shall be entitled to rely upon, and shall be fully protected in relying upon, any notice or communication (including any notice of borrowing) delivered by Borrower Agent on behalf of any Borrower.  Agent and Lenders may give any notice or communication with a Borrower hereunder to Borrower Agent on behalf of such Borrower.  Each of Agent, Issuing Bank and Lenders shall have the right, in its discretion, to deal exclusively with Borrower Agent for any or all purposes under the Loan Documents.  Each Borrower agrees that any notice, election, communication, representation, agreement or undertaking made on its behalf by Borrower Agent shall be binding upon and enforceable against it.

 

4.5           One Obligation.  The Revolver Loans, LC Obligations and other Obligations shall constitute one general obligation of Borrowers and (unless otherwise expressly provided in any Loan Document) shall be secured by Agent’s Lien upon all Collateral; provided, however, that Agent and each Lender shall be deemed to be a creditor of, and the holder of a separate claim against, each Borrower to the extent of any Obligations jointly or severally owed by such Borrower.

 

4.6           Effect of Termination.  On the effective date of the full termination of the Revolver Commitments, all Obligations shall be immediately due and payable, and any Lender may terminate its and its Affiliates’ Bank Products (including, only with the consent of Agent, any Cash Management Services).  All undertakings of Borrowers contained in the Loan Documents shall survive any termination, and Agent shall retain its Liens in the Collateral and all of its rights and remedies under the Loan Documents until Full Payment of the Obligations.  Notwithstanding Full Payment of the Obligations, Agent shall not be required to terminate its Liens in any Collateral unless, with respect to any damages Agent may incur as a result of the dishonor or return of Payment Items applied to Obligations, Agent receives (a) a written agreement, executed by Borrowers and any Person whose advances are used in whole or in part to satisfy the Obligations, indemnifying Agent and Lenders from any such damages; or (b) such Cash Collateral as Agent, in its discretion, deems necessary to protect against any such damages.  The provisions of Sections 2.3, 3.4, 3.6, 3.7, 3.9, 5.5, 5.9, 5.10, 12, 14.2 and this Section, and the obligation of each Obligor and Lender with respect to each indemnity given by it in any Loan Document, shall survive Full Payment of the Obligations and any release relating to this credit facility.

 

SECTION 5.      PAYMENTS

 

5.1           General Payment Provisions.  All payments of Obligations shall be made in Dollars, without offset, counterclaim or defense of any kind, free of (and without deduction for) any Taxes, and in immediately available funds, not later than 12:00 noon on the due date and shall be made (except as otherwise instructed by Agent after the Closing Date) at Agent’s office identified under Agent’s signature hereto.  Any payment after such time shall be deemed made on the next Business Day.  If any payment under the Loan Documents shall be stated to be due on a day other than a Business Day, the due date shall be extended to the next Business Day and such extension of time shall be included in any computation of interest and fees.  Any payment of a LIBOR Revolver Loan prior to the end of its Interest Period shall be accompanied by all amounts due under Section 3.9.  Any prepayment of Revolver Loans shall be applied first to Base Rate Revolver Loans and then to LIBOR Revolver Loans; provided, however, that as long as no Event of Default exists, prepayments of LIBOR Revolver Loans may, at the option of Borrowers and Agent, be held by Agent as Cash Collateral and applied to such Revolver Loans at the end  of their Interest Periods.

 

 

  

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5.2           Repayment of Revolver Loans.  Revolver Loans shall be due and payable in full on the Revolver Termination Date, unless payment is sooner required hereunder.  Revolver Loans may be prepaid from time to time, without penalty or premium.  If any Asset Disposition includes the disposition of Contracts or Inventory, then Net Proceeds equal to the greater of (a) the net book value of such Contracts and Inventory, or (b) the reduction in the Borrowing Base upon giving effect to such disposition, shall be applied to the Revolver Loans.  Notwithstanding anything herein to the contrary, if an Overadvance exists, Borrowers shall, on the sooner of Agent’s demand or the first Business Day after any Borrower has knowledge thereof, repay the outstanding Revolver Loans in an amount sufficient to reduce the principal balance of Revolver Loans so that aggregate Revolver Loans made to CAI do not exceed the CAI Borrowing Base, the aggregate Revolver Loans made to CCI and CCCI do not exceed the CCI Borrowing Base and the aggregate Revolver Loans made to all Borrowers do not exceed the Adjusted Borrowing Base.

 

5.3           Curative Equity.  Within 1 Business Day of the date of receipt by any Borrower of the proceeds of any Curative Equity pursuant to Section 10.4, such Borrower shall prepay the outstanding principal of the Obligations in accordance with Section 5.1 in an amount equal to 100% of such proceeds, net of any reasonable out-of-pocket expenses incurred in connection with the issuance of such Curative Equity.

 

5.4           Payment of Other Obligations.  Obligations other than Revolver Loans, including LC Obligations and Extraordinary Expenses, shall be paid by Borrowers as provided in the Loan Documents or, if no payment date is specified, on demand.

 

5.5           Marshaling; Payments Set Aside.  None of Agent or Lenders shall be under any obligation to marshal any assets in favor of any Obligor or against any Obligations.  If any payment by or on behalf of Borrowers is made to Agent, Issuing Bank or any Lender, or Agent, Issuing Bank or any Lender exercises a right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by Agent, Issuing Bank or such Lender in its discretion) to be repaid to a trustee, receiver or any other Person, then to the extent of such recovery, the Obligation originally intended to be satisfied, and all Liens, rights and remedies relating thereto, shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred.

 

5.6           Post-Default Allocation of Payments.

 

5.6.1           Allocation.  Notwithstanding anything herein to the contrary, during an Event of Default, monies to be applied to the Obligations, whether arising from payments by Obligors, realization on Collateral, setoff or otherwise, shall be allocated as follows:

 

(a)           FIRST, to all costs and expenses, including Extraordinary Expenses, owing to Agent;

 

(b)           SECOND, to all amounts owing to Agent on Swingline Loans and Protective Advances;

 

 

  

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(c)           THIRD, to all costs and expenses, including Extraordinary Expenses, owing to any Lender;

 

(d)           FOURTH, to all amounts owing to Issuing Bank on LC Obligations;

 

(e)           FIFTH, to all Obligations constituting fees (other than Secured Bank Product Obligations);

 

(f)           SIXTH, to all Obligations constituting interest (other than Secured Bank Product Obligations);

 

(g)           SEVENTH, to provide Cash Collateral for outstanding Letters of Credit;

 

(h)           EIGHTH, to all Revolver Loans and Noticed Hedges, including Cash Collateralization of outstanding Noticed Hedges;

 

(i)           NINTH, to all other Obligations (including Secured Bank Product Obligations); and

 

(j)           LAST, to the Borrowers.

 

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.  Amounts distributed with respect to any Secured Bank Product Obligations shall be the lesser of the maximum Secured Bank Product Obligations last reported to Agent or the actual Secured Bank Product Obligations as calculated by the methodology reported to Agent for determining the amount due.  Agent shall have no obligation to calculate the amount to be distributed with respect to any Secured Bank Product Obligations, and may request a reasonably detailed calculation of such amount from the applicable Secured Party.  If a Secured Party fails to deliver such calculation within 5 Business Days following request by Agent, Agent may assume the amount to be distributed is zero. The allocations set forth in this Section are solely to determine the rights and priorities of Agent and Secured Parties as among themselves, and may be changed by agreement among them without the consent of any Obligor.  This Section is not for the benefit of or enforceable by any Borrower.

 

5.6.2           Erroneous Application.  Agent shall not be liable for any application of amounts made by it in good faith and, if any such application is subsequently determined to have been made in error, the sole recourse of any Lender or other Person to which such amount should have been made shall be to recover the amount from the Person that actually received it (and, if such amount was received by any Lender, such Lender hereby agrees to return it).

 

5.7           Application of Payments.  The ledger balance in the main Dominion Account as of the end of a Business Day shall be applied to the Obligations at the beginning of the next Business Day, during any Dominion Trigger Period.  If, as a result of such application, a credit balance exists, the balance shall not accrue interest in favor of Borrowers and shall be made available to Borrowers as long as no Default or Event of Default exists.  Each Borrower irrevocably waives the right to direct the application of any payments or Collateral proceeds, and agrees that Agent shall have the continuing, exclusive right to apply and reapply same against the Obligations, in such manner as Agent deems advisable.

 

 

  

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5.8           Loan Account; Account Stated.

 

5.8.1           Loan Account.  Agent shall maintain in accordance with its usual and customary practices an account or accounts (“Loan Account”) evidencing the Debt of Borrowers resulting from each Revolver Loan or issuance of a Letter of Credit from time to time.  Any failure of Agent to record anything in the Loan Account, or any error in doing so, shall not limit or otherwise affect the obligation of Borrowers to pay any amount owing hereunder.  Agent may maintain a single Loan Account in the name of Borrower Agent, and each Borrower confirms that such arrangement shall have no effect on the joint and several character of its liability for the Obligations.

 

5.8.2           Entries Binding.  Entries made in the Loan Account shall constitute presumptive evidence of the information contained therein.  If any information contained in the Loan Account is provided to or inspected by any Person, then such information shall be conclusive and binding on such Person for all purposes absent manifest error, except to the extent such Person notifies Agent in writing within 30 days after receipt or inspection that specific information is subject to dispute; provided, that payment by Borrowers to Agent of any amounts owed hereunder which are under dispute by Borrowers shall not be deemed a waiver of Borrowers’ right to continue such dispute.

 

5.9           Taxes.

 

5.9.1           Payments Free of Taxes.  All payments by Obligors of Obligations shall be free and clear of and without reduction for any Taxes.  If Applicable Law requires any Obligor or Agent to withhold or deduct any Tax (including backup withholding or withholding Tax), the withholding or deduction shall be based on information provided pursuant to Section 5.10 and Agent shall pay the amount withheld or deducted to the relevant Governmental Authority.  If the withholding or deduction is made on account of Indemnified Taxes or Other Taxes, the sum payable by Borrowers shall be increased so that Agent, Lender or Issuing Bank, as applicable, receives an amount equal to the sum it would have received if no such withholding or deduction (including deductions applicable to additional sums payable under this Section) had been made.  Without limiting the foregoing, Borrowers shall timely pay all Other Taxes to the relevant Governmental Authorities.

 

5.9.2           Payment.  Borrowers shall indemnify, hold harmless and reimburse (within 10 days after demand therefor) Agent, Lenders and Issuing Bank for any Indemnified Taxes or Other Taxes (including those attributable to amounts payable under this Section) withheld or deducted by any Obligor or Agent, or paid by Agent, any Lender or Issuing Bank, with respect to any Obligations, Letters of Credit or Loan Documents, whether or not such Taxes were properly asserted by the relevant Governmental Authority (provided, that payment by Borrowers to Agent of any amounts owed hereunder which are under dispute by Borrowers shall not be deemed a waiver of Borrower’s right to continue such dispute), and including all penalties, interest and reasonable expenses relating thereto which arise as a result of any action or inaction by Borrowers, as well as any amount that a Lender or Issuing Bank fails to pay indefeasibly to Agent under Section 5.10.  A certificate as to the amount of any such payment or liability delivered to Borrower Agent by Agent, or by a Lender or Issuing Bank (with a copy to Agent), shall be conclusive, absent manifest error.  As soon as practicable after any payment of Taxes by a Borrower, Borrower Agent shall deliver to Agent a receipt from the Governmental Authority or other evidence of payment satisfactory to Agent.

 

 

  

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5.10           Lender Tax Information.

 

5.10.1           Status of Lenders.  Each Lender shall deliver documentation and information to Agent and Borrower Agent, at the times and in the form required by Applicable Law or reasonably requested by Agent or Borrower Agent, sufficient to permit Agent or Borrowers to determine (a) whether or not payments made with respect to Obligations are subject to Taxes, (b) if applicable, the required rate of withholding or deduction, and (c) such Lender’s entitlement to any available exemption from, or reduction of, applicable Taxes for such payments or otherwise to establish such Lender’s status for withholding tax purposes in the applicable jurisdiction.

 

5.10.2           Documentation.  If a Borrower is resident for tax purposes in the United States, any Lender that is a “United States person” within the meaning of section 7701(a)(30) of the Code shall deliver to Agent and Borrower Agent IRS Form W-9 or such other documentation or information prescribed by Applicable Law or reasonably requested by Agent or Borrower Agent to determine whether such Lender is subject to backup withholding or information reporting requirements.  If any Foreign Lender is entitled to any exemption from or reduction of withholding tax for payments with respect to the Obligations, it shall deliver to Agent and Borrower Agent, on or prior to the date on which it becomes a Lender hereunder (and from time to time thereafter upon request by Agent or Borrower Agent, but only if such Foreign Lender is legally entitled to do so), (a) IRS Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party; (b) IRS Form W-8ECI; (c) IRS Form W-8IMY and all required supporting documentation; (d) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, IRS Form W-8BEN and a certificate showing such Foreign Lender is not (i) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (ii) a “10 percent shareholder” of any Obligor within the meaning of section 881(c)(3)(B) of the Code, or (iii) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code; or (e) any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in withholding tax, together with such supplementary documentation necessary to allow Agent and Borrowers to determine the withholding or deduction required to be made.

 

5.10.3           Lender Obligations.  Each Lender and Issuing Bank shall promptly notify Borrowers and Agent of any change in circumstances that would change any claimed Tax exemption or reduction.  Each Lender and Issuing Bank shall indemnify, hold harmless and reimburse (within 10 days after demand therefor) Borrowers and Agent for any Taxes, losses, claims, liabilities, penalties, interest and expenses (including reasonable attorneys’ fees) incurred by or asserted against a Borrower or Agent by any Governmental Authority due to such Lender’s or Issuing Bank’s failure to deliver, or inaccuracy or deficiency in, any documentation required to be delivered by it pursuant to this Section.  Each Lender and Issuing Bank authorizes Agent to set off any amounts due to Agent under this Section against any amounts payable to such Lender or Issuing Bank under any Loan Document.

 

5.11           Nature and Extent of Each Borrower’s Liability.

 

5.11.1           Joint and Several Liability.  Each Borrower agrees that it is jointly and severally liable for, and absolutely and unconditionally guarantees to Agent and Lenders the prompt payment and performance of, all Obligations and all agreements under the Loan Documents.  Each Borrower agrees that its guaranty obligations hereunder constitute a continuing guaranty of payment and not of collection, that such obligations shall not be discharged until Full Payment of the Obligations, and that such obligations are absolute and unconditional, irrespective of (a) the genuineness, validity, regularity, enforceability, subordination or any future modification of, or change 

 

 

 

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in, any Obligations or Loan Document, or any other document, instrument or agreement to which any Obligor is or may become a party or be bound; (b) the absence of any action to enforce this Agreement (including this Section) or any other Loan Document, or any waiver, consent or indulgence of any kind by Agent or any Lender with respect thereto; (c) the existence, value or condition of, or failure to perfect a Lien or to preserve rights against, any security or guaranty for the Obligations or any action, or the absence of any action, by Agent or any Lender in respect thereof (including the release of any security or guaranty); (d) the insolvency of any Obligor; (e) any election by Agent or any Lender in an Insolvency Proceeding for the application of Section 1111(b)(2) of the Bankruptcy Code; (f) any borrowing or grant of a Lien by any other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy Code or otherwise; (g) the disallowance of any claims of Agent or any Lender against any Obligor for the repayment of any Obligations under Section 502 of the Bankruptcy Code or otherwise; or (h) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, except Full Payment of all Obligations.

 

5.11.2           Waivers.

 

(a)           Each Borrower expressly waives all rights that it may have now or in the future under any statute, at common law, in equity or otherwise, to compel Agent or Lenders to marshal assets or to proceed against any Obligor, other Person or security for the payment or performance of any Obligations before, or as a condition to, proceeding against such Borrower.  Each Borrower waives all defenses available to a surety, guarantor or accommodation co-obligor other than Full Payment of all Obligations.  It is agreed among each Borrower, Agent and Lenders that the provisions of this Section 5.11 are the essence of the transaction contemplated by the Loan Documents and that, but for such provisions, Agent and Lenders would decline to make Loans and issue Letters of Credit.  Each Borrower acknowledges that its guaranty pursuant to this Section is necessary to the conduct and promotion of its business, and can be expected to benefit such business.

 

(b)           Agent and Lenders may, in their sole discretion, pursue such rights and remedies as they deem appropriate, including realization upon Collateral or any Real Estate by judicial foreclosure or non-judicial sale or enforcement, without affecting any rights and remedies under this Section 5.11.  If, in taking any action in connection with the exercise of any rights or remedies, Agent or any Lender shall forfeit any other rights or remedies, including the right to enter a deficiency judgment against any Borrower or other Person, whether because of any Applicable Laws pertaining to “election of remedies” or otherwise, each Borrower consents to such action and waives any claim based upon it, even if the action may result in loss of any rights of subrogation that any Borrower might otherwise have had.  Any election of remedies that results in denial or impairment of the right of Agent or any Lender to seek a deficiency judgment against any Borrower shall not impair any other Borrower’s obligation to pay the full amount of the Obligations.  Each Borrower waives all rights and defenses arising out of an election of remedies, such as nonjudicial foreclosure with respect to any security for the Obligations, even though that election of remedies destroys such Borrower’s rights of subrogation against any other Person.  Agent may bid all or a portion of the Obligations at any foreclosure or trustee’s sale or at any private sale, and the amount of such bid need not be paid by Agent but shall be credited against the Obligations.  The amount of the successful bid at any such sale, whether 

 

 

 

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Agent or any other Person is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral, and the difference between such bid amount and the remaining balance of the Obligations shall be conclusively deemed to be the amount of the Obligations guaranteed under this Section 5.11, notwithstanding that any present or future law or court decision may have the effect of reducing the amount of any deficiency claim to which Agent or any Lender might otherwise be entitled but for such bidding at any such sale.

 

5.11.3           Extent of Liability; Contribution.

 

(a)           Notwithstanding anything herein to the contrary, each Borrower’s liability under this Section 5.11 shall be limited to the greater of (i) all amounts for which such Borrower is primarily liable, as described below, and (ii) such Borrower’s Allocable Amount.

 

(b)           If any Borrower makes a payment under this Section 5.11 of any Obligations (other than amounts for which such Borrower is primarily liable) (a “Guarantor Payment”) that, taking into account all other Guarantor Payments previously or concurrently made by any other Borrower, exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied by such Guarantor Payments in the same proportion that such Borrower’s Allocable Amount bore to the total Allocable Amounts of all Borrowers, then such Borrower shall be entitled to receive contribution and indemnification payments from, and to be reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment.  The “Allocable Amount” for any Borrower shall be the maximum amount that could then be recovered from such Borrower under this Section 5.11 without rendering such payment voidable under Section 548 of the Bankruptcy Code or under any applicable state fraudulent transfer or conveyance act, or similar statute or common law.

 

(c)           Nothing contained in this Section 5.11 shall limit the liability of any Borrower to pay Revolver Loans made directly or indirectly to that Borrower (including Revolver Loans advanced to any other Borrower and then re-loaned or otherwise transferred to, or for the benefit of, such Borrower), LC Obligations relating to Letters of Credit issued to support such Borrower’s business, and all accrued interest, fees, expenses and other related Obligations with respect thereto, for which such Borrower shall be primarily liable for all purposes hereunder.  Agent and Lenders shall have the right, at any time in their discretion, to condition Revolver Loans and Letters of Credit upon a separate calculation of borrowing availability for each Borrower and to restrict the disbursement and use of such Revolver Loans and Letters of Credit to such Borrower.

 

5.11.4           Joint Enterprise.  Each Borrower has requested that Agent and Lenders make this credit facility available to Borrowers on a combined basis, in order to finance Borrowers’ business most efficiently and economically.  Borrowers’ business is a mutual and collective enterprise, and the successful operation of each Borrower is dependent upon the successful performance of the integrated group.  Borrowers believe that consolidation of their credit facility will enhance the borrowing power of each Borrower and ease administration of the facility, all to their mutual advantage.  Borrowers acknowledge that Agent’s and Lenders’ willingness to extend credit and to administer the Collateral on a combined basis hereunder is done solely as an accommodation to Borrowers and at Borrowers’ request.

 

 

  

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5.11.5           Subordination.  Each Borrower hereby subordinates any claims, including any rights at law or in equity to payment, subrogation, reimbursement, exoneration, contribution, indemnification or set off, that it may have at any time against any other Obligor, howsoever arising, to the Full Payment of all Obligations.

 

SECTION 6.     CONDITIONS PRECEDENT/SUBSEQUENT

 

6.1           Conditions Precedent to Initial Revolver Loans.  In addition to the conditions set forth in Section 6.2, Lenders shall not be required to fund any requested Revolver Loan, issue any Letter of Credit, or otherwise extend credit to Borrowers hereunder, until the date (“Closing Date”) that each of the following conditions has been satisfied:

 

(a)           Notes shall have been executed by Borrowers and delivered to each Lender that requests issuance of a Note.  Each other Loan Document (other than a Compliance Certificate) shall have been duly executed and delivered to Agent by each of the signatories thereto, and each Obligor (to the extent a party thereto) shall be in compliance with all terms thereof.

 

(b)           Agent shall have received acknowledgments of all filings or recordations necessary to perfect its Liens in the Collateral, as well as UCC and Lien searches and other evidence satisfactory to Agent that such Liens are the only Liens upon the Collateral, except Permitted Liens.

 

(c)           Agent shall have received certificates, in the form of Exhibit D, from a knowledgeable Senior Officer of Parent and each Borrower certifying that, after giving effect to the initial Revolver Loans and transactions hereunder, (i) it is Solvent; (ii) no Default or Event of Default exists; (iii) the representations and warranties set forth in Section 9 are true and correct; and (iv) it has complied with all agreements and conditions to be satisfied by it under the Loan Documents.

 

(d)           Agent shall have received a certificate of a duly authorized officer of each Obligor, certifying (i) that attached copies of such Obligor’s Organic Documents are true and complete, and in full force and effect, without amendment except as shown; (ii) that an attached copy of resolutions authorizing execution and delivery of the Loan Documents is true and complete, and that such resolutions are in full force and effect, were duly adopted, have not been amended, modified or revoked, and constitute all resolutions adopted with respect to this credit facility; and (iii) to the title, name and signature of each Person authorized to sign the Loan Documents.  Agent may conclusively rely on this certificate until it is otherwise notified by the applicable Obligor in writing.

 

(e)           Agent shall have received a written opinion of Andrews Kurth, LLP, as well as any local counsel to Borrowers or Agent, with respect to the Loan Documents.

 

(f)           Agent shall have received a written opinion from Parent’s Corporate General Counsel with respect to existence and authority of each Obligor, and with respect to each Obligor there has been no violation of laws and there exists no litigation regarding each Obligor.

 

(g)           Agent shall have received a written opinion of Hughes Watters Askanase L.L.P. regarding the enforceability of Borrowers’ form of Contract and its compliance with any Requirement of Law with respect to the laws of the State of Texas  and relevant federal laws.

 

 

  

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(h)           Agent shall have received a written opinion of Hughes Watters Askanase L.L.P. regarding the enforceability of Borrowers’ form of Contract and its compliance with any Requirement of Law with respect to the laws of the State of Oklahoma and relevant federal laws.

 

(i)           Agent shall have received a written opinion of McGlinchey Stafford PLLC regarding the enforceability of Borrowers’ form of Contract and its compliance with any Requirement of Law with respect to the laws of the State of Louisiana and relevant federal laws.

 

(j)           Agent shall have received copies of the charter documents of each Obligor, certified by the Secretary of State or other appropriate official of such Obligor’s jurisdiction of organization.  Agent shall have received good standing certificates for each Obligor, issued by the Secretary of State or other appropriate official of such Obligor’s jurisdiction of organization and each jurisdiction where such Obligor’s conduct of business or ownership of Property necessitates qualification.

 

(k)           Agent shall have completed its business, financial and legal due diligence of Obligors, including a roll-forward of its previous field examination, with results satisfactory to Agent.  No material adverse change in the financial condition of any Obligor or in the quality, quantity or value of any Collateral shall have occurred since July 31, 2010.

 

(l)           Borrowers shall have paid all fees and expenses due and payable to Agent and Lenders on the Closing Date.

 

(m)           Agent shall have received a Borrowing Base Certificate prepared as of November 12, 2010.  Upon giving effect to the initial funding of Revolver Loans and issuance of Letters of Credit, the making of the Term Loan under the Term Loan Facility, and the payment by Borrowers of all fees and expenses incurred in connection herewith, the Term Loan Facility and the assignment of assets pursuant to the Intercompany Assignment Agreement, the completion of an equity rights offering, the redemption of Borrowers’ Existing Securitization Facility, as well as any payables stretched beyond their customary payment practices, Availability shall be at least $60,000,000.

 

(n)           Agent shall have received copies of the Term Loan Agreement and the Term Loan Documents.

 

(o)           Agent shall have received a letter from each third party service maintenance providers acknowledging that any refunds owed to a Borrower as a result of the cancellation of a third party service maintenance plan purchased under a Contract shall be paid directly to the Dominion Account, which letter shall be in form and substance satisfactory to Agent.

 

(p)           Agent shall have received a letter from each third party credit insurance provider acknowledging that any refunds owed to a Borrower as a result of the cancellation of a credit insurance policy shall be paid directly to the Dominion Account, which letter shall be in form and substance satisfactory to Agent.

 

(q)           Agent shall have received a fully signed Intercreditor Agreement.

 

 

  

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(r)           Agent shall have received evidence that the Existing Securitization Facility (as defined in the Original Loan Agreement) will be paid in full and terminated on the Closing Date.

 

(s)           Agent shall have received each fully executed Intercompany Assignment Agreement together with evidence that on the Closing Date all of the assignments set forth therein shall be consummated.

 

6.2           Conditions Precedent to All Credit Extensions.  Agent, Issuing Bank and Lenders shall not be required to fund any Revolver Loans, arrange for issuance of any Letters of Credit or grant any other accommodation to or for the benefit of Borrowers, unless the following conditions are satisfied:

 

(a)           No Default or Event of Default shall exist at the time of, or result from, such funding, issuance or grant;

 

(b)           The representations and warranties of each Obligor in the Loan Documents shall be true and correct on the date of, and upon giving effect to, such funding, issuance or grant (except for representations and warranties that expressly relate to an earlier date);

 

(c)           All conditions precedent in any other Loan Document shall be satisfied;

 

(d)           No event shall have occurred or circumstance exist that has or could reasonably be expected to have a Material Adverse Effect;

 

(e)           With respect to issuance of a Letter of Credit, the LC Conditions shall be satisfied; and

 

(f)           After giving effect to the funding of any Revolver Loan, issuance of any Letters of Credit or granting of any other accommodation to or for the benefit of the Borrowers, Borrowing Availability shall be in an amount greater than zero.

 

Each request (or deemed request) by Borrowers for funding of a Revolver Loan, issuance of a Letter of Credit or grant of an accommodation shall constitute a representation by Borrowers that the foregoing conditions are satisfied on the date of such request and on the date of such funding, issuance or grant.  As an additional condition to any funding, issuance or grant, Agent shall have received such other information, documents, instruments and agreements as it deems appropriate in connection therewith.

 

6.3           Conditions Subsequent.  Borrowers shall deliver each of the following within the specified time period:

 

6.3.1           Within 60 days after the Closing Date, Borrowers shall deliver to Agent the Related Real Estate Documents for all Real Estate listed on Schedule 7.3.

 

SECTION 7.     COLLATERAL

 

7.1           Grant of Security Interest.  To secure the prompt payment and performance of all Obligations, each Borrower hereby grants to Agent, for the benefit of Secured Parties, a continuing security interest in and Lien upon all Property of such Borrower, including all of the following Property, whether now owned or hereafter acquired, and wherever located:

 

 

  

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(a)           all Contracts;

 

(b)           all Accounts including Credit Card Accounts;

 

(c)           all Chattel Paper, including electronic chattel paper;

 

(d)           all Commercial Tort Claims, including those shown on Schedule 9.1.16;

 

(e)           all Deposit Accounts;

 

(f)           all Documents;

 

(g)           all General Intangibles, including Intellectual Property;

 

(h)           all Goods, including Inventory, Equipment and fixtures;

 

(i)           all Instruments;

 

(j)           all Investment Property, including the Equity Interests of each Borrower in its Subsidiaries set forth on Schedule 7.1(j);

 

(k)           all Letter-of-Credit Rights;

 

(l)           all Supporting Obligations;

 

(m)           all monies, whether or not in the possession or under the control of Agent, a Lender, or a bailee or Affiliate of Agent or a Lender, including any Cash Collateral;

 

(n)           all accessions to, substitutions for, and all replacements, products, and cash and non-cash proceeds of the foregoing, including proceeds of and unearned premiums with respect to insurance policies, and claims against any Person for loss, damage or destruction of any Collateral; and

 

(o)           all books and records (including customer lists, files, correspondence, tapes, computer programs, print-outs and computer records) pertaining to the foregoing.

 

No Contracts or its related security shall be released from Agent’s security interest to become a Securitized Contract unless and until Agent executes a release releasing such Contract from Agent’s security interest.  If a Securitized Contract is transferred from a Securitization Subsidiary back to a Borrower, it shall cease being a Securitized Contract upon such transfer back and, together with its related security shall again constitute Collateral hereunder.

 

7.2           Lien on Deposit Accounts; Cash Collateral.

 

7.2.1           Deposit Accounts.  To further secure the prompt payment and performance of all Obligations, each Borrower hereby grants to Agent, for the benefit of Secured Parties, a continuing security interest in and Lien upon all amounts credited to any Deposit Account of such Borrower, including any sums in any blocked or lockbox accounts (if any) or in any accounts into which such sums are swept.  Each Borrower authorizes and directs 

 

 

 

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each bank or other depository to deliver to Agent, and each Deposit Account Control Agreement shall require such bank or other depository to deliver to Agent, on a daily basis during a Dominion Trigger Period, all balances in each Deposit Account maintained by such Borrower with such depository for application to the Obligations then outstanding.  Each Borrower irrevocably appoints Agent as such Borrower’s attorney-in-fact to collect such balances to the extent any such delivery is not so made.

 

7.2.2           Cash Collateral.  At the request of Borrower Agent, any Cash Collateral shall be invested, at Agent’s discretion, in Cash Equivalents, but Agent shall have no responsibility for any investment or loss.  Each Borrower hereby grants to Agent, for the benefit of Secured Parties, a security interest in all Cash Collateral held from time to time and all proceeds thereof, as security for the Obligations, whether such Cash Collateral is held in a Cash Collateral Account or elsewhere.  Agent may apply Cash Collateral to the payment of any Obligations, in such order as Agent may elect, as they become due and payable.  Each Cash Collateral Account and all Cash Collateral shall be under the sole dominion and control of Agent.  No Borrower or other Person claiming through or on behalf of any Borrower shall have any right to any Cash Collateral, until Full Payment of all Obligations.

 

7.3           Real Estate Collateral.

 

7.3.1           Lien on Real Estate.  Subject to Section 6.3, the Obligations shall also be secured by Mortgages upon the Real Estate listed on Schedule 7.3.  The Mortgages shall be duly recorded, at Borrowers’ expense, in each office where such recording is required to constitute a valid, secured Lien on the Real Estate covered thereby.  If any Borrower acquires Real Estate hereafter, Borrowers shall, within 30 days, execute, deliver and record a Mortgage sufficient to create a valid, secured Lien in favor of Agent on such Real Estate, and shall deliver all Related Real Estate Documents.

 

7.3.2           Collateral Assignment of Leases.  To further secure the prompt payment and performance of all Obligations, each Borrower hereby transfers and assigns to Agent, for the benefit of Secured Parties, all of such Borrower’s right, title and interest in, to and under all now or hereafter existing leases of real Property to which such Borrower is a party, whether as lessor or lessee, and all extensions, renewals, modifications and proceeds thereof.

 

7.3.3           Real Estate Collateral.  Borrowers have delivered to Agent fully executed Leasehold Mortgages upon all leased Real Estate of Borrowers identified in Schedule 1.1L.  Agent shall hold such Leasehold Mortgages, and Agent and each Borrower agree that the Leasehold Mortgages will not create a valid Lien in favor of Agent until the Leasehold Mortgage is recorded as set forth below.  If any Borrower acquires a leasehold interest in Real Estate hereafter, Borrowers shall, upon acquiring such interest and upon Agent’s request, agree to use commercially reasonable efforts to obtain a Leasehold Mortgage Consent from each landlord for each such new leased Real Estate, and if such consent is obtained, execute and deliver a Leasehold Mortgage sufficient to create a Lien in favor of Agent on such Real Estate.  Agent and such Borrower agree that any such Leasehold Mortgage shall not create a valid Lien in favor of Agent until the Leasehold Mortgage is recorded as set forth below.  At any time (i) Availability is less than $30,000,000, or (ii) an Event of Default exists, at the option of Agent the Leasehold Mortgages shall be duly recorded, at Borrowers’ expense, in each office where such recording is required to provide notice to third party’s of Agent’s Lien on the Real Estate covered thereby.

 

 

  

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7.4           Other Collateral.

 

7.4.1           Commercial Tort Claims.  Borrowers shall (i) promptly notify Agent in writing if any Borrower has a Commercial Tort Claim (other than, as long as no Default or Event of Default exists, a Commercial Tort Claim for less than $500,000), (ii) promptly amend Schedule 9.1.16 to include such claim, and (iii) take such actions as Agent deems appropriate to subject such claim to a duly perfected, first priority Lien in favor of Agent (for the benefit of Secured Parties).

 

7.4.2           Certain After-Acquired Collateral.  Borrowers shall promptly notify Agent in writing if, after the Closing Date, any Borrower obtains any interest in any Collateral consisting of Deposit Accounts, Chattel Paper, Documents, Instruments, Intellectual Property, Investment Property or Letter-of-Credit Rights and, upon Agent’s request, shall promptly take such actions as Agent deems appropriate to effect Agent’s duly perfected, first priority Lien upon such Collateral, including obtaining any appropriate possession, control agreement or Lien Waiver.  If any Collateral is in the possession of a third party, at Agent’s request, Borrowers shall obtain an acknowledgment that such third party holds the Collateral for the benefit of Agent.

 

7.5           No Assumption of Liability.  The Lien on Collateral granted hereunder is given as security only and shall not subject Agent or any Lender to, or in any way modify, any obligation or liability of Borrowers relating to any Collateral.

 

7.6           Further Assurances.  Promptly upon request, Borrowers shall deliver such instruments, assignments, title certificates, or other documents or agreements, and shall take such actions, as Agent deems appropriate under Applicable Law to evidence or perfect its Lien on any Collateral, or otherwise to give effect to the intent of this Agreement.  Each Borrower authorizes Agent to file any financing statement that indicates the Collateral as “all assets” or “all personal property” of such Borrower, or words to similar effect, and ratifies any action taken by Agent before the Closing Date to effect or perfect its Lien on any Collateral.

 

7.7           Foreign Subsidiary Stock.  Notwithstanding Section 7.1, the Collateral shall include only 65% of the voting stock of any Foreign Subsidiary.

 

7.8           Contract Legend.

 

7.8.1           New Contracts.  Borrowers shall immediately following the execution or receipt of a Contract stamp or type in on the Contract the following:

 

This instrument or agreement is assigned as collateral to Bank of America, N.A.

 

Provided, that so long as any obligations under the Term Loan Facility remain outstanding, such legend may include a reference to the Lien in favor of Term Agent.

 

7.8.2           Assigned Contracts.  Notwithstanding the above, Borrowers shall cause each of the Contracts assigned to a Borrower pursuant to the Intercompany Assignment Agreement to include the above legend within 30 days after the Closing Date.

 

 

  

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SECTION 8.      COLLATERAL ADMINISTRATION

 

8.1           Collateral Reports.  By the 15th day of each month and at such other times as Agent may request, Borrowers shall deliver to Agent (and Agent shall promptly deliver same to Lenders) (i) a Borrowing Base Certificate prepared as of the close of business of the previous month (provided that the NOLV Percentage to be applied to the Value of Eligible Inventory and the appraisal percentage used to determine the value of Gross Contract Payments shall be the applicable NOLV Percentage or appraisal percentage, as applicable, set forth in the most recent appraisal delivered to Agent for (x) the month in which the Borrowing Base Certificate is delivered or (y) the immediately succeeding month during such period of such immediately succeeding month pending delivery of a new Borrowing Base Certificate) (provided, that Borrowing Base Certificates shall be delivered weekly during a Increased Reporting Period; provided further, that the calculation of contracts not qualifying as Eligible Contracts, the CAI Availability Reserve and CCI Availability Reserve shall be provided by Borrower on a monthly basis at all times), (ii) an aggregate list of Borrowers’ Contracts, aged in 30 days contractual delinquency intervals and separately identifying the revolving Contracts; (iii) a calculation of the Past Due Percent, the Cash Recovery Percent, Collateral Adjustment Percentage, the Charge-Off Percent; the Eligible Contracts, the Eligible Inventory, the Eligible Credit Card Accounts; (iv) an Inventory turn report of Borrowers’ Inventory; (v) a listing of each Borrower’s Inventory by location, specifying the amount of Inventory at each location; (vi) the summary balances of Borrowers’ “primary portfolio” and “secondary portfolio” (as such portfolios are described in Parent’s SEC filings) and delinquent balances of each such portfolio; (vii) such other reports as to the Collateral of Borrower as Agent shall reasonably request from time to time, together with a reconciliation to the general ledger; and (viii) a certificate of an officer of Borrower Agent certifying as to the accuracy and completeness of the foregoing.  All calculations of Availability in any Borrowing Base Certificate shall originally be made by Borrowers and certified by a Senior Officer, provided that Agent may from time to time review and adjust any such calculation (a) to reflect its reasonable estimate of declines in value of any Collateral, due to collections received in the Dominion Account or otherwise; (b) to adjust advance rates to reflect changes in dilution, quality, mix and other factors affecting Collateral; and (c) to the extent the calculation is not made in accordance with this Agreement or does not accurately reflect the CAI Availability Reserve or CCI Availability Reserve.

 

8.2           Administration of Contracts.

 

8.2.1           Contracts.

 

(a)           Borrowers hereby represent and warrant to Agent and Lenders with respect to the Contracts, that:  (i) each existing Contract represents, and each future Contract will represent, a bona fide obligation of the Contract Debtor, enforceable in accordance with its terms; (ii) each existing Contract is, and each future Contract will be, for a liquidated amount payable by the Contract Debtor thereon on the terms set forth in the Contract therefor or in the schedule thereof delivered to Agent, without any offset, deduction, defense (including the defense of usury), or counterclaim; (iii) there is only one original counterpart of the Contract executed by the Contract Debtor and any copies of such original are clearly marked as copies; (iv) each Contract correctly sets forth the terms thereof, including the interest rate, if any, applicable thereto and correctly describes the collateral, if any, for such Contract; (vi) the signatures of all Contract Debtors are genuine and, to the knowledge of Borrowers, each Contract Debtor had the legal capacity to enter into and execute such documents on the date thereof; (vii) each Contract complies with all Requirement of Law; and (viii) Borrowers have not used illegal, improper, fraudulent or deceptive marketing techniques or unfair business practices with respect to the Contracts.

 

 

  

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(b)           Borrowers shall not grant any discount, credit or allowance to any such Contract Debtor without Agent’s prior written consent, except for discounts, credits and allowances made or given in the Ordinary Course of Business or in compliance with the Credit and Collection Guidelines.

 

(c)           Except as provided in Borrowers’ Credit and Collection Guidelines, Borrowers shall not accept any note or other instrument (except a check or other instrument for the immediate payment of money) with respect to any Contract without Agent’s written consent.  If Agent consents to the acceptance of any such instrument, it shall be considered as evidence of the Contract and not payment thereof and Borrowers will promptly deliver such instrument to Agent, endorsed by the applicable Borrower to Agent in a manner satisfactory in form and substance to Agent.  Regardless of the form of presentment, demand, notice of protest with respect thereto, the Contract Debtor shall remain liable thereon until such Instrument is paid in full.

 

(d)           Agent may rely, in determining which Contracts are Eligible Contracts, on all statements and representations made by Borrowers with respect thereto.

 

(e)           Except as provided in the Credit and Collections Guidelines with respect to Modified Contracts, Borrowers shall not amend or modify any Contract without Agent’s prior written consent and any such modifications to the applicable Contract are identified as approved modifications.

 

(f)           Borrowers shall hold each original Contract as the custodian for Agent for the purposes of perfecting Agent’s Lien in the Contracts.

 

(g)           If the original of any Contract is in print format, Borrowers shall keep such Contract in a fireproof file cabinet at Borrowers’ chief executive office (unless delivered to Agent hereunder) and if the original Contract is in electronic format, Borrowers shall keep an electronic version on their computer systems in their chief executive office and with backup copies kept in location other than the chief executive office.

 

8.2.2           Taxes.  If any collections received from payments made by Contract Debtors includes charges for any Taxes, Agent is authorized, in its discretion, to pay the amount thereof to the proper taxing authority for the account of such Borrower and to charge Borrowers therefor; provided, however, that neither Agent nor Lenders shall be liable for any Taxes that may be due from Borrowers or with respect to any Collateral.

 

8.2.3           Contract Verification.  Whether or not a Default or Event of Default exists, Agent shall have the right at any time, in the name of Agent, any designee of Agent or any Borrower, to verify the validity, amount or any other matter relating to any Contracts by mail, telephone or otherwise.  Borrowers shall cooperate fully with Agent in an effort to facilitate and promptly conclude any such verification process.

 

8.2.4           Maintenance of Dominion Account.  Borrowers shall maintain Dominion Accounts pursuant to lockbox or other arrangements acceptable to Agent.  Borrowers shall obtain an agreement (in form and substance satisfactory to Agent) from each lockbox servicer (if any) and Dominion Account bank, establishing Agent’s control over and Lien in the lockbox (if any) or Dominion Account, which may be exercised by Agent during any 

 

 

 

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Dominion Trigger Period, requiring immediate deposit of all remittances received in the lockbox (if any) to a Dominion Account, and waiving offset rights of such servicer or bank, except for customary administrative charges.  If a Dominion Account is not maintained with Bank of America, Agent may, during any Dominion Trigger Period, require immediate transfer of all funds in such account to a Dominion Account maintained with Bank of America.  Agent and Lenders assume no responsibility to Borrowers for any lockbox arrangement (if any) or Dominion Account, including any claim of accord and satisfaction or release with respect to any Payment Items accepted by any bank.

 

8.2.5           Proceeds of Collateral.  Borrowers shall request in writing and otherwise take all necessary steps to ensure that all payments on Contracts or otherwise relating to Collateral are made directly to a Dominion Account (or a lockbox relating to a Dominion Account, if any).  If any Borrower or its Subsidiary receives cash or Payment Items with respect to any Collateral, it shall hold same in trust for Agent and promptly (not later than the next Business Day) deposit same into a Dominion Account; provided, that payments on Securitization Contracts sold to the Securitization Subsidiary pursuant to the Permitted ABS Purchase Agreement may be remitted to and held by the Securitization Subsidiary and not subject to the requirements set forth above.

 

8.3           Administration of Inventory.

 

8.3.1           Records and Reports of Inventory.  Each Borrower shall keep accurate and complete records of its Inventory, including costs and daily withdrawals and additions, and shall submit to Agent inventory and reconciliation reports in form satisfactory to Agent, on such periodic basis as Agent may request.  Each Borrower shall conduct a physical inventory at each of its locations at least once per calendar year (and on a more frequent basis if requested by Agent when an Event of Default exists) and periodic cycle counts consistent with historical practices, and shall provide to Agent a report based on each such inventory and count promptly upon completion thereof, together with such supporting information as Agent may request.  Agent may participate in and observe each physical count.

 

8.3.2           Returns of Inventory.  No Borrower shall return any Inventory to a supplier, vendor or other Person, whether for cash, credit or otherwise, unless (a) such return is in the Ordinary Course of Business; (b) no Default, Event of Default or Overadvance exists or would result therefrom; (c) Agent is promptly notified if the aggregate Value of all Inventory returned in any month exceeds $2,500,000; and (d) any payment received by a Borrower in excess of the aggregate amount of $2,500,000 in any month for a return is promptly remitted to Agent for application to the Obligations.

 

8.3.3           Acquisition, Sale and Maintenance.  No Borrower shall acquire or accept any Inventory on consignment or approval (other than in the Ordinary Course of Business), and shall take all reasonable steps to assure that all Inventory is produced in accordance with Applicable Law. To the best of Borrowers’ knowledge, all of each Borrower’s Inventory is produced in accordance with the FLSA.  No Borrower shall sell any Inventory on consignment or approval or any other basis under which the customer may return or require a Borrower to repurchase such Inventory.  Borrowers shall use, store and maintain all Inventory with reasonable care and caution, in accordance with applicable standards of any insurance and in conformity with all Applicable Law, and shall make current rent payments (within applicable grace periods provided for in leases) at all locations where any Collateral is located.

 

 

  

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8.4           Administration of Equipment.

 

8.4.1           Records and Schedules of Equipment.  Each Borrower shall keep accurate and complete records of its Equipment, including kind, quality, quantity, cost, acquisitions and dispositions thereof, and shall submit to Agent, on such periodic basis as Agent may request, a current schedule thereof, in form satisfactory to Agent.  Promptly upon request, Borrowers shall deliver to Agent evidence of their ownership or interests in any Equipment.

 

8.4.2           Dispositions of Equipment.  No Borrower shall sell, lease or otherwise dispose of any Equipment, without the prior written consent of Agent and Required Lenders, other than (a) a Permitted Asset Disposition; and (b) replacement of Equipment that is worn, damaged or obsolete with Equipment of like function and value, if the replacement Equipment is acquired substantially contemporaneously with such disposition and is free of Liens other than Permitted Liens.

 

8.4.3           Condition of Equipment.  The Equipment is in good operating condition and repair, and all necessary replacements and repairs have been made so that the value and operating efficiency of the Equipment is preserved at all times, reasonable wear and tear excepted.  Each Borrower shall ensure that the Equipment is mechanically and structurally sound, and capable of performing the functions for which it was designed, in accordance with manufacturer specifications.  No Borrower shall permit any Equipment to become affixed to real Property unless any landlord or mortgagee delivers a Lien Waiver or an appropriate Rent and Charges Reserve has been established with respect thereto.

 

8.5           Administration of Deposit Accounts.  Schedule 8.5 sets forth all Deposit Accounts maintained by Borrowers, including all Dominion Accounts.  Each Borrower shall take all actions necessary to establish Agent’s control of each such Deposit Account (other than an account exclusively used for payroll, payroll taxes or employee benefits, or an account containing not more than $10,000 at any time).  Each Borrower shall be the sole account holder of each Deposit Account and shall not allow any other Person (other than Agent or Term Agent) to have control over a Deposit Account or any Property deposited therein.  Each Borrower shall promptly notify Agent of any opening or closing of a Deposit Account and, with the consent of Agent, will amend Schedule 8.5 to reflect same.

 

8.6           Administration of Credit Card Accounts.

 

8.6.1           Credit Card Agreements.  Schedule 8.6.1 is a list of all Credit Card Agreements as of the Closing Date.

 

8.6.2           Credit Card Processor Notifications.  Each Borrower shall deliver to Agent copies of Credit Card Processor Notifications which have been executed on behalf of such Borrower and delivered to such Borrower’s Credit Card Issuers and Credit Card Processors. Each Credit Card Processor Notification shall require the ACH or wire transfer no less frequently than daily to a Dominion Account of all payments due from Credit Card Processors or Credit Card Issuers.

 

 

  

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8.7           General Provisions.

 

8.7.1           Location of Collateral.  All tangible items of Collateral, other than Inventory in transit, shall at all times be kept by Borrowers at the business locations set forth in Schedule 8.7.1, except that Borrowers may (a) make sales or other dispositions of Collateral in accordance with Section 10.2.6; and (b) move Collateral to another location in the United States, upon 30 Business Days prior written notice to Agent.

 

8.7.2           Insurance of Collateral; Condemnation Proceeds.

 

(a)           Each Borrower shall maintain insurance with respect to the Collateral, covering casualty, hazard, theft, malicious mischief, flood and other risks, in amounts, with endorsements and with insurers (with a Best Rating of at least A7, unless otherwise approved by Agent) satisfactory to Agent.  All proceeds under each policy shall be payable to Agent.  From time to time upon request, Borrowers shall deliver to Agent the certified copies of its insurance policies and updated flood plain searches.  Unless Agent shall agree otherwise, each policy shall include satisfactory endorsements (i) showing Agent as loss payee; (ii) requiring 30 days prior written notice to Agent in the event of cancellation of the policy for any reason whatsoever, except 10 days notice shall be given for cancellation due to non-payment of premium; and (iii) specifying that the interest of Agent shall not be impaired or invalidated by any act or neglect of any Borrower or the owner of the Property, nor by the occupation of the premises for purposes more hazardous than are permitted by the policy.  If any Borrower fails to provide and pay for any insurance, Agent may, at its option, but shall not be required to, procure the insurance and charge Borrowers therefor.  Each Borrower agrees to deliver to Agent, promptly as rendered, copies of all claims reports made to insurance companies in excess of $1,000,000.  While no Event of Default exists, Borrowers may settle, adjust or compromise any insurance claim, as long as the proceeds are delivered to Agent.  If an Event of Default exists, only Agent shall be authorized to settle, adjust and compromise such claims.

 

(b)           Any proceeds of insurance (other than proceeds from workers’ compensation or D&O insurance) and any awards arising from condemnation of any Collateral shall be paid to Agent and shall be deposited in the Dominion Account.  Any such proceeds or awards that relate to Inventory shall be applied to payment of the Revolver Loans, and if a Dominion Trigger Period exists, then to any other Obligations outstanding.

 

(c)           If requested by Borrowers in writing within 15 days after Agent’s receipt of any insurance proceeds or condemnation awards relating to any loss or destruction of Equipment or Real Estate, Borrowers may use such proceeds or awards to repair or replace such Equipment or Real Estate (and until so used, the proceeds shall be held by Agent as Cash Collateral) as long as (i) no Default or Event of Default exists; (ii) such repair or replacement is promptly undertaken and concluded, in accordance with plans satisfactory to Agent; (iii) replacement buildings are of comparable size, quality and utility to the destroyed buildings; (iv) the repaired or replaced Property is free of Liens, other than Permitted Liens that are not Purchase Money Liens; (v) Borrowers comply with disbursement procedures for such repair or replacement as Agent may reasonably require; and (vi) the aggregate amount of such proceeds or awards from any single casualty or condemnation does not exceed $5,000,000.

 

 

  

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8.7.3           Protection of Collateral.  All expenses of protecting, storing, warehousing, insuring, handling, maintaining and shipping any Collateral, all Taxes payable with respect to any Collateral (including any sale thereof), and all other payments required to be made by Agent to any Person to realize upon any Collateral, shall be borne and paid by Borrowers.  Agent shall not be liable or responsible in any way for the safekeeping of any Collateral, for any loss or damage thereto (except for reasonable care in its custody while Collateral is in Agent’s actual possession), for any diminution in the value thereof, or for any act or default of any warehouseman, carrier, forwarding agency or other Person whatsoever, but the same shall be at Borrowers’ sole risk.

 

8.7.4           Defense of Title to Collateral.  Each Borrower shall at all times defend its title to Collateral and Agent’s Liens therein against all Persons, claims and demands whatsoever, except Permitted Liens.

 

8.8           Power of Attorney.  Each Borrower hereby irrevocably constitutes and appoints Agent (and all Persons designated by Agent) as such Borrower’s true and lawful attorney (and agent-in-fact) for the purposes provided in this Section.  Agent, or Agent’s designee, may, without notice and in either its or a Borrower’s name, but at the cost and expense of Borrowers:

 

(a)           Endorse a Borrower’s name on any Payment Item or other proceeds of Collateral (including proceeds of insurance) that come into Agent’s possession or control; and

 

(b)           During an Event of Default, (i) notify any Contract Debtors of the assignment of their Contracts, demand and enforce payments on Contracts, by legal proceedings or otherwise, and generally exercise any rights and remedies with respect to Contracts; (ii) settle, adjust, modify, compromise, discharge or release any claims with respect to amounts due on Contracts or other Collateral, or any legal proceedings brought to collect on Contracts or other Collateral; (iii) sell or assign any Contract and other Collateral upon such terms, for such amounts and at such times as Agent deems advisable; (iv) collect, liquidate, and receive balances in Deposit Accounts or investment accounts, and take control, in any manner, of proceeds of Collateral; (v) prepare, file and sign a Borrower’s name to a proof of claim or other document in a bankruptcy of a Contract Debtor, or to any notice, assignment or satisfaction of Lien or similar document; (vi) receive, open and dispose of mail addressed to a Borrower, and notify postal authorities to deliver any such mail to an address designated by Agent; (vii) endorse any Chattel Paper, Document, Instrument, bill of lading, or other document or agreement relating to any Contract, Inventory or other Collateral; (viii) use a Borrower’s stationery and sign its name to verifications of Contract and notices to Contract Debtors; (ix) use information contained in any data processing, electronic, or other information systems relating to Collateral; (x) make and adjust claims under insurance policies; (xi) take any action as may be necessary or appropriate to obtain payment under any letter of credit, banker’s acceptance or other instrument for which a Borrower is a beneficiary; and (xii) take all other actions as Agent deems appropriate to fulfill any Borrower’s obligations under the Loan Documents.

 

SECTION 9.      REPRESENTATIONS AND WARRANTIES

 

9.1           General Representations and Warranties.  To induce Agent and Lenders to enter into this Agreement and to make available the Revolver Commitments, Revolver Loans and Letters of Credit, Parent and each Borrower represents and warrants that:

 

9.1.1           Organization and Qualification.  Parent and its Subsidiaries are duly organized, validly existing and in good standing under the laws of the jurisdiction of their organization.  Parent and its Subsidiaries are duly qualified, authorized to do business and in good standing as a foreign corporation in each jurisdiction where failure to be so qualified could reasonably be expected to have a Material Adverse Effect.

 

 

  

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9.1.2           Power and Authority.  Each Obligor is duly authorized to execute, deliver and perform its Loan Documents.  The execution, delivery and performance of the Loan Documents have been duly authorized by all necessary action, and do not (a) require any consent or approval of any holders of Equity Interests of any Obligor, other than those already obtained; (b) contravene the Organic Documents of any Obligor; (c) violate or cause a default under any Applicable Law or Material Contract; or (d) result in or require the imposition of any Lien (other than Permitted Liens) on any Property of any Obligor.

 

9.1.3           Enforceability.  Each Loan Document is a legal, valid and binding obligation of each Obligor party thereto, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.

 

9.1.4           Capital Structure.  Schedule 9.1.4 shows, for each of Parent and its Subsidiaries, its name, its jurisdiction of organization, its authorized and issued Equity Interests, the holders of its Equity Interests, and all agreements binding on such holders with respect to their Equity Interests.  Except as disclosed on Schedule 9.1.4, in the five years preceding the Closing Date, neither Parent nor any Subsidiary has acquired any substantial assets from any other Person nor has been the surviving entity in a merger or combination.  Parent has good title to its Equity Interests in its Subsidiaries, subject only to Agent’s Lien and Term Agent’s Lien, and all such Equity Interests are duly issued, fully paid and non-assessable.  Except as set forth in Schedule 9.1.4, there are no outstanding purchase options, warrants, subscription rights, agreements to issue or sell, convertible interests, phantom rights or powers of attorney relating to Equity Interests of Parent or its Subsidiary.

 

9.1.5           Corporate Names; Locations.  During the five years preceding the Closing Date, except as shown on Schedule 9.1.5, neither Parent nor its Subsidiary has been known as or used any corporate, fictitious or trade names, has been the surviving corporation of a merger or combination, or has acquired any substantial part of the assets of any Person.  The chief executive offices and other places of business of Parent and its Subsidiaries are shown on Schedule 8.7.1.  During the five years preceding the Closing Date, no Borrower or its Subsidiary has had any other office or place of business.

 

9.1.6           Title to Properties; Priority of Liens.  Each of Parent and its subsidiaries has good and marketable title to (or valid leasehold interests in) all of its Real Estate, and good title to all of its personal Property, including all Property reflected in any financial statements delivered to Agent or Lenders, in each case free of Liens except Permitted Liens and minor defects in title to its Real Estate that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purpose.  Each of Parent and its Subsidiaries has paid and discharged all lawful claims that, if unpaid, could become a Lien on its Properties, other than Permitted Liens.  All Liens of Agent in the Collateral are duly perfected, first priority Liens, subject only to Permitted Liens that are expressly allowed to have priority over Agent’s Liens.

 

9.1.7           Financial Statements.  The consolidated and consolidating balance sheets, and related statements of income, cash flow and shareholder’s equity, of Parent and its Subsidiaries that have been and are hereafter delivered to Agent and Lenders, are prepared in accordance with GAAP, and fairly present the financial positions and results of operations of Parent and its Subsidiaries at the dates and for the periods indicated.  All 

 

 

 

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projections delivered from time to time to Agent and Lenders have been prepared in good faith, based on reasonable assumptions in light of the circumstances at such time.  Since July 31, 2010, there has been no change in the condition, financial or otherwise, of Parent or any of its Subsidiaries (when taken as a whole) that could reasonably be expected to have a Material Adverse Effect.  No financial statement delivered to Agent or Lenders at any time contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make such statement not materially misleading.  Each Borrower and its Subsidiaries are Solvent.

 

9.1.8           Surety Obligations.  Neither Parent nor any of its Subsidiaries are obligated as surety or indemnitor under any bond or other contract that assures payment or performance of any obligation of any Person, except as permitted hereunder.

 

9.1.9           Taxes.  Parent and each of its Subsidiaries have filed all federal, state and local tax returns and other reports that it is required by law to file, and has paid, or made provision for the payment of, all Taxes upon it, its income and its Properties that are due and payable, except to the extent being Properly Contested.  The provision for Taxes on the books of each Parent and its Subsidiaries is adequate for all years not closed by applicable statutes, and for its current Fiscal Year.

 

9.1.10           Brokers.  There are no brokerage commissions, finder’s fees or investment banking fees payable in connection with any transactions contemplated by the Loan Documents.

 

9.1.11           Intellectual Property.  Each of Parent and its Subsidiaries own or has the lawful right to use all Intellectual Property necessary for the conduct of its business, without conflict with any rights of others except for any such conflict of infringement that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.  There is no pending or, to Parent’s or any Borrower’s knowledge, threatened Intellectual Property Claim with respect to Parent, any of its Subsidiaries or any of their Property (including any Intellectual Property).  Except as disclosed on Schedule 9.1.11, neither Parent nor its Subsidiaries pays or owes any Royalty or other compensation to any Person with respect to any Intellectual Property.  All Intellectual Property owned, used or licensed by, or otherwise subject to any interests of, Parent or its Subsidiaries is shown on Schedule 9.1.11.

 

9.1.12           Governmental Approvals.  Each of Parent and its Subsidiaries have, is in compliance with, and is in good standing with respect to, all Governmental Approvals necessary to conduct its business and to own, lease and operate its Properties.  To the best of each Borrowers’ knowledge, all necessary import, export or other licenses, permits or certificates for the import or handling of any goods or other Collateral have been procured and are in effect, and Parent and its Subsidiaries have complied with all foreign and domestic laws with respect to the shipment and importation of any goods or Collateral, except where noncompliance could not reasonably be expected to have a Material Adverse Effect.

 

9.1.13           Compliance with Laws.  Each of Parent and its Subsidiaries have duly complied, and its Properties and business operations are in compliance, in all material respects with all Applicable Law (including all consumer credit disclosure laws and regulations), except where noncompliance could not reasonably be expected to have a Material Adverse Effect.  There have been no citations, notices or orders of material noncompliance issued to Parent or its Subsidiaries under any Applicable Law.  To the best of Borrowers’ knowledge no Inventory has been produced in violation of the FLSA.

 

 

  

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9.1.14           Compliance with Environmental Laws.  Except as disclosed on Schedule 9.1.14, neither Parent’s nor its Subsidiary’s past or present operations, Real Estate or other Properties are subject to any federal, state or local investigation to determine whether any remedial action is needed to address any environmental pollution, hazardous material or environmental clean-up.  Neither Parent nor its Subsidiaries have received any Environmental Notice.  Neither Parent nor its Subsidiaries have any contingent liability with respect to any Environmental Release, environmental pollution or hazardous material on any Real Estate now or previously owned, leased or operated by it.

 

9.1.15           Burdensome Contracts.  Neither Parent nor its Subsidiaries are a party or subject to any contract, agreement or charter restriction that could reasonably be expected to have a Material Adverse Effect.  Neither Parent nor its Subsidiaries are party or subject to any Restrictive Agreement, except as shown on Schedule 9.1.15.  No such Restrictive Agreement prohibits the execution, delivery, or performance of any Loan Document by an Obligor.

 

9.1.16           Litigation.  Except as shown on Schedule 9.1.16, there are no proceedings or investigations pending or, to Parent’s or any Borrower’s knowledge, threatened against Parent or its Subsidiaries, or any of their businesses, operations, Properties, prospects or conditions, that (a) relate to any Loan Documents or transactions contemplated thereby; or (b) could reasonably be expected to have a Material Adverse Effect if determined adversely to Parent or its Subsidiaries.  Except as shown on such Schedule, no Obligor has a Commercial Tort Claim (other than, as long as no Default or Event of Default exists, a Commercial Tort Claim for less than $100,000).  Neither Parent nor its Subsidiaries are in default with respect to any order, injunction or judgment of any Governmental Authority.

 

9.1.17           No Defaults.  No event or circumstance has occurred or exists that constitutes a Default or Event of Default.  Neither Parent nor its Subsidiaries are in default, and no event or circumstance has occurred or exists that with the passage of time or giving of notice would constitute a default, under any Material Contract or in the payment of any Borrowed Money.  There is no basis upon which any party (other than a Parent or its Subsidiaries) could terminate a Material Contract prior to its scheduled termination date.

 

9.1.18           ERISA.  Except as disclosed on Schedule 9.1.18:

 

(a)           Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code, and other federal and state laws.  Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the knowledge of Parent and Borrowers, nothing has occurred which would prevent, or cause the loss of, such qualification.  Each Obligor and ERISA Affiliate has made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

 

(b)           There are no pending or, to the knowledge of Parent and Borrowers, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect.  There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted in or could reasonably be expected to have a Material Adverse Effect.

 

 

  

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(c)           (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) no Obligor or ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) no Obligor or ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) no Obligor or ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA.

 

(d)           With respect to any Foreign Plan, (i) all employer and employee contributions required by law or by the terms of the Foreign Plan have been made, or, if applicable, accrued, in accordance with normal accounting practices; (ii) the fair market value of the assets of each funded Foreign Plan, the liability of each insurer for any Foreign Plan funded through insurance, or the book reserve established for any Foreign Plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligations with respect to all current and former participants in such Foreign Plan according to the actuarial assumptions and valuations most recently used to account for such obligations in accordance with applicable generally accepted accounting principles; and (iii) it has been registered as required and has been maintained in good standing with applicable regulatory authorities.

 

9.1.19           Trade Relations.  There exists no actual or threatened termination, limitation or modification of any business relationship between Parent or its Subsidiaries and any customer or supplier, or any group of customers or suppliers, who individually or in the aggregate are material to the business of Parent or its Subsidiaries.  There exists no condition or circumstance that could reasonably be expected to impair the ability of Parent or its Subsidiaries to conduct its business at any time hereafter in substantially the same manner as conducted on the Closing Date.

 

9.1.20           Labor Relations.  Except as described on Schedule 9.1.20, neither Parent nor its Subsidiaries are party to or bound by any collective bargaining agreement, management agreement or consulting agreement.  There are no material grievances, disputes or controversies with any union or other organization of Parent or its Subsidiaries’ employees, or, to any Borrower’s knowledge, any asserted or threatened strikes, work stoppages or demands for collective bargaining.

 

9.1.21           Payable Practices.  Neither Parent nor its Subsidiaries shall make any change in its historical accounts payable practices from those in effect on the Closing Date other than any changes made in the Ordinary Course of Business.

 

9.1.22           Not a Regulated Entity.  No Obligor is (a) an “investment company” or a “person directly or indirectly controlled by or acting on behalf of an investment company” within the meaning of the Investment Company Act of 1940; or (b) subject to regulation under the Federal Power Act, the Interstate Commerce Act, any public utilities code or any other Applicable Law regarding its authority to incur Debt.

 

 

  

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9.1.23           Margin Stock.  Neither Parent nor its Subsidiaries are engaged, principally or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock.  No Revolver Loan proceeds or Letters of Credit will be used by Borrowers to purchase or carry, or to reduce or refinance any Debt incurred to purchase or carry, any Margin Stock or for any related purpose in any manner that would result in a violation of Regulations T, U or X of the Board of Governors.

 

9.1.24           Excluded Subsidiaries.  At all times after the consummation of the Intercompany Assignment Agreements the Excluded Subsidiaries shall conduct no business and have no material assets.

 

9.2           Complete Disclosure.  No Loan Document contains any untrue statement of a material fact, nor fails to disclose any material fact necessary to make the statements contained therein not materially misleading.  There is no fact or circumstance that any Obligor has failed to disclose to Agent in writing that could reasonably be expected to have a Material Adverse Effect.

 

SECTION 10.      COVENANTS AND CONTINUING AGREEMENTS

 

10.1           Affirmative Covenants.  As long as any Revolver Commitments or Obligations are outstanding, Parent and each Borrower shall, and shall cause each of their Subsidiaries to:

 

10.1.1           Inspections; Appraisals.

 

(a)           Permit Agent from time to time, subject (except when a Default or Event of Default exists) to reasonable notice and normal business hours, to visit and inspect the Properties of any Parent or its Subsidiaries, inspect, audit and make extracts from Parent’s or its Subsidiaries’ books and records, and discuss with its officers, employees, agents, advisors and independent accountants Parent’s or such Subsidiary’s business, financial condition, assets, prospects and results of operations.  Lenders may participate in any such visit or inspection, at their own expense.  Neither Agent nor any Lender shall have any duty to Parent or any Borrower to make any inspection, nor to share any results of any inspection, appraisal or report with Parent or any Borrower.  Borrowers acknowledge that all inspections, appraisals and reports are prepared by Agent and Lenders for their purposes, and Parent and Borrowers shall not be entitled to rely upon them.

 

(b)           Reimburse Agent for all charges, costs and expenses of Agent in connection with (i) examinations of any Obligor’s books and records or any other financial or Collateral matters as Agent deems appropriate, up to 2 times per Loan Year; and (ii) appraisals of Inventory up to 2 times per Loan Year (it being understood that Agent shall require at least 2 examinations per year pursuant to clause (i) above and at least 2 appraisals of Inventory per year pursuant to clause (ii) above); provided, however, that if an examination or appraisal is initiated during an Increased Reporting Period, all charges, costs and expenses therefor shall be reimbursed by Borrowers without regard to such limits.  Subject to and without limiting the foregoing, Parent and Borrowers specifically agree to pay Agent’s then standard charges for each day that an employee of Agent or its Affiliates is engaged in any examination activities, and shall pay the standard charges of Agent’s internal appraisal group.  This Section shall not be construed to limit Agent’s right to conduct examinations or to obtain appraisals at any time in its discretion, nor to use third parties for such purposes.

 

 

  

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10.1.2           Financial and Other Information.  Keep adequate records and books of account with respect to its business activities, in which proper entries are made in accordance with GAAP reflecting all financial transactions; and furnish to Agent and Lenders (the documents required to be delivered pursuant to clauses (a), (b) and (h) below shall be deemed to have been delivered on the date on which such documents are posted on the Securities and Exchange Commission’s website at www.sec.gov and Borrowers have given notice to Agent of such posting):

 

(a)           as soon as available, and in any event no later than the earlier of (i) the date Parent files its 10K with the Securities and Exchange Commission, or (ii) 90 days after the close of each Fiscal Year, balance sheets as of the end of such Fiscal Year and the related statements of income, cash flow and shareholders’ equity for such Fiscal Year, on a consolidated basis for Parent and its Subsidiaries, which consolidated statements shall be audited and certified (without qualification) by a firm of independent certified public accountants of recognized standing selected by Parent and acceptable to Agent, and shall set forth in comparative form corresponding figures for the preceding Fiscal Year and other information acceptable to Agent;

 

(b)           as soon as available, and in any event no later than the earlier of (i) the date Parent files its 10Q with the Securities and Exchange Commission, or (ii) 45 days after the end of each Fiscal Quarter, unaudited balance sheets as of the end of such Fiscal Quarter and the related statements of income and cash flow for such Fiscal Quarter and for the portion of the Fiscal Year then elapsed, on a consolidated basis for Parent and its Subsidiaries, setting forth in comparative form corresponding figures for the preceding Fiscal Year and certified by the chief financial officer of Borrower Agent as prepared in accordance with GAAP and fairly presenting the financial position and results of operations for such Fiscal Quarter and period, subject to normal year end adjustments and the absence of footnotes;

 

(c)           as soon as available, and in any event within 30 days after the end of each month that is not the last month of a Fiscal Quarter, internal management financial statements (balance sheet, statement of income, and cash flow statement) as of the end of such month, on a consolidated basis for Parent and its Subsidiaries, setting forth in comparative form corresponding figures for (i) the preceding Fiscal Year and (ii) such period set forth in the projections delivered pursuant to Section 10.1.2(f) hereof, in each case on a month-to-date and year-to-date basis with respect to profit and loss and cash flow statements, in each case certified by the chief financial officer of Borrower Agent as prepared in accordance with its normal internal, interim reporting practices;

 

(d)           within the time frame specified for the delivery of financial statements under clauses (a)(ii), (b)(ii) and (c) above, or more frequently if requested by Agent while a Default or Event of Default exists, a Compliance Certificate executed by the chief financial officer or treasurer of Borrower Agent;

 

(e)           not later than 30 days after receipt thereof by Borrowers, copies of all management letters (if any) and other material reports submitted to Borrowers by their accountants in connection with such financial statements, if any;

 

(f)           not later than 30 days after the commencement of each Fiscal Year, preliminary projections of Parent’s consolidated balance sheets, results of operations, cash flow and Availability for such Fiscal Year, month by month, and not later than 60 days after the commencement of each Fiscal Year, final projections of Parent’s consolidated balance sheets, results of operations, cash flow and Availability for such Fiscal Year, month by month, approved by the Parent’s board of directors or other governing body;

 

 

  

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(g)           at Agent’s request, a listing of each Borrower’s trade payables, specifying the trade creditor and balance due, and a detailed trade payable aging, all in form satisfactory to Agent;

 

(h)           promptly after the sending or filing thereof, copies of any proxy statements, financial statements or reports that Parent or any Borrower has made generally available to its shareholders; copies of any regular, periodic and special reports or registration statements or prospectuses that Parent or any Borrower files with the Securities and Exchange Commission or any other Governmental Authority, or any securities exchange; and copies of any press releases or other statements made available by Parent or a Borrower to the public concerning material changes to or developments in the business of Parent or such Borrower;

 

(i)           promptly after the sending or filing thereof, copies of any annual report to be filed in connection with each Plan or Foreign Plan;

 

(j)           as soon as available, and in any event no later than 45 days after the end of each Fiscal Quarter, Borrower’s “data tape” in form and substance reasonably satisfactory to Agent and Required Lenders; and

 

(k)           such other reports and information (financial or otherwise) as Agent may reasonably request (at its reasonable discretion or at the reasonable request of any Lender) from time to time in connection with any Collateral or any Borrower’s, its Subsidiary’s or other Obligor’s financial condition or business.

 

10.1.3           Notices.  Notify Agent and Lenders in writing, promptly after Parent or a Borrower’s obtaining knowledge thereof, of any of the following that affects an Obligor:  (a) the threat or commencement of any proceeding or investigation, whether or not covered by insurance, if an adverse determination could have a Material Adverse Effect; (b) any pending or threatened material labor dispute, strike or walkout, or the expiration of any material labor contract; (c) any default under or termination of a Material Contract; (d) the existence of any Default or Event of Default; (e) any judgment in an amount exceeding $1,000,000; (f) the assertion of any Intellectual Property Claim, if an adverse resolution could have a Material Adverse Effect; (g) any violation or asserted violation of any Applicable Law (including ERISA, OSHA, FLSA, or any Environmental Laws), if an adverse resolution could have a Material Adverse Effect; (h) any Environmental Release by an Obligor or on any Property owned, leased or occupied by an Obligor; or receipt of any Environmental Notice; (i) the occurrence of any material ERISA Event; (j) the discharge of or any withdrawal or resignation by Borrowers’ independent accountants; (k) any opening of a new office or place of business, at least 30 days prior to such opening; (l) any default under the Term Loan Agreement or the Term Loan Documents, or (m) together with the delivery of the subsequent Compliance Certificate, the filing (or authorization by any Obligor to any party other than Agent for the filing thereof) of any financing statement (including any amendment thereto or continuation thereof), mortgage or other lien filing (including any federal U.S. Copyright Office or U.S. Patent and Trademark Office intellectual property lien filing).

 

10.1.4           Landlord and Storage Agreements.  Upon request, provide Agent with copies of all existing agreements, and promptly after execution thereof provide Agent with copies of all future agreements, between an Obligor and any landlord, warehouseman, processor, shipper, bailee or other Person that owns any premises at which any Collateral may be kept or that otherwise may possess or handle any Collateral.

 

 

  

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10.1.5           Compliance with Laws.  Comply with all Applicable Laws, including ERISA, Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws, and laws regarding collection and payment of Taxes, and maintain all Governmental Approvals necessary to the ownership of its Properties or conduct of its business, unless failure to comply (other than failure to comply with Anti-Terrorism Laws) or maintain could not reasonably be expected to have a Material Adverse Effect.  Without limiting the generality of the foregoing, if any Environmental Release occurs at or on any Properties of Parent or its Subsidiaries, it shall act promptly and diligently to investigate and report to Agent and all appropriate Governmental Authorities the extent of, and to make appropriate remedial action to eliminate, such Environmental Release, whether or not directed to do so by any Governmental Authority.

 

10.1.6           Taxes.  Pay and discharge all Taxes prior to the date on which they become delinquent or penalties attach, unless such Taxes are being Properly Contested.

 

10.1.7           Insurance.  In addition to the insurance required hereunder with respect to Collateral, maintain insurance with insurers (with a Best Rating of at least A7, unless otherwise approved by Agent) satisfactory to Agent, with respect to the Properties and business of Borrowers and its Subsidiaries of such type (including product liability, workers’ compensation, larceny, embezzlement, or other criminal misappropriation insurance), in such amounts, and with such coverages and deductibles as are customary for companies similarly situated.

 

10.1.8           Licenses.  Keep each License affecting any Collateral (including the manufacture, distribution or disposition of Inventory) or any other material Property of Borrowers and its Subsidiaries in full force and effect; promptly notify Agent of any proposed modification to any such License, or entry into any new License, in each case at least 30 days prior to its effective date; pay all Royalties when due; and notify Agent of any default or breach asserted by any Person to have occurred under any License.

 

10.1.9           Future Subsidiaries.  Promptly notify Agent upon any Person becoming a Subsidiary of Parent and, if such Person is neither a Foreign Subsidiary nor a Securitization Subsidiary, cause it to guaranty the Obligations in a manner satisfactory to Agent, and to execute and deliver such documents, instruments and agreements and to take such other actions as Agent shall require to evidence and perfect a Lien in favor of Agent (for the benefit of Secured Parties) on all assets of such Person, including delivery of such legal opinions, in form and substance satisfactory to Agent, as it shall deem appropriate.

 

10.1.10                      [Reserved]

 

10.1.11                      Service Maintenance Plans.  To the extent that Borrowers finance so-called “service maintenance plans,” Borrowers shall ensure that the cost of such plans are disclosed to the Contract Debtors and such plans are in compliance with all applicable consumer credit laws, including any and all special insurance laws relating thereto.

 

 

  

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10.1.12                      Charge-Off Policy.  Borrowers shall establish and implement, in a manner satisfactory to Agent, a policy for charging off the unpaid balance of its delinquent Contracts as set forth in the Credit and Collections Guidelines.  Borrowers shall not in any way modify such policy as in effect on the Closing Date without providing 10 Business Days prior written notice to Agent of such modification and, if such modification is a material modification, obtaining Agent’s consent to such material modification, which consent will not be unreasonably withheld.

 

10.1.13                      Loss Reserve.  Borrowers shall maintain, on a consolidated basis, loss reserves at all times during the term of the Agreement in amounts required to be maintained under GAAP.

 

10.1.14                      Dissolution of Excluded Subsidiaries.  Within 15 days after the Closing Date, Parent and Borrowers shall file all of the necessary documents with the applicable Governmental Authority to cause each of the Excluded Subsidiaries to be dissolved and shall deliver evidence of such dissolution to Agent promptly after receipt thereof from such Governmental Authority.  The Excluded Subsidiaries shall not hold any assets or conduct any business after the Closing Date.

 

10.2           Negative Covenants.  As long as any Revolver Commitments or Obligations are outstanding, Parent and each Borrower shall not, and shall not permit any of its Subsidiaries to:

 

10.2.1           Permitted Debt.  Create, incur, guarantee or suffer to exist any Debt, except:

 

(a)           the Obligations;

 

(b)           Subordinated Debt;

 

(c)           Permitted Purchase Money Debt;

 

(d)           Borrowed Money (other than the Obligations, the obligations under the Term Loan Documents, Subordinated Debt and Permitted Purchase Money Debt), but only to the extent outstanding on the Closing Date and not satisfied with proceeds of the initial Revolver Loans;

 

(e)           Bank Product Debt;

 

(f)           Debt that is in existence when a Person becomes a Subsidiary of Parent or that is secured by an asset when acquired by Parent or its Subsidiaries, as long as such Debt was not incurred in contemplation of such Person becoming a Subsidiary of Parent or such acquisition, and does not exceed $15,000,000 in the aggregate at any time;

 

(g)           Permitted Contingent Obligations;

 

(h)           Debt owed to a Flooring Lender, provided that such Flooring Lender has entered into a Flooring Intercreditor Agreement with respect to such Debt;

 

(i)           (x) Debt incurred for the acquisition of Real Estate by a Borrower so long as the purchase price of such Real Estate does not exceed the fair market value of the Real Estate at the time of its acquisition and the Debt incurred in connection therewith does not exceed 100% of the purchase price of such Real Estate, and (y) Debt secured solely by Real Estate owned by a Borrower as of the Closing Date incurred to refinance a portion of the Term Loan Facility; provided, that (i) the amount of Net Proceeds received by such Borrower with respect to such Debt shall be not less than the amount advanced by the Term Lenders under the Term Loan Borrowing Base with 

 

 

 

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respect to any Real Estate listed on Schedule 7.3 being refinanced, (ii) the Net Proceeds received by Borrowers with respect to such Debt to refinance any Real Estate listed on Schedule 7.3 shall be applied to prepay the Term Loan in accordance with Section 5.2.2 of the Term Loan Agreement (together with any prepayment fee then due, if any, under Section 5.2.3 of the Term Loan Agreement), and (iii) the Lien of the Mortgage held by Agent on such Real Estate shall be subordinated to the Lien of the Lender holding such Debt; provided further, that the aggregate outstanding Debt permitted under this subsection (i) does not at any time exceed, excluding any advances under the Term Loan against such Real Estate, (A) $10,000,000 plus (B) such additional amount incurred so long as no Default or Event of Default has occurred and is continuing and Availability on a pro forma basis after giving effect to the incurrence of such Debt and on a projected basis for the six months following the incurrence of such Debt is not less than $75,000,000, provided further, that once the obligations under the Term Loan Facility are paid in full and the Term Loan Facility is terminated, the only limitation on the amount of Debt permitted under this subsection (i) shall be to require that Debt under this subsection (i) not exceed $25,000,000 outstanding at any time.

 

(j)           Debt incurred under the Term Loan Facility and otherwise incurred under the Term Loan Documents;

 

(k)           Refinancing Debt as long as each Refinancing Condition is satisfied;

 

(l)           Debt incurred in connection with the purchase of Contracts and related assets by CCI from CCCI as evidence by the CCCI Originator Notes;

 

(m)           Debt incurred in connection with the purchase of Contracts and related assets by CCI from CAI as evidence by the CCI Originator Notes;

 

(n)           Permitted ABS Facility so long as prior to entering into such facility Agent and Required Lenders have approved the structure and documents related to such facility and the Permitted ABS Agent has entered into the Permitted ABS Intercreditor Agreement;

 

(o)           Debt incurred under the Permitted ABS Originator Notes;

 

(p)           Debt incurred in connection with the purchase of Contracts and related assets by CCI from an Exlcuded Subsidiary as evidenced by the CFII Originator Note; and

 

(q)           Debt that is not included in any of the preceding clauses of this Section, is not secured by a Lien and does not exceed $10,000,000 in the aggregate at any time.

 

10.2.2           Permitted Liens.  Create or suffer to exist any Lien upon any of its Property, except the following (collectively, “Permitted Liens”):

 

(a)           Liens in favor of Agent;

 

(b)           Purchase Money Liens securing Permitted Purchase Money Debt;

 

(c)           Liens for Taxes not yet due or being Properly Contested;

 

 

  

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(d)           statutory Liens (other than Liens for Taxes or imposed under ERISA) arising in the Ordinary Course of Business, but only if (i) payment of the obligations secured thereby is not yet due or is being Properly Contested, and (ii) such Liens do not materially impair the value or use of the Property or materially impair operation of the business of Parent or its Subsidiaries;

 

(e)           Liens incurred or deposits made in the Ordinary Course of Business to secure the performance of tenders, bids, leases, contracts (except those relating to Borrowed Money), statutory obligations and other similar obligations, or arising as a result of progress payments under government contracts, as long as such Liens are at all times junior to Agent’s Liens;

 

(f)           Liens arising in the Ordinary Course of Business that are subject to Lien Waivers;

 

(g)           Liens arising by virtue of a judgment or judicial order against Parent or its Subsidiaries, or any Property of Parent or its Subsidiaries, as long as such Liens are (i) in existence for less than 20 consecutive days or being Properly Contested, and (ii) at all times junior to Agent’s Liens;

 

(h)           easements, rights-of-way, restrictions, covenants or other agreements of record, and other similar charges or encumbrances on Real Estate, that do not secure any monetary obligation and do not interfere with the Ordinary Course of Business;

 

(i)           normal and customary rights of setoff upon deposits in favor of depository institutions, and Liens of a collecting bank on Payment Items in the course of collection;

 

(j)           Liens in favor of a Flooring Lender so long as such Liens do not attach to any assets of a Borrower other than the Inventory floored by such Flooring Lender;

 

(k)           Liens securing only the Real Estate owned by a Borrower  to secure Debt permitted under Section 10.2.1(i);

 

(l)           existing Liens shown on Schedule 10.2.2;

 

(m)           Liens on the Equity Interests of Parent which are held by Parent, to the extent such Equity Interests are deemed to be Margin Stock;

 

(n)           Liens on the Securitized Contracts in favor of the Permitted ABS Agent and subject to the Permitted ABS Intercreditor Agreement;

 

(o)           Liens (subject to the Intercreditor Agreement) in favor of Term Agent securing the obligations under the Term Loan Documents and any Refinancing Debt or Liens solely on Real Estate set forth on Schedule 7.3 in connection with a refinancing of the Term Loan permitted pursuant to clause (i) of Section 10.2.1;

 

(p)           rights of CCI in the Contracts purchased from CCCI pursuant to the CCI Receivables Purchase Agreement and evidenced by a UCC-1 Financing Statement naming CCI as a secured party and CCCI as debtor; provided, that such rights are an ownership right and not a Lien; and

 

 

  

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(q)           rights of CAI in the Contracts purchased from CCCI pursuant to the CAI Receivables Purchase Agreement and evidenced by a UCC-1 Financing Statement naming CAI as a secured party and CCCI as debtor; provided, that such rights are an ownership right and not a Lien.

 

10.2.3           Capital Expenditures.  Make Capital Expenditures (net of any net proceeds from the sale of any Borrower’s fixed assets) in excess of $22,000,000 in the aggregate during any 12-month period, measured as at the end of each Fiscal Quarter.

 

10.2.4           Distributions; Upstream Payments.  Declare or make any Distributions, except Upstream Payments and Permitted Distributions; or create or suffer to exist any encumbrance or restriction on the ability of a Subsidiary of Parent to make any Upstream Payment, except for restrictions under the Loan Documents, the Term Loan Documents, under Applicable Law or in effect on the Closing Date as shown on Schedule 9.1.15.

 

10.2.5           Restricted Investments.  Make any Restricted Investment.

 

10.2.6           Disposition of Assets.  Make any Asset Disposition, except a Permitted Asset Disposition, a disposition of Equipment under Section 8.4.2, a transfer of Property by an Obligor of its Subsidiary to a Borrower, or a disposition of Margin Stock by Parent.

 

10.2.7           Loans.  Make any loans or other advances of money to any Person, except (a) advances to an officer or employee for salary, travel expenses, commissions and similar items in the Ordinary Course of Business; (b) prepaid expenses and extensions of trade credit made in the Ordinary Course of Business; (c) deposits with financial institutions permitted hereunder; (d) as long as no Default or Event of Default exists, intercompany loans by a Borrower to another Borrower; (e) loans made by a Borrower to a Contract Debtor pursuant to a Contract; (f) loans made under the CCI Originator Notes and CCCI Originator Notes, and (g) loans made under the ABS Originator Notes.

 

10.2.8           Restrictions on Payment of Certain Debt.

 

(a)           Make any payments (whether voluntary or mandatory, or a prepayment, redemption, repurchase, retirement, defeasance or acquisition) with respect to (i) any Subordinated Debt, except regularly scheduled payments of principal, interest and fees, but only to the extent permitted under any subordination agreement relating to such Debt (and a Senior Officer of Borrower Agent shall certify to Agent, not less than five Business Days prior to the date of payment, that all conditions under such agreement have been satisfied); or (ii) any Borrowed Money (other than the Obligations and obligations under the Term Loan Documents) prior to its due date under the agreements evidencing such Debt as in effect on the Closing Date (or as amended thereafter with the consent of Agent and Required Lenders).

 

(b)           Make (1) any voluntary prepayment with respect to the Term Loan (other than in connection with a refinancing permitted under Section 10.2.1), unless in each case, immediately prior to and after giving effect to any such voluntary prepayment (x) no Event of Default exists and (y) Availability exceeds $60,000,000, or (2) any mandatory prepayment with respect to the Term Loan other than those set forth in Section 5.2.2 of the Term Loan Agreement.

 

 

  

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10.2.9           Fundamental Changes.  Merge, combine or consolidate with any Person, or liquidate, wind up its affairs or dissolve itself, in each case whether in a single transaction or in a series of related transactions, except for (x) mergers or consolidations of a wholly-owned Subsidiary with another wholly-owned Subsidiary or into a Borrower and (y) dissolution of the Excluded Subsidiaries; change its name or conduct business under any fictitious name; change its tax, charter or other organizational identification number; or change its form or state of organization.

 

10.2.10                      Subsidiaries.  Form or acquire any Subsidiary after the Closing Date, except in accordance with Sections 10.1.9 and 10.2.5; or permit any existing Subsidiary to issue any additional Equity Interests except director’s qualifying shares.

 

10.2.11                      Organic Documents.  Amend, modify or otherwise change any of its Organic Documents as in effect on the Closing Date except in the Ordinary Course of Business and in a manner not adverse to Agent or Lenders.

 

10.2.12                      Tax Consolidation.  File or consent to the filing of any consolidated income tax return with any Person other than Borrowers and its Subsidiaries.

 

10.2.13                      Accounting Changes.  Make any material change in accounting treatment or reporting practices, except as required by GAAP and in accordance with Section 1.2; or change its Fiscal Year.

 

10.2.14                      Restrictive Agreements.  Become a party to any Restrictive Agreement, except a Restrictive Agreement (a) in effect on the Closing Date; (b) relating to secured Debt permitted hereunder, as long as the restrictions apply only to collateral for such Debt; or (c) constituting customary restrictions on assignment in leases and other contracts.

 

10.2.15                      Hedging Agreements.  Enter into any Hedging Agreement, except to hedge risks arising in the Ordinary Course of Business and not for speculative purposes.

 

10.2.16                      Conduct of Business.  Engage in any business, other than its business as conducted on the Closing Date and any activities incidental thereto.

 

10.2.17                      Affiliate Transactions.  Enter into or be party to any transaction with an Affiliate, except (a) transactions contemplated by the Loan Documents; (b) payment of reasonable compensation to officers and employees for services actually rendered, and loans and advances permitted by Section 10.2.7; (c) payment of customary directors’ fees and indemnities; (d) transactions solely among Borrowers; (e) transactions with Affiliates that were consummated prior to the Closing Date, as shown on Schedule 10.2.17; (f) transactions with Affiliates in the Ordinary Course of Business, upon fair and reasonable terms fully disclosed to Agent and no less favorable than would be obtained in a comparable arm’s-length transaction with a non-Affiliate; and (g) entry into the Permitted ABS Purchase Agreement, the Contract Allocation Agreement and Permitted ABS Originator Notes and all transactions contemplated thereunder.

 

10.2.18                      Plans.  Become party to any Multiemployer Plan or Foreign Plan, other than any in existence on the Closing Date.

 

10.2.19                      Amendments to Subordinated Debt/Term Loan Documents.

 

 

  

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(a)           Amend, supplement or otherwise modify any document, instrument or agreement relating to any Subordinated Debt, if, in each case, such modification (a) increases the principal balance of such Debt, or increases any required payment of principal or interest; (b) accelerates the date on which any installment of principal or any interest is due, or adds any additional redemption, put or prepayment provisions; (c) shortens the final maturity date or otherwise accelerates amortization; (d) increases the interest rate; (e) increases or adds any fees or charges; (f) modifies any covenant in a manner or adds any representation, covenant or default that is more onerous or restrictive in any material respect for Parent or its Subsidiaries, or that is otherwise materially adverse to Parent, any of its Subsidiaries or Lenders; or (g) results in the Obligations not being fully benefited by the subordination provisions thereof.

 

(b)           Amend, supplement or otherwise modify any Term Loan Document, except as set forth in the Intercreditor Agreement.

 

10.2.20                      Credit Card Agreements.  No Borrower shall enter into any Credit Card Agreements other than the ones expressly contemplated in Section 8.6.1.

 

10.2.21                      Amendment to Permitted ABS Documents.  Permit any amendment, modification or other change in the Permitted ABS Documents or any related instrument or agreement, if it results in any covenants, terms or conditions that are more restrictive or burdensome for the Borrowers than those in effect as of the date of this Agreement.  Borrowers shall promptly provide written notice of any such amendments to the Agent.

 

10.3           Financial Covenants.  As long as any Revolver Commitments or Obligations are outstanding, Parent shall, on a consolidated basis with its Subsidiaries:

 

10.3.1           Minimum Fixed Charge Coverage Ratio.  Maintain a Fixed Charge Coverage Ratio at least equal to 1.10:1.00 for the month ending October 31, 2010 and each month thereafter, in each case measured monthly as at the last day of each month on a trailing twelve month basis; provided, that that the Fixed Charge Coverage Ratio shall be determined quarterly, measured as of the last day of each Fiscal Quarter for the most recently ended four Fiscal Quarters, after all obligations under the Term Loan Facility have been terminated.

 

10.3.2           Maximum Leverage Ratio.  Maintain Leverage Ratio not greater than 2.00:1.00 for the Fiscal Quarter ending October 31, 2010 and each Fiscal Quarter thereafter, measured as of the last day of each Fiscal Quarter.

 

10.3.3           Minimum Availability.  Maintain Availability of not less than $25,000,000 at all times; provided, that this financial covenant shall be applicable only so long as any obligations under the Term Loan Facility remain outstanding.

 

10.4           Curative Equity.

 

10.4.1           Subject to the limitations set forth in Section 10.4.6, Borrowers may cure an Event of Default arising out of a breach of any of the financial covenants set forth in Sections 10.3.1 and 10.3.2 (the “Specified Financial Covenants”) (as the case may be) by way of an investment of Curative Equity prior to the date on which the Compliance Certificate is delivered to Agent pursuant to Section 10.1.2(d) in respect of the month or Fiscal Quarter (as the case may be) with respect to which any such breach occurred; provided, that Borrowers’ right to so cure an Event of Default shall be contingent on the timely delivery of such Compliance Certificate as required under Section 10.1.2(d).

 

 

  

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10.4.2           Borrowers shall promptly notify Agent of their receipt of any proceeds of Curative Equity and shall immediately apply the same to the payment of the Obligations in the manner specified in Section 5.3.

 

10.4.3           Subject to the limitations set forth in Section 10.4.6, any investment of Curative Equity shall be in an amount that is sufficient to cause Parent and its Subsidiaries to be in compliance with all of the Specified Financial Covenants as at the last day of the most recently ended month or Fiscal Quarter (as the case may be), calculated for such purpose as if such amount were additional EBITDAR and increase in Tangible Net Worth, and a decrease in Total Liabilities, as necessary, of Parent and its Subsidiaries as at such date and had been included in the financial calculations of Parent and its Subsidiaries on such date.

 

10.4.4           In the Compliance Certificate delivered pursuant to Section 10.1.2(d) in respect of the month end or Fiscal Quarter end (as the case may be) on which Curative Equity is used to cure any breach of the Specified Financial Covenants, Borrowers shall (i) include evidence of its receipt of Curative Equity proceeds, and (ii) set forth a calculation of the financial results and balance sheet of Parent and its Subsidiaries as at such month end or Fiscal Quarter end (as the case may be) (including for such purposes the proceeds of such Curative Equity as either deemed EBITDAR for such month end or Fiscal Quarter end (as the case may be) and the three following month end or Fiscal Quarter end (as the case may be), or increased Tangible Net Worth and decreased Total Liabilities for such month end or Fiscal Quarter end (as the case may be), as if received on such date), which shall confirm that on a pro forma basis taking into account the application of Curative Equity proceeds, Parent and its Subsidiaries would have been in compliance with the Specified Financial Covenants  (as at such date).

 

10.4.5           Upon delivery of a Compliance Certificate pursuant to Section 10.1.2(d) conforming to the requirements of this Section, any Event of Default that is continuing from a breach of any of the Specified Financial Covenants shall be deemed cured with no further action required by the Lenders.  In the event Borrowers do not cure all financial covenant violations as provided in this Section 10.4, the existing Event of Default shall continue unless waived by the Required Lenders in writing.

 

10.4.6           Notwithstanding the foregoing, Borrowers’ rights under this Section 10.4 may (i) be exercised not more than one time during the term of this Agreement, (ii) not be exercised in an amount less than $1,000,000 or greater than $5,000,000, and (iii) shall be on terms acceptable to Agent.

 

10.5           Contract Forms.  Borrowers shall not use or acquire in their business Contracts which are not on the printed forms previously approved in writing by Agent and Borrowers shall not change or vary the printed forms of such Contracts without Agent’s prior written consent, unless such change or variation is required by any Requirement of Law.  Agent may reasonably withhold its consent until Agent receives a satisfactory opinion of Borrowers’ counsel regarding compliance of the revised form of Contract with any Requirement of Law.

 

 

  

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10.6           Credit and Collection Guidelines.  Borrowers shall not make any material changes in its Credit and Collection Guidelines (a copy of which has been previously furnished by Borrowers to Agent) without Agent’s prior written consent, which Agent may withhold in its sole and absolute discretion.  Borrower shall not enter into or otherwise acquire Contracts which do not comply with the Credit and Collection Guidelines.

 

10.7           Minimum Cash Recovery Percent. As long as any Revolver Commitments or Obligations are outstanding, Parent shall, on a consolidated basis with its Subsidiaries maintain a Cash Recovery Percent in a percentage not equal to or less than 4.74% for each month, measured monthly as of the last day of each month.

 

SECTION 11.     EVENTS OF DEFAULT; REMEDIES ON DEFAULT

 

11.1           Events of Default.  Each of the following shall be an “Event of Default” hereunder, if the same shall occur for any reason whatsoever, whether voluntary or involuntary, by operation of law or otherwise:

 

(a)           A Borrower fails to pay any Obligations when due (whether at stated maturity, on demand, upon acceleration or otherwise);

 

(b)           Any representation, warranty or other written statement of an Obligor made in connection with any Loan Documents or transactions contemplated thereby is incorrect or misleading in any material respect when given;

 

(c)           A Borrower breaches or fail to perform any covenant contained in Section 7.2, 7.3, 7.4, 7.6, 7.8.2, 8.1, 8.2.1, 8.2.4, 8.2.5, 8.4.2, 10.1.1, 10.1.2, 10.1.3, 10.1.7 (only with respect to a failure to maintain insurance at the required coverage amount), 10.1.12 (only with respect to a failure to provide Agent with prior notice of a material modification and to obtain Agent’s consent to such material modification), 10.2, 10.3 or 10.7;

 

(d)           An Obligor breaches or fails to perform any other covenant contained in any Loan Documents, and such breach or failure is not cured within 15 days after a Senior Officer of such Obligor has knowledge thereof or receives notice thereof from Agent, whichever is sooner; provided, however, that such notice and opportunity to cure shall not apply if the breach or failure to perform is not capable of being cured within such period or is a willful breach by an Obligor;

 

(e)           A Guarantor repudiates, revokes or attempts to revoke its Guaranty; an Obligor denies or contests the validity or enforceability of any Loan Documents or Obligations, or the perfection or priority of any Lien granted to Agent; or any Loan Document ceases to be in full force or effect for any reason (other than a waiver or release by Agent and Lenders);

 

(f)           Any breach or default of an Obligor occurs under any document, instrument or agreement to which it is a party or by which it or any of its Properties is bound, relating to any Debt (other than the Obligations) in excess of $5,000,000 (including the documents related to the Term Loan Facility and the Permitted ABS Documents), if the maturity of or any payment with respect to such Debt may be accelerated or demanded due to such breach;

 

 

  

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(g)           Any judgment or order for the payment of money is entered against an Obligor in an amount that exceeds, individually or cumulatively with all unsatisfied judgments or orders against all Obligors, $5,000,000 (net of any insurance coverage therefor acknowledged in writing by the insurer), unless a stay of enforcement of such judgment or order is in effect, by reason of a pending appeal or otherwise;

 

(h)           A loss, theft, damage or destruction occurs with respect to any Collateral if the amount not covered by insurance exceeds $5,000,000;

 

(i)           An Obligor is enjoined, restrained or in any way prevented by any Governmental Authority from conducting any material part of its business; an Obligor suffers the loss, revocation or termination of any material license, permit, lease or agreement necessary to its business; there is a cessation of any material part of an Obligor’s business for a material period of time; any material Collateral or Property of an Obligor is taken or impaired through condemnation; an Obligor agrees to or commences any liquidation, dissolution or winding up of its affairs; or an Obligor is not Solvent;

 

(j)           An Insolvency Proceeding is commenced by an Obligor; an Obligor makes an offer of settlement, extension or composition to its unsecured creditors generally; a trustee is appointed to take possession of any substantial Property of or to operate any of the business of an Obligor; or an Insolvency Proceeding is commenced against an Obligor and:  the Obligor consents to institution of the proceeding, the petition commencing the proceeding is not timely contested by the Obligor, the petition is not dismissed within 45 days after filing, or an order for relief is entered in the proceeding;

 

(k)           An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan that has resulted or could reasonably be expected to result in liability of an Obligor to a Pension Plan, Multiemployer Plan or PBGC, or that constitutes grounds for appointment of a trustee for or termination by the PBGC of any Pension Plan or Multiemployer Plan; an Obligor or ERISA Affiliate fails to pay when due any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan; or any event similar to the foregoing occurs or exists with respect to a Foreign Plan;

 

(l)           An Obligor or any of its Senior Officers is criminally indicted or convicted for (i) a felony committed in the conduct of the Obligor’s business, or (ii) violating any state or federal law (including the Controlled Substances Act, Money Laundering Control Act of 1986 and Illegal Exportation of War Materials Act) that could lead to forfeiture of any material Property or any Collateral;

 

(m)           A Change of Control occurs; or any event occurs or condition exists that has a Material Adverse Effect; or

 

(n)           Any default or event of default occurs under the Term Loan Agreement or any other Term Loan Documents.

 

11.2           Remedies upon Default.  If an Event of Default described in Section 11.1(j) occurs with respect to any Borrower, then to the extent permitted by Applicable Law, all Obligations (other than Secured Bank Product Obligations) shall become automatically due and payable and all Revolver Commitments shall terminate, without any action by Agent or notice of any kind.  In addition, or if any other Event of Default exists, Agent may in its sole discretion (and shall upon written direction of Required Lenders) do any one or more of the following from time to time:

 

 

  

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(a)           declare any Obligations (other than Secured Bank Product Obligations) immediately due and payable, whereupon they shall be due and payable without diligence, presentment, demand, protest or notice of any kind, all of which are hereby waived by Borrowers to the fullest extent permitted by law;

 

(b)           terminate, reduce or condition any Revolver Commitment, or make any adjustment to the Borrowing Base, CAI Borrowing Base, or CCI Borrowing Base;

 

(c)           require Obligors to Cash Collateralize LC Obligations, Secured Bank Product Obligations and other Obligations that are contingent or not yet due and payable, and, if Obligors fail promptly to deposit such Cash Collateral, Agent may (and shall upon the direction of Required Lenders) advance the required Cash Collateral as Revolver Loans (whether or not an Overadvance exists or is created thereby, or the conditions in Section 6 are satisfied); and

 

(d)           exercise any other rights or remedies afforded under any agreement, by law, at equity or otherwise, including the rights and remedies of a secured party under the UCC.  Such rights and remedies include the rights to (i) take possession of any Collateral; (ii) require Borrowers to assemble Collateral, at Borrowers’ expense, and make it available to Agent at a place designated by Agent; (iii) enter any premises where Collateral is located and store Collateral on such premises until sold (and if the premises are owned or leased by a Borrower, Borrowers agree not to charge for such storage); and (iv) sell or otherwise dispose of any Collateral in its then condition, or after any further manufacturing or processing thereof, at public or private sale, with such notice as may be required by Applicable Law, in lots or in bulk, at such locations, all as Agent, in its sole discretion, deems advisable.  Each Borrower agrees that 10 days notice of any proposed sale or other disposition of Collateral by Agent shall be reasonable.  Agent shall have the right to conduct such sales on any Obligor’s premises, without charge, and such sales may be adjourned from time to time in accordance with Applicable Law.  Agent shall have the right to sell, lease or otherwise dispose of any Collateral for cash, credit or any combination thereof, and Agent may purchase any Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of the purchase price, may credit bid and set off the amount of such price against the Obligations.

 

11.3           License.  Except as is prohibited by an existing and enforceable anti-assignment provision (other than to the extent that any such term would be rendered ineffective pursuant to the UCC or any other applicable law or principles of equity), Agent 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 or all Intellectual Property of Borrowers, computer hardware and software, trade secrets, brochures, customer lists, promotional and advertising materials, labels, packaging materials and other Property, in advertising for sale, marketing, selling, collecting, completing manufacture of, or otherwise exercising any rights or remedies with respect to, any Collateral.  Each Borrower’s rights and interests under Intellectual Property shall inure to Agent’s benefit.

 

11.4           Setoff.  At any time during an Event of Default, Agent, Issuing Bank, Lenders, and any of their Affiliates are authorized, to the fullest extent permitted by Applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by Agent, Issuing Bank, such Lender or such Affiliate to or for the credit or the account of an Obligor against any Obligations, irrespective of whether or not Agent, Issuing Bank, such Lender or such Affiliate shall have made any demand under this Agreement or any other Loan Document and although 

 

 

 

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such Obligations may be contingent or unmatured or are owed to a branch or office of Agent, Issuing Bank, such Lender or such Affiliate different from the branch or office holding such deposit or obligated on such indebtedness.  The rights of Agent, Issuing Bank, each Lender and each such Affiliate under this Section are in addition to other rights and remedies (including other rights of setoff) that such Person may have.

 

11.5           Remedies Cumulative; No Waiver.

 

11.5.1           Cumulative Rights.  All agreements, warranties, guaranties, indemnities and other undertakings of Borrowers under the Loan Documents are cumulative and not in derogation of each other.  The rights and remedies of Agent and Lenders are cumulative, may be exercised at any time and from time to time, concurrently or in any order, and are not exclusive of any other rights or remedies available by agreement, by law, at equity or otherwise.  All such rights and remedies shall continue in full force and effect until Full Payment of all Obligations.

 

11.5.2           Waivers.  No waiver or course of dealing shall be established by (a) the failure or delay of Agent or any Lender to require strict performance by Borrowers with any terms of the Loan Documents, or to exercise any rights or remedies with respect to Collateral or otherwise; (b) the making of any Loan or issuance of any Letter of Credit during a Default, Event of Default, or other failure to satisfy any conditions precedent; or (c) acceptance by Agent or any Lender of any payment or performance by an Obligor under any Loan Documents in a manner other than that specified therein.  It is expressly acknowledged by Borrowers that any failure to satisfy a financial covenant on a measurement date shall not be cured or remedied by satisfaction of such covenant on a subsequent date.

 

SECTION 12.     AGENT

 

12.1           Appointment, Authority and Duties of Agent.

 

12.1.1           Appointment and Authority.  Each Secured Party appoints and designates Bank of America as Agent under all Loan Documents.  Agent may, and each Secured Party authorizes Agent to, enter into all Loan Documents to which Agent is intended to be a party and accept all Security Documents, for Agent’s benefit and the benefit of Secured Parties.  Each Secured Party agrees that any action taken by Agent or Required Lenders in accordance with the provisions of the Loan Documents, and the exercise by 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, Agent shall have the sole and exclusive authority to (a) act as the disbursing and collecting agent for Lenders with respect to all payments and collections arising in connection with the Loan Documents; (b) execute and deliver as Agent each Loan Document, including any intercreditor or subordination agreement, and accept delivery of each Loan Document from any Obligor 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.  The duties of Agent shall be ministerial and 

 

 

 

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administrative in nature, and Agent shall not have a fiduciary relationship with any Lender, Secured Party, Participant or other Person, by reason of any Loan Document or any transaction relating thereto.  Agent alone shall be authorized to determine whether any Contract or Inventory constitute Eligible Contracts or Eligible Inventory, whether to impose or release any reserve, or whether any conditions to funding or to issuance of a Letter of Credit have been satisfied, which determinations and judgments, if exercised in good faith, shall exonerate Agent from liability to any Lender or other Person for any error in judgment.

 

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

 

12.1.3           Agent Professionals.  Agent may perform its duties through agents and employees.  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.  Agent shall not be responsible for the negligence or misconduct of any agents, employees or Agent Professionals selected by it with reasonable care.

 

12.1.4           Instructions of Required Lenders.  The rights and remedies conferred upon Agent under the Loan Documents may be exercised without the necessity of joinder of any other party, unless required by Applicable Law.  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 Agent in connection with any act.  Agent shall be entitled to refrain from any act until it has received such instructions or assurances, and Agent shall not incur liability to any Person 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 Agent as a result of Agent acting or refraining from acting in accordance with the instructions of Required Lenders.  Notwithstanding the foregoing, instructions by and consent of all Lenders or Secured Parties shall be required in the circumstances described in Section 14.1.1, and in no event shall Required Lenders, without the prior written consent of each Lender, direct Agent to accelerate and demand payment of Revolver Loans held by one Lender without accelerating and demanding payment of all other Revolver Loans, nor to terminate the Revolver Commitments of one Lender without terminating the Revolver Commitments of all Lenders.  In no event shall 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.

 

12.2           Agreements Regarding Collateral and Field Examination Reports.

 

12.2.1           Lien Releases; Care of Collateral.  Secured Parties authorize Agent to release any Lien with respect to any Collateral (a) upon Full Payment of the Obligations; (b) that is the subject of an Asset Disposition which Borrowers certify in writing to Agent is a Permitted Asset Disposition or a Lien which Borrowers certify is a Permitted Lien entitled to priority over Agent’s Liens (and Agent may rely conclusively on any such certificate without further inquiry); (c) that does not constitute Collateral with a book value greater than $10,000,000 in the aggregate released during any 6-month period (other than with respect to owned Real Estate); or (d) with the 

 

 

 

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written consent of all Lenders.  Secured Parties authorize Agent to subordinate their Liens to any Purchase Money Lien permitted hereunder.  Agent shall have no obligation to assure that any Collateral exists or is owned by a Borrower, or is cared for, protected or insured, nor to assure that Agent’s Liens have been properly created, perfected or enforced, or are entitled to any particular priority, nor to exercise any duty of care with respect to any Collateral.

 

12.2.2           Possession of Collateral.  Agent and Secured Parties appoint each Lender as agent (for the benefit of Secured Parties) for the purpose of perfecting Liens in any Collateral held or controlled by such Lender, to the extent such Liens are perfected by possession or control.  If any Lender obtains possession or control of any Collateral, it shall notify Agent thereof and, promptly upon Agent’s request, deliver such Collateral to Agent or otherwise deal with it in accordance with Agent’s instructions.

 

12.2.3           Reports.  Agent shall promptly forward to each Lender, when complete, copies of any field audit, examination or appraisal prepared by or for Agent with respect to any Obligor or Collateral (“Report”).  Each Lender agrees (a) that neither Bank of America nor 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; (b) that the Reports are not intended to be comprehensive audits or examinations, and that Agent or any other Person performing any audit or examination will inspect only specific information regarding Obligations or the Collateral and will rely significantly upon Borrowers’ books and records as well as upon representations of Borrowers’ officers and employees; and (c) to keep all Reports confidential and strictly for such Lender’s internal use, and not to distribute any Report (or the contents thereof) to any Person (except to such Lender’s Participants, attorneys and accountants) or use any Report in any manner other than administration of the Revolver Loans and other Obligations.  Each Lender shall indemnify and hold harmless 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 Agent furnishing a Report to such Lender.

 

12.3           Reliance By Agent.  Agent shall be entitled to rely, and shall be fully protected 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.

 

12.4           Action Upon Default.  Agent shall not be deemed to have knowledge of any Default or Event of Default unless it has received written notice from a Lender or Borrower specifying the occurrence and nature thereof.  If any Lender acquires knowledge of a Default or Event of Default, it shall promptly notify Agent and the other Lenders thereof in writing.  Each Lender agrees that, except as otherwise provided in any Loan Documents or with the written consent of Agent and Required Lenders, it will not take any Enforcement Action, accelerate Obligations (other than Secured Bank Product 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.  Notwithstanding the foregoing, however, a Secured Party may take action to preserve or enforce its rights against an Obligor where a deadline or limitation period is applicable that would, absent such action, bar enforcement of Obligations held by such Secured Party, including the filing of proofs of claim in an Insolvency Proceeding.

 

 

  

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12.5           Ratable Sharing.  If any Lender shall obtain any payment or reduction of any Obligation, whether through set-off or otherwise, in excess of its share of such Obligation, determined on a Pro Rata basis or in accordance with Section 5.6.1, as applicable, such Lender shall forthwith purchase from Agent, Issuing Bank and the other Lenders such participations in the affected Obligation as are necessary to cause the purchasing Lender to share the excess payment or reduction on a Pro Rata basis or in accordance with Section 5.6.1, as applicable.  If any of such payment or reduction is thereafter recovered from the purchasing Lender, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.  No Lender shall set off against any Dominion Account without the prior consent of Agent.

 

12.6           Indemnification of Agent Indemnitees.  EACH LENDER SHALL INDEMNIFY AND HOLD HARMLESS AGENT INDEMNITEES, TO THE EXTENT NOT REIMBURSED BY OBLIGORS (BUT WITHOUT LIMITING THE INDEMNIFICATION OBLIGATIONS OF OBLIGORS UNDER ANY LOAN DOCUMENTS), ON A PRO RATA BASIS, AGAINST ALL CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY AGENT INDEMNITEE, PROVIDED THE CLAIM RELATES TO OR ARISES FROM AN AGENT INDEMNITEE ACTING AS OR FOR AGENT (IN ITS CAPACITY AS AGENT).  In Agent’s sole discretion, it may reserve for any such Claims made against an Agent Indemnitee, and may satisfy any judgment, order or settlement relating thereto, from proceeds of Collateral prior to making any distribution of Collateral proceeds to Secured Parties.  If Agent is sued by any receiver, bankruptcy trustee, debtor-in-possession or other Person for any alleged preference or fraudulent transfer, then any monies paid by Agent in settlement or satisfaction of such proceeding, together with all interest, costs and expenses (including attorneys’ fees) incurred in the defense of same, shall be promptly reimbursed to Agent by each Lender to the extent of its Pro Rata share.  In no event shall any Lender have any obligation hereunder to indemnify or hold harmless any Agent Indemnitee with respect to a Claim that is determined in a final, non-appealable judgment by a court of competent jurisdiction to result from the gross negligence or willful misconduct of such Agent Indemnitee.

 

12.7           Limitation on Responsibilities of Agent.  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 directly and solely caused by Agent’s gross negligence or willful misconduct.  Agent does not assume any responsibility for any failure or delay in performance or any breach by any Obligor, Lender or other Secured Party of any obligations under the Loan Documents.  Agent does not make to Secured Parties any express or implied warranty, representation or guarantee with respect to any Obligations, Collateral, Loan Documents or Obligor.  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, collectibility, value, sufficiency, location or existence of any Collateral, or the validity, extent, perfection or priority of any Lien therein; the validity, enforceability or collectibility of any Obligations; or the assets, liabilities, financial condition, results of operations, business, creditworthiness or legal status of any Obligor or Contract 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 or performance by any Obligor of any terms of the Loan Documents, or the satisfaction of any conditions precedent contained in any Loan Documents.

 

12.8           Successor Agent and Co-Agents.

 

 

  

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12.8.1           Resignation; Successor Agent.  Subject to the appointment and acceptance of a successor Agent as provided below, Agent may resign at any time by giving at least 30 days written notice thereof to Lenders and Borrowers.  Upon receipt of such notice, Required Lenders shall have the right to appoint a successor Agent which shall be (a) a Lender or an Affiliate of a Lender; or (b) 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 $200,000,000 and (provided no Default or Event of Default exists) is reasonably acceptable to Borrowers.  If no successor agent is appointed prior to the effective date of the resignation of Agent, then Agent may appoint a successor agent from among Lenders, or if no Lender accepts such role, Agent may appoint Required Lenders as successor agent.  Upon acceptance by a successor Agent of an appointment to serve as Agent hereunder, or upon appointment of Required Lenders as successor Agent, such successor Agent shall thereupon succeed to and become vested with all the powers and duties of the retiring Agent without further act, and the retiring Agent shall be discharged from its duties and obligations hereunder but shall continue to have the benefits of the indemnification set forth in Sections 12.6 and 14.2.  Notwithstanding any Agent’s resignation, the provisions of this Section 12 shall continue in effect for its benefit with respect to any actions taken or omitted to be taken by it while Agent.  Any successor to Bank of America by merger or acquisition of stock or this loan shall continue to be Agent hereunder without further act on the part of the parties hereto, unless such successor resigns as provided above.

 

12.8.2           Separate Collateral Agent.  It is the intent of the parties that there shall be no violation of any Applicable Law denying or restricting the right of financial institutions to transact business in any jurisdiction.  If Agent believes that it may be limited in the exercise of any rights or remedies under the Loan Documents due to any Applicable Law, Agent may appoint an additional Person who is not so limited, as a separate collateral agent or co-collateral agent.  If Agent so appoints a collateral agent or co-collateral agent, each right and remedy intended to be available to Agent under the Loan Documents shall also be vested in such separate agent.  Every covenant and obligation necessary to the exercise thereof by such agent shall run to and be enforceable by it as well as Agent.  Lenders shall execute and deliver such documents as Agent deems appropriate to vest any rights or remedies in such agent.  If any collateral agent or co-collateral agent shall die or dissolve, become incapable of acting, resign or be removed, then all the rights and remedies of such agent, to the extent permitted by Applicable Law, shall vest in and be exercised by Agent until appointment of a new agent.

 

12.9           Due Diligence and Non-Reliance.  Each Lender acknowledges and agrees that it has, independently and without reliance upon 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 Obligor and its own decision to enter into this Agreement and to fund Revolver Loans and participate in LC Obligations hereunder.  Each Secured Party has made such inquiries concerning the Loan Documents, the Collateral and each Obligor as such Secured Party feels necessary.  Each Secured Party further acknowledges and agrees that the other Secured Parties and Agent have made no representations or warranties concerning any Obligor, any Collateral or the legality, validity, sufficiency or enforceability of any Loan Documents or Obligations.  Each Secured Party will, independently and without reliance upon the other Secured Parties or Agent, 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 Revolver Loans and participating in LC Obligations, and in taking or refraining from any action under any Loan Documents.  Except for notices, reports and other information expressly requested by a Lender, Agent shall have no duty or responsibility to provide any Secured Party with any notices, reports or certificates furnished to Agent by any Obligor or any credit or other information concerning the affairs, financial condition, business or Properties of any Obligor (or any of its Affiliates) which may come into possession of Agent or any of Agent’s Affiliates.

 

 

  

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12.10           Replacement of Certain Lenders.  If a Lender (a) is a Defaulting Lender, or (b) fails, within 10 days after request by Borrowers, to give its consent to any amendment, waiver or action for which consent of all Lenders was required and Required Lenders consented, then, in addition to any other rights and remedies that any Person may have, Agent may, by notice to such Lender within 120 days after such event, require such Lender to assign all of its rights and obligations under the Loan Documents to Eligible Assignee(s) specified by Agent, pursuant to appropriate Assignment and Acceptance(s) and within 20 days after Agent’s notice.  Agent is irrevocably appointed as attorney-in-fact to execute any such Assignment and Acceptance if the Lender fails to execute same.  Such Lender shall be entitled to receive, in cash, concurrently with such assignment, all amounts owed to it under the Loan Documents, including all principal, interest and fees through the date of assignment (but excluding any prepayment charge).

 

12.11           Remittance of Payments and Collections.

 

12.11.1                      Remittances Generally.  All payments by any Secured Party to 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 or if payment is due on demand by Agent and request for payment is made by Agent by 11:00 a.m. on a Business Day, payment shall be made by such Secured Party not later than 2:00 p.m. on such day, and if request is made after 11:00 a.m., then payment shall be made by 11:00 a.m. on the next Business Day.  Payment by Agent to any Secured Party shall be made by wire transfer, in the type of funds received by Agent.  Any such payment shall be subject to Agent’s right of offset for any amounts due from such payee under the Loan Documents.

 

12.11.2                      Failure to Pay.  If any Secured Party fails to pay any amount when due by it to Agent pursuant to the terms hereof, such amount shall bear interest from the due date until paid at the rate determined by Agent as customary in the banking industry for interbank compensation.  In no event shall Borrowers be entitled to receive credit for any interest paid by a Secured Party to Agent, nor shall any Defaulting Lender be entitled to interest on any amount held by Agent pursuant to Section 4.2.

 

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

 

12.12           Agent in its Individual Capacity.  As a Lender, Bank of America 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 Bank of America in its capacity as a Lender.  Each of Bank of America and its Affiliates may accept deposits from, maintain deposits or credit balances for, invest in, lend money to, provide Bank Products to, act as trustee under indentures of, serve as financial or other advisor to, and generally engage in any kind of business with, Obligors and their Affiliates, as if Bank of America were any other bank, without any duty to account therefor (including any fees or other consideration received in connection therewith) to the other Lenders.  In their individual capacity, Bank of America and its Affiliates may receive information regarding Obligors, their Affiliates and 

 

 

 

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their Contract Debtors (including information subject to confidentiality obligations), and each Secured Party agrees that Bank of America and its Affiliates shall be under no obligation to provide such information to any Secured Party, if acquired in such individual capacity and not as Agent hereunder.

 

12.13           Agent Titles.  Each Lender, other than Bank of America, that is designated (on the cover page of this Agreement or otherwise) by Bank of America as an “Agent”, “Arranger”, “Joint Book Runner”, “Syndication Agent”, or “Co-Documentation Agent” of any type shall not have any right, power, responsibility or duty under any Loan Documents other than those applicable to all Lenders, and shall in no event be deemed to have any fiduciary relationship with any other Lender.

 

12.14           Bank Product Providers.  Each Secured Bank Product Provider, by delivery of a notice to Agent of a Bank Product, agrees to be bound by Section 5.6 and this Section 12.  Each Secured Bank Product Provider shall indemnify and hold harmless Agent Indemnitees, to the extent not reimbursed by Obligors, against all Claims that may be incurred by or asserted against any Agent Indemnitee in connection with such provider’s Secured Bank Product Obligations.

 

12.15           No Third Party Beneficiaries.  This Section 12 is an agreement solely among Lenders and Agent, and shall survive Full Payment of the Obligations.  This Section 12 does not confer any rights or benefits upon Borrowers or any other Person.  As between Borrowers and Agent, any action that Agent may take under any Loan Documents or with respect to any Obligations shall be conclusively presumed to have been authorized and directed by Lenders.

 

SECTION 13.                                BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS

 

13.1           Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of Borrowers, Agent, Lenders, Secured Parties and their respective successors and assigns, except that (a) no Borrower shall have the right to assign its rights or delegate its obligations under any Loan Documents; and (b) any assignment by a Lender must be made in compliance with Section 13.3.  Agent may treat the Person which made any Revolver Loan as the owner thereof for all purposes until such Person makes an assignment in accordance with Section 13.3.  Any authorization or consent of a Lender shall be conclusive and binding on any subsequent transferee or assignee of such Lender.

 

13.2           Participations.

 

13.2.1           Permitted Participants; Effect.  Any Lender may, in the ordinary course of its business and in accordance with Applicable Law, at any time sell to a financial institution (“Participant”) a participating interest in the rights and obligations of such Lender under any Loan Documents.  Despite any sale by a Lender of participating interests to a Participant, such Lender’s obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for performance of such obligations, such Lender shall remain the holder of its Revolver Loans and Revolver Commitments for all purposes, all amounts payable 

 

 

 

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by Borrowers shall be determined as if such Lender had not sold such participating interests, and Borrowers and Agent shall continue to deal solely and directly with such Lender in connection with the Loan Documents.  Each Lender shall be solely responsible for notifying its Participants of any matters under the Loan Documents, and Agent and the other Lenders shall not have any obligation or liability to any such Participant.  A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 5.9 unless Borrowers agree otherwise in writing.

 

13.2.2           Voting Rights.  Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, waiver or other modification of any Loan Documents other than that which forgives principal, interest or fees, reduces the stated interest rate or fees payable with respect to any Revolver Loan or Revolver Commitment in which such Participant has an interest, postpones the Revolver Commitment Termination Date or any date fixed for any regularly scheduled payment of principal, interest or fees on such Revolver Loan or Revolver Commitment, or releases any Borrower, Guarantor or substantial portion of the Collateral.

 

13.2.3           Benefit of Set-Off.  Borrowers agree that each Participant shall have a right of set-off in respect of its participating interest to the same extent as if such interest were owing directly to a Lender, and each Lender shall also retain the right of set-off with respect to any participating interests sold by it.  By exercising any right of set-off, a Participant agrees to share with Lenders all amounts received through its set-off, in accordance with Section 12.5 as if such Participant were a Lender.

 

13.3           Assignments.

 

13.3.1           Permitted Assignments.  A Lender may assign to an Eligible Assignee any of its rights and obligations under the Loan Documents, as long as (a) each assignment is of a constant, and not a varying, percentage of the transferor Lender’s rights and obligations under the Loan Documents and, in the case of a partial assignment, is in a minimum principal amount of $10,000,000 (unless otherwise agreed by Agent in its discretion) and integral multiples of $1,000,000 in excess of that amount; (b) except in the case of an assignment in whole of a Lender’s rights and obligations, the aggregate amount of the Revolver Commitments retained by the transferor Lender is at least $10,000,000 (unless otherwise agreed by Agent in its discretion); and (c) the parties to each such assignment shall execute and deliver to Agent, for its acceptance and recording, an Assignment and Acceptance.  Nothing herein shall limit the right of a Lender to pledge or assign any rights under the Loan Documents to (i) any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors and any Operating Circular issued by such Federal Reserve Bank, or (ii) counterparties to swap agreements relating to any Revolver Loans; provided, however, that any payment by Borrowers to the assigning Lender in respect of any Obligations assigned as described in this sentence shall satisfy Borrowers’ obligations hereunder to the extent of such payment, and no such assignment shall release the assigning Lender from its obligations hereunder.

 

13.3.2           Effect; Effective Date.  Upon delivery to Agent of an assignment notice in the form of Exhibit C and a processing fee of $5,000 (unless otherwise agreed by Agent in its discretion), the assignment shall become effective as specified in the notice, if it complies with this Section 13.3.  From such effective date, the Eligible Assignee shall for all purposes be a Lender under the Loan Documents, and shall have all rights and obligations of a Lender thereunder.  Upon consummation of an assignment, the transferor Lender, Agent and Borrowers shall make appropriate arrangements for issuance of replacement and/or new Notes, as applicable.  The transferee Lender shall comply with Section 5.10 and deliver, upon request, an administrative questionnaire satisfactory to Agent.

 

 

  

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SECTION 14.      MISCELLANEOUS

 

14.1           Consents, Amendments and Waivers.

 

14.1.1           Amendment.  No modification of any Loan Document, including any extension or amendment of a Loan Document or any waiver of a Default or Event of Default, shall be effective without the prior written agreement of Agent (with the consent of Required Lenders) and each Obligor party to such Loan Document; provided, however, that

 

(a)           without the prior written consent of Agent, no modification shall be effective with respect to any provision in a Loan Document that relates to any rights, duties or discretion of Agent;

 

(b)           without the prior written consent of Issuing Bank, no modification shall be effective with respect to any LC Obligations, Section 2.3 or any other provision in a Loan document that relates to any rights, duties or discretion of Issuing Bank;

 

(c)           without the prior written consent of each affected Lender, no modification shall be effective that would (i) increase the Revolver Commitment of such Lender; or (ii) reduce the amount of, or waive or delay payment of, any principal, interest or fees payable to such Lender;

 

(d)           without the prior written consent of all Lenders (except a Defaulting Lender as provided in Section 4.2), no modification shall be effective that would (i) extend the Revolver Termination Date; (ii) alter Section 5.6, 7.1 (except to add Collateral), 10.3.3, or 14.1.1; (iii) amend the definitions of Adjusted Borrowing Base, Borrowing Base, CAI Borrowing Base, CCI Borrowing Base (or any defined terms used in such definitions) (provided that Agent shall be able to establish new CAI Availability Reserves or CCI Availability Reserves after the Closing Date in its reasonable discretion and thereafter shall be able to modify and/or remove such reserves in its reasonable discretion), Pro Rata, Required Lenders or Supermajority Lenders; (iv) increase any advance rate, or increase total Revolver Commitments except as set forth in Section 2.2; (vi) release Collateral except as currently contemplated by the Loan Documents; or (vii) release any Obligor from liability for any Obligations, if such Obligor has material assets at the time of the release;

 

(e)           without the prior written consent of Supermajority Lenders, no modification shall be effective that would amend the definition of Permitted Distributions; and

 

(f)           without the prior written consent of a Secured Bank Product Provider, no modification shall be effective that affects its relative payment priority under Section 5.6.

 

14.1.2           Limitations.  The agreement of Borrowers shall not be necessary to the effectiveness of any modification of a Loan Document that deals solely with the rights and duties of Lenders, Agent and/or Issuing Bank as among themselves.  Only the consent of the parties to the Fee Letter, or any agreement relating to a Bank Product shall be required for any modification of such agreement, and any non-Lender that is party to a Bank Product agreement shall have no right to participate in any manner in modification of any other Loan Document.  Any waiver or consent granted by Agent or Lenders hereunder shall be effective only if in writing, and only for the matter specified.

 

 

 

  

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14.1.3           Payment for Consents.  No Borrower will, directly or indirectly, pay any remuneration or other thing of value, whether by way of additional interest, fee or otherwise, to any Lender (in its capacity as a Lender hereunder) as consideration for agreement by such Lender with any modification of any Loan Documents, unless such remuneration or value is concurrently paid, on the same terms, on a Pro Rata basis to all Lenders providing their consent.

 

14.2           Indemnity.  EACH BORROWER SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES AGAINST ANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE BY ANY OBLIGOR OR OTHER PERSON, INCLUDING CLAIMS ARISING FROM THE NEGLIGENCE OF AN INDEMNITEE.  In no event shall any party to a Loan Document have any obligation thereunder to indemnify or hold harmless an Indemnitee with respect to a Claim that is determined in a final, non-appealable judgment by a court of competent jurisdiction to result from the gross negligence or willful misconduct of such Indemnitee.

 

14.3           Notices and Communications.

 

14.3.1           Notice Address.  Subject to Section 4.1.4, all notices and other communications by or to a party hereto shall be in writing and shall be given to any Borrower, at Borrower Agent’s address shown on the signature pages hereof, and to any other Person at its address shown on the signature pages hereof (or, in the case of a Person who becomes a Lender after the Closing Date, at the address shown on its Assignment and Acceptance), or at such other address as a party may hereafter specify by notice in accordance with this Section 14.3.  Each such notice or other communication shall be effective only (a) if given by facsimile transmission, when transmitted to the applicable facsimile number, if confirmation of receipt is received; (b) if given by mail, three Business Days after deposit in the U.S. mail, with first-class postage pre-paid, addressed to the applicable address; or (c) if given by personal delivery, when duly delivered to the notice address with receipt acknowledged.  Notwithstanding the foregoing, no notice to Agent pursuant to Section 2.1.4, 2.3, 3.1.2 or 4.1.1 shall be effective until actually received by the individual to whose attention at Agent such notice is required to be sent.  Any written notice or other communication that is not sent in conformity with the foregoing provisions shall nevertheless be effective on the date actually received by the noticed party.  Any notice received by Borrower Agent shall be deemed received by all Borrowers.

 

14.3.2           Electronic Communications; Voice Mail.  Electronic mail and internet websites may be used only for routine communications, such as financial statements, Borrowing Base Certificates and other information required by Section 10.1.2, administrative matters, distribution of Loan Documents for execution, and matters permitted under Section 4.1.4.  Agent and Lenders make no assurances as to the privacy and security of electronic communications.  Electronic and voice mail may not be used as effective notice under the Loan Documents.

 

14.3.3           Non-Conforming Communications.  Agent and Lenders may rely upon any notices purportedly given by or on behalf of any Borrower even if such notices were not made in a manner specified herein, were incomplete or were not confirmed, or if the terms thereof, as understood by the recipient, varied from a later confirmation.  Each Borrower shall indemnify and hold harmless each Indemnitee from any liabilities, losses, costs and expenses arising from any telephonic communication purportedly given by or on behalf of a Borrower.

 

 

  

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14.4           Performance of Borrowers’ Obligations.  Agent may, in its sole discretion at any time and from time to time, at Borrowers’ expense, pay any amount or do any act required of a Borrower under any Loan Documents or otherwise lawfully requested by Agent to (a) enforce any Loan Documents or collect any Obligations; (b) protect, insure, maintain or realize upon any Collateral; or (c) defend or maintain the validity or priority of Agent’s Liens in any Collateral, including any payment of a judgment, insurance premium, warehouse charge, finishing or processing charge, or landlord claim, or any discharge of a Lien.  All payments, costs and expenses (including Extraordinary Expenses) of Agent under this Section shall be reimbursed to Agent by Borrowers, on demand, with interest from the date incurred to the date of payment thereof at the Default Rate applicable to Base Rate Revolver Loans.  Any payment made or action taken by Agent under this Section shall be without prejudice to any right to assert an Event of Default or to exercise any other rights or remedies under the Loan Documents.

 

14.5           Credit Inquiries.  Each Borrower hereby authorizes Agent and Lenders (but they shall have no obligation) to respond to usual and customary credit inquiries from third parties concerning any Borrower or its Subsidiary.

 

14.6           Severability.  Wherever possible, each provision of the Loan Documents shall be interpreted in such manner as to be valid under Applicable Law.  If any provision is found to be invalid under Applicable Law, it shall be ineffective only to the extent of such invalidity and the remaining provisions of the Loan Documents shall remain in full force and effect.

 

14.7           Cumulative Effect; Conflict of Terms.  The provisions of the Loan Documents are cumulative.  The parties acknowledge that the Loan Documents may use several limitations, tests or measurements to regulate similar matters, and they agree that these are cumulative and that each must be performed as provided.  Except as otherwise provided in another Loan Document (by specific reference to the applicable provision of this Agreement), if any provision contained herein is in direct conflict with any provision in another Loan Document, the provision herein shall govern and control.

 

14.8           Counterparts.  Any Loan Document may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement shall become effective when Agent has received counterparts bearing the signatures of all parties hereto.  Delivery of a signature page of any Loan Document by telecopy or other electronic means shall be effective as delivery of a manually executed counterpart of such agreement.

 

14.9           Entire Agreement.  Time is of the essence of the Loan Documents.  The Loan Documents constitute the entire contract among the parties relating to the subject matter hereof, and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.

 

14.10           Relationship with Lenders.  The obligations of each Lender hereunder are several, and no Lender shall be responsible for the obligations or Revolver Commitments of any other Lender.  Amounts payable hereunder to each Lender shall be a separate and independent debt.  It shall not be necessary for Agent or any other Lender to be joined as an additional party in any proceeding for such purposes.  Nothing in this Agreement and no 

 

 

 

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action of Agent, Lenders or any other Secured Party pursuant to the Loan Documents or otherwise shall be deemed to constitute Agent and Lenders to be a partnership, association, joint venture or any other kind of entity, nor to constitute control of any Borrower.

 

14.11           No Advisory or Fiduciary Responsibility.  In connection with all aspects of each transaction contemplated by any Loan Document, Borrowers acknowledge and agree that (a)(i) this credit facility and any related arranging or other services by Agent, any Lender, any of their Affiliates or any arranger are arm’s-length commercial transactions between Borrowers and such Person; (ii) Borrowers have consulted their own legal, accounting, regulatory and tax advisors to the extent they have deemed appropriate; and (iii) Borrowers are capable of evaluating and understanding, and do understand and accept, the terms, risks and conditions of the transactions contemplated by the Loan Documents; (b) each of Agent, Lenders, their Affiliates and any arranger is and has been acting solely as a principal in connection with this credit facility, is not the financial advisor, agent or fiduciary for Borrowers, any of their Affiliates or any other Person, and has no obligation with respect to the transactions contemplated by the Loan Documents except as expressly set forth therein; and (c) Agent, Lenders, their Affiliates and any arranger may be engaged in a broad range of transactions that involve interests that differ from those of Borrowers and their Affiliates, and have no obligation to disclose any of such interests to Borrowers or their Affiliates.  To the fullest extent permitted by Applicable Law, each Borrower hereby waives and releases any claims that it may have against Agent, Lenders, their Affiliates and any arranger with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated by a Loan Document.

 

14.12           Confidentiality.  Each of Agent, Lenders and Issuing Bank agrees to maintain the confidentiality of all Information (as defined below), except that Information may be disclosed (a) to its Affiliates, and to its and their partners, directors, officers, employees, agents, advisors and representatives (provided such Persons are informed of the confidential nature of the Information and instructed to keep it confidential); (b) to the extent requested by any governmental, regulatory or self-regulatory authority purporting to have jurisdiction over it or its Affiliates; (c) to the extent required by Applicable Law or by any subpoena or other legal process; (d) to any other party hereto; (e) in connection with any action or proceeding, or other exercise of rights or remedies, relating to any Loan Documents or Obligations; (f) subject to an agreement containing provisions substantially the same as this Section, to any Transferee or any actual or prospective party (or its advisors) to any Bank Product; (g) with the consent of Borrower Agent; or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) is available to Agent, any Lender, Issuing Bank or any of their Affiliates on a nonconfidential basis from a source other than Borrowers.  Notwithstanding the foregoing, Agent and Lenders may publish or disseminate general information describing this credit facility, including the names and addresses of Borrowers and a general description of Borrowers’ businesses, and may use Borrowers’ logos, or trademarks in advertising materials.  As used herein, “Information” means all information received from an Obligor or Subsidiary relating to it or its business that is identified as confidential when delivered.  Any Person required to maintain the confidentiality of Information pursuant to this Section shall be deemed to have complied if it exercises the same degree of care that it accords its own confidential information.  Each of Agent, Lenders and Issuing Bank acknowledges that (i) Information may include material non-public information concerning an Obligor or Subsidiary; (ii) it has developed compliance procedures regarding the use of material non-public information; and (iii) it will handle such material non-public information in accordance with Applicable Law, including federal and state securities laws.

 

 

  

96

  

 

 

14.13           Intentionally Omitted.

 

14.14           GOVERNING LAW.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, UNLESS OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO FEDERAL LAWS RELATING TO NATIONAL BANKS).

 

14.15           Consent to Forum; Arbitration.

 

14.15.1                      Forum.  EACH BORROWER HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL OR STATE COURT SITTING IN OR WITH JURISDICTION OVER LOS ANGELES COUNTY, CALIFORNIA, IN ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH COURT.  EACH BORROWER IRREVOCABLY WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT FORUM.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 14.3.1.  Nothing herein shall limit the right of Agent or any Lender to bring proceedings against any Obligor in any other court, nor limit the right of any party to serve process in any other manner permitted by Applicable Law.  Nothing in this Agreement shall be deemed to preclude enforcement by Agent of any judgment or order obtained in any forum or jurisdiction.

 

14.15.2                      Arbitration.  Notwithstanding any other provision of this Agreement to the contrary, any controversy or claim among the parties relating in any way to any Obligations or Loan Documents, including any alleged tort, shall at the request of any party hereto be determined by binding arbitration conducted in accordance with the United States Arbitration Act (Title 9 U.S. Code).  Arbitration proceedings will be determined in accordance with the Act, the then-current rules and procedures for the arbitration of financial services disputes of the American Arbitration Association (“AAA”), and the terms of this Section.  In the event of any inconsistency, the terms of this Section shall control.  If AAA is unwilling or unable to serve as the provider of arbitration or to enforce any provision of this Section, Agent may designate another arbitration organization with similar procedures to serve as the provider of arbitration.  The arbitration proceedings shall be conducted in Los Angeles or Pasadena, California.  The arbitration hearing shall commence within 90 days of the arbitration demand and close within 90 days thereafter.  The arbitration award must be issued within 30 days after close of the hearing (subject to extension by the arbitrator for up to 60 days upon a showing of good cause), and shall include a concise written statement of reasons for the award.  The arbitrator shall give effect to applicable statutes of limitation in determining any controversy or claim, and for these purposes, service on AAA under applicable AAA rules of a notice of claim is the equivalent of the filing of a lawsuit.  Any dispute concerning this Section or whether a controversy or claim is arbitrable shall be determined by the arbitrator.  The arbitrator shall have the power to award legal fees to the extent provided by this Agreement.  Judgment upon an arbitration award may be entered in any court having jurisdiction.  The arbitrator shall not have the power to commit errors of law or legal reasoning, and any award may be reviewed 

 

 

 

97

 

 

 

and vacated or corrected on appeal to a court of competent jurisdiction for any such error.  The institution and maintenance of an action for judicial relief or pursuant to a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.  No controversy or claim shall be submitted to arbitration without the consent of all parties if, at the time of the proposed submission, such controversy or claim relates to an obligation secured by Real Estate, but if all parties do not consent to submission of such a controversy or claim to arbitration, it shall be determined as provided in the next sentence.  At the request of any party, a controversy or claim that is not submitted to arbitration as provided above shall be determined by judicial reference; and if such an election is made, the parties shall designate to the court a referee or referees selected under the auspices of the AAA in the same manner as arbitrators are selected in AAA sponsored proceedings and the presiding referee of the panel (or the referee if there is a single referee) shall be an active attorney or retired judge; and judgment upon the award rendered by such referee or referees shall be entered in the court in which proceeding was commenced.  None of the foregoing provisions of this Section shall limit the right of Agent or Lenders to exercise self-help remedies, such as setoff, foreclosure or sale of any Collateral or to obtain provisional or ancillary remedies from a court of competent jurisdiction before, after or during any arbitration proceeding.  The exercise of a remedy does not waive the right of any party to resort to arbitration or reference.  At Agent’s option, foreclosure under a mortgage or deed of trust may be accomplished either by exercise of power of sale thereunder or by judicial foreclosure.

 

14.16           Waivers by Borrowers.  To the fullest extent permitted by Applicable Law, each Borrower waives (a) the right to trial by jury (which Agent and each Lender hereby also waives) in any proceeding or dispute of any kind relating in any way to any Loan Documents, Obligations or Collateral; (b) presentment, demand, protest, notice of presentment, default, non-payment, maturity, release, compromise, settlement, extension or renewal of any commercial paper, accounts, documents, instruments, chattel paper and guaranties at any time held by Agent on which a Borrower may in any way be liable, and hereby ratifies anything Agent may do in this regard; (c) notice prior to taking possession or control of any Collateral; (d) any bond or security that might be required by a court prior to allowing Agent to exercise any rights or remedies; (e) the benefit of all valuation, appraisement and exemption laws; (f) any claim against Agent or any Lender, on any theory of liability, for special, indirect, consequential, exemplary or punitive damages (as opposed to direct or actual damages) in any way relating to any Enforcement Action, Obligations, Loan Documents or transactions relating thereto; and (g) notice of acceptance hereof.  Each Borrower acknowledges that the foregoing waivers are a material inducement to Agent and Lenders entering into this Agreement and that Agent and Lenders are relying upon the foregoing in their dealings with Borrowers.  Each Borrower has reviewed the foregoing waivers with its legal counsel and has knowingly and voluntarily waived its jury trial and other rights following consultation with legal counsel.  In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.

 

14.17           Patriot Act Notice.  Agent and Lenders hereby notify Borrowers that pursuant to the requirements of the Patriot Act, Agent and Lenders are required to obtain, verify and record information that identifies each Borrower, including its legal name, address, tax ID number and other information that will allow Agent and Lenders to identify it in accordance with the Patriot Act.  Agent and Lenders will also require information regarding each personal guarantor, if any, and may require information regarding Borrowers’ management and owners, such as legal name, address, social security number and date of birth.

 

 

  

98

  

 

 

14.18           No Novation.  This Agreement does not extinguish the obligations for the payment of money outstanding under the Original Loan Agreement or discharge or release the obligations or the liens or priority of any mortgage, pledge, security agreement or any other security therefor.  Nothing herein contained shall be construed as a substitution or novation of the obligations outstanding under the Original Loan Agreement or instruments securing the same, which shall remain in full force and effect, except as modified hereby or by instruments executed concurrently herewith.  Nothing expressed or implied in this Agreement shall be construed as a release or other discharge of any Borrower from any of its obligations or liabilities under the Original Loan Agreement or any of the security agreements, pledge agreements, mortgages, or other loan documents executed in connection therewith.  Each Borrower hereby (i) confirms and agrees that each Loan Document to which it or its predecessor in interest is a party  or to which it is a successor by operation of law is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects except that on and after the Closing Date all references in any such Loan Document to “the Loan Agreement”, “thereto”, “thereof”, “thereunder” or words of like import referring to the Original Loan Agreement shall mean the Original Loan Agreement as amended and restated by this Agreement; and (ii) confirms and agrees that to the extent that any such Loan Document purports to assign or pledge to Agent, for the benefit of the Lenders, or to grant to Agent, for the benefit of the Lenders a security interest in or lien on, any collateral as security for the Obligations of Borrowers from time to time existing in respect of the Original Loan Agreement, such pledge, assignment or grant of the security interest or lien is hereby ratified and confirmed in all respects.

 

14.19           Intercreditor Agreement.  Each Lender hereby irrevocably appoints, designates and authorizes Agent to enter into and become bound by the Intercreditor Agreement on its behalf and to take such action on its behalf under the provisions thereof.  Each Lender further agrees to be bound by the terms and conditions of the Intercreditor Agreement and agrees that it shall not take any action that is prohibited by the terms of the Intercreditor Agreement.  No further consent or approval on the part of any Lender is or will be required in connection with the performance by Agent of the Intercreditor Agreement.  Parent, Borrowers, Agent and Lenders acknowledge that the exercise of certain of Agent’s rights and remedies hereunder are subject to and restricted by, the provisions of the Intercreditor Agreement.  Except as specified herein, nothing contained in the Intercreditor Agreement shall be deemed to modify any of the provisions of this Agreement and the other Loan Documents, which, as among Parent, Borrowers, Agent and Lenders shall remain in full force and effect.

 

[Remainder of page intentionally left blank; signatures begin on following page]

 

 

  

99

  

 

 

IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the date set forth above.

 

PARENT:

CONN’S, INC.

By:   /s/ Michael J. Poppe                                                         

Name:     Michael J. Poppe                                                       

Title: Executive Vice-President and Chief Financial Officer

Address:

3295 College Street

Beaumont, Texas  77701

Attn:      Chief Financial Officer                                               

Telecopy:  409-835-7069                                                            

BORROWERS:

CONN APPLIANCES, INC.,

a Texas corporation

By:  /s/ Michael J. Poppe                                                         

Name:  Michael J. Poppe                                                         

Title:  Chief Financial Officer                                                   

Address:

3295 College Street

Beaumont, Texas  77701

Attn:      Chief Financial Officer                                              

Telecopy: 409-835-7069                                                           

 

 

 

Amended and Restated Loan and Security Agreement

 

  

  

  

 

CONN CREDIT I, LP,

a Texas limited partnership

By:          Conn Credit Corporation, Inc.,

a Texas corporation,

its sole general partner

By:      /s/ Michael J. Poppe                                                    

Name:    Michael J. Poppe                                                       

Title:  Chief Financial Officer                                                  

Address:

3295 College Street

Beaumont, Texas  77701

Attn:      Chief Financial Officer                                              

Telecopy: 409-835-7069                                                           

CONN CREDIT CORPORATION, INC.,

a Texas corporation

By:        /s/ Michael J. Poppe                                                  

Name:   Michael J. Poppe                                                        

Title:  Chief Financial Officer                                                  

Address:

3295 College Street

Beaumont, Texas  77701

Attn:      Chief Financial Officer                                              

Telecopy:   409-835-7069                                                          

 

 

 

 

 

 

Amended and Restated Loan and Security Agreement

 

  

  

  

 

AGENT AND LENDERS:

BANK OF AMERICA, N.A.,

as Agent and Lender

By:       /s/ Matthew R. Van Steenhuyse                               

Name:  Matthew R. Van Steenhuyse                                     

Title:   Senior Vice President                                                   

Address:

55 South Lake Avenue, Suite 900

Pasadena, California 91101

Attn:       Matthew R. Van Steenhuyse

Telecopy:  _________________

 

 

 

 

 

 

 

 

Amended and Restated Loan and Security Agreement

 

  

  

  

 

 

JPMORGAN CHASE BANK, NATIONAL

ASSOCIATION, as Lender, Co-Syndication Agent,

Joint Book Runner, Co-Lead Arranger

By:       /s/ T.C. Wilde                                                                

Name:   T. C. Wilde

Title:     Vice President

Address:

2200 Ross Avenue, 9th Floor

Dallas, Texas  75201

Attn:       T. C. Wilde

Telecopy:  (214) 965-2375

 

 

 

 

 

 

Amended and Restated Loan and Security Agreement

 

  

  

  

 

CAPITAL ONE, N.A.,

as Lender and Co-Documentation Agent

By:   /s/ Lori S. Mitchell                                                         

Name:  Loris S. Mitchell                                                         

Title:  Executive Vice President                                             

Address:

Specialty Finance Lender Group

440 Third St.

Baton Rouge, Louisiana  70802

Attn:       Lori S. Mitchell

Office:    (225) 381-2260

 

 

 

 

 

 

Amended and Restated Loan and Security Agreement

 

  

  

  

 

 

UNION BANK, N.A. fka UNION BANK OF

CALIFORNIA, N.A.,

as Lender

By:     /s/ Nadia Mitevska                                                       

Name:   Nadia Mitevska                                                          

Title:    Vice President                                                              

Address:

   Commercial Finance Division

400 California St., 8th Floor

San Francisco, CA 94104

Attn: Nadia Mitevska, Vice President/

Senior Relationship Manager

Telecopy: 415-765-2170

 

 

 

 

 

 

Amended and Restated Loan and Security Agreement

 

  

  

  

 

 

COMPASS BANK,

as Lender

By:    /s/ Frank Carvelli                                                          

Name:  Frank Carvelli                                                             

Title:  Vice President                                                              

Address:

     24 Greenway Plaza, Ste. 1403                           

      Houston, TX 77046                                          

Attn:            Frank Carvelli                                                     

Telecopy:

 

 

 

 

 

 

Amended and Restated Loan and Security Agreement

 

  

  

 

 

COMPASS BANK, successor in interest to 

GUARANTY BANK

as Lender

 

By:       /s/ Frank Carvelli                                                          

Name:  Frank Carvelli                                                             

Title:    Vice President                                                              

Address:

     24 Greenway Plaza, Ste. 1403                           

      Houston, TX 77046                                          

Attn:            Frank Carvelli                                                     

Telecopy:

 

 

 

 

 

 

Amended and Restated Loan and Security Agreement

 

  

  

 

 

FIRST TENNESSEE BANK NATIONAL 

ASSOCIATION, as Lender

By:        /s/ R. Keith Kirby                                                    

Name:    R. Keith Kirby                                                         

Title:    Vice President                                                           

Address:

P.O. Box 84

Memphis, Tennessee  38101

Attn:       R. Keith Kirby, Vice President

Telecopy:  (901) 523-4718

 

 

 

 

 

 

Amended and Restated Loan and Security Agreement

 

  

  

 

 

WELLS FARGO PREFERRED CAPITAL, INC.,

as Lender, and Co-Syndication Agent

By:       /s/ Casey P. Johnson                                                

Name:   Casey P. Johnson                                                     

Title:  Senior Vice President                                                  

Address:

 

800 Walnut Street

Des Moines, Iowa 50309

Attn:       Mr. Casey P. Johnson, Senior Vice President

Telecopy:  (515) 557-5035

 

 

 

 

 

 

Amended and Restated Loan and Security Agreement

 

  

  

 

 

REGIONS BANK,

as Lender and Co-Documentation Agent

By:         /s/ Jason Nichols                                                     

Name:    Jason Nichols                                                          

Title:      Vice President                                                          

Address:

5001 Spring Valley Road, Suite 153W                 

Dallas, TX 75219                                                     

Attn:      Jason Nichols, Vice President                                                                

Telecopy:     972-383-7505                                                     

 

 

 

 

 

 

Amended and Restated Loan and Security Agreement

 

  

  

 

 

AMEGY BANK,

as Lender

By:     /s/ Mark L. Wayne                                                      

Name:    Mark L. Wayne                                                        

Title:   Senior Vice President                                                 

Address:

       _______________________________

       _______________________________

Attn:        _______________________________   

Telecopy:   ______________________________                                                   

 

 

 

 

 

 

Amended and Restated Loan and Security Agreement

 

  

  

 

 

COMMUNITYBANK OF TEXAS, N.A.,

as Lender

By:      /s/ Mike Peyton                                                          

Name:    Mike Peyton                                                            

Title:   EVP                                                                               

Address:

5999 Delaware                                                         

Beaumont, Texas 77706                                         

Attn:       Mike Peyton                                                           

Telecopy:  409-861-7218                                                        

 

 

 

 

 

 

Amended and Restated Loan and Security Agreement

 

  

  

 

 

EXHIBIT A

 

to

 

Amended and Restated

Loan and Security Agreement

 

REVOLVER NOTE

 

	 _____________, 2010	 $________________

 

CONN APPLIANCES, INC., a Texas corporation, CONN CREDIT I, LP, a Texas limited partnership, and CONN CREDIT CORPORATION, INC., a Texas corporation (collectively, “Borrowers”), for value received, hereby unconditionally promise to pay, on a joint and several basis, to the order of ____________________________ (“Lender”), the principal sum of ______________________________ DOLLARS ($___________), or such lesser amount as may be advanced by Lender as Revolver Loans and owing as LC Obligations from time to time under the Loan Agreement described below, together with all accrued and unpaid interest thereon.  Terms are used herein as defined in the Amended and Restated Loan and Security Agreement dated as of November __, 2010, among Borrowers, Bank of America, N.A., as Agent, Lender, and certain other financial institutions, as such agreement may be amended, modified, renewed or extended from time to time (“Loan Agreement”).

 

Principal of and interest on this Note from time to time outstanding shall be due and payable as provided in the Loan Agreement.  This Note is issued pursuant to and evidences Revolver Loans and LC Obligations under the Loan Agreement, to which reference is made for a statement of the rights and obligations of Lender and the duties and obligations of Borrowers.  The Loan Agreement contains provisions for acceleration of the maturity of this Note upon the happening of certain stated events, and for the borrowing, prepayment and reborrowing of amounts upon specified terms and conditions.

 

The holder of this Note is hereby authorized by Borrowers to record on a schedule annexed to this Note (or on a supplemental schedule) the amounts owing with respect to Revolver Loans and LC Obligations, and the payment thereof.  Failure to make any notation, however, shall not affect the rights of the holder of this Note or any obligations of Borrowers hereunder or under any other Loan Documents.

 

Time is of the essence of this Note.  Each Borrower and all endorsers, sureties and guarantors of this Note hereby severally waive demand, presentment for payment, protest, notice of protest, notice of intention to accelerate the maturity of this Note, diligence in collecting, the bringing of any suit against any party, and any notice of or defense on account of any extensions, renewals, partial payments, or changes in any manner of or in this Note or in any of its terms, provisions and covenants, or any releases or substitutions of any security, or any delay, indulgence or other act of any trustee or any holder hereof, whether before or after maturity.  Borrowers jointly and severally agree to pay, and to save the holder of this Note harmless against, any liability for the payment of all costs and expenses (including without limitation reasonable attorneys’ fees) if this Note is collected by or through an attorney-at-law.

 

 

  

Exhibit A

1

  

 

 

In no contingency or event whatsoever shall the amount paid or agreed to be paid to the holder of this Note for the use, forbearance or detention of money advanced hereunder exceed the highest lawful rate permitted under Applicable Law.  If any such excess amount is inadvertently paid by Borrowers or inadvertently received by the holder of this Note, such excess shall be returned to Borrowers or credited as a payment of principal, in accordance with the Loan Agreement.  It is the intent hereof that Borrowers not pay or contract to pay, and that holder of this Note not receive or contract to receive, directly or indirectly in any manner whatsoever, interest in excess of that which may be paid by Borrowers under Applicable Law.

 

This Note shall be governed by the laws of the State of California, without giving effect to any conflict of law principles (but giving effect to federal laws relating to national banks).

 

IN WITNESS WHEREOF, this Revolver Note is executed as of the date set forth above.

 

	
Attest:

 

 

 

____________________________________________

Secretary

	
CONN APPLIANCES, INC.,

a Texas corporation

 

 

By:                                                               

Name:_________________________

Title:                                                               

	  	  
	
Attest:

 

 

 

____________________________________________

Secretary

	
CONN CREDIT I, LP,

a Texas limited partnership

 

By:Conn Credit Corporation, Inc.,

a Texas corporation,

its General Partner

By:                                                           

Name:                                                      

Title:                                                        

	  	  
	
Attest:

 

 

 

____________________________________________

Secretary

	
CONN CREDIT CORPORATION, INC.,

a Texas corporation

 

 

By:                                                               

Name:_________________________

Title:                                                            

 

 

  

Exhibit A

2

  

 

EXHIBIT B

 

to

 

Amended and Restated

Loan and Security Agreement

 

ASSIGNMENT AND ACCEPTANCE

 

Reference is made to the Amended and Restated Loan and Security Agreement dated as of November __, 2010, as amended (“Loan Agreement”), among CONN APPLIANCES, INC., a Texas corporation, CONN CREDIT I, LP, a Texas limited partnership, and CONN CREDIT CORPORATION, INC., a Texas corporation (collectively, “Borrowers”), BANK OF AMERICA, N.A., as agent (“Agent”) for the financial institutions from time to time party to the Loan Agreement (“Lenders”), and such Lenders.  Terms are used herein as defined in the Loan Agreement.

 

______________________________________ (“Assignor”) and ______________________ _____________ (“Assignee”) agree as follows:

 

1.           Assignor hereby assigns to Assignee and Assignee hereby purchases and assumes from Assignor (a) a principal amount of $________ of Assignor’s outstanding Revolver Loans and $___________ of Assignor’s participations in LC Obligations, and (b) the amount of $__________ of Assignor’s Revolver Commitment (which represents ____% of the total Revolver Commitments), (the foregoing items being, collectively, the “Assigned Interest”), together with an interest in the Loan Documents corresponding to the Assigned Interest.  This Agreement shall be effective as of the date (“Effective Date”) indicated in the corresponding Assignment Notice delivered to Agent, provided such Assignment Notice is executed by Assignor, Assignee, Agent and Borrower Agent, if applicable.  From and after the Effective Date, Assignee hereby expressly assumes, and undertakes to perform, all of Assignor’s obligations in respect of the Assigned Interest, and all principal, interest, fees and other amounts which would otherwise be payable to or for Assignor’s account in respect of the Assigned Interest shall be payable to or for Assignee’s account, to the extent such amounts accrue on or after the Effective Date.

 

2.           Assignor (a) represents that as of the date hereof, prior to giving effect to this assignment, its Revolver Commitment is $__________, the outstanding balance of its Revolver Loans and participations in LC Obligations is $__________; (b) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Agreement or any other instrument or document furnished pursuant thereto, other than that Assignor is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; and (c) makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrowers or the performance by Borrowers of their obligations under the Loan Documents.  [Assignor is attaching the Note[s] held by it and requests that Agent exchange such Note[s] for new Notes payable to Assignee [and Assignor].]

 

 

  

Exhibit B

1

  

 

 

3.           Assignee (a) represents and warrants that it is legally authorized to enter into this Assignment and Acceptance; (b) confirms that it has received copies of the Loan Agreement and such other Loan Documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (c) agrees that it shall, independently and without reliance upon Assignor and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents; (d) confirms that it is an Eligible Assignee; (e) appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers under the Loan Agreement as are delegated to Agent by the terms thereof, together with such powers as are incidental thereto; (f) agrees that it will observe and perform all obligations that are required to be performed by it as a “Lender” under the Loan Documents; and (g) represents and warrants that the assignment evidenced hereby will not result in a non-exempt “prohibited transaction” under Section 406 of ERISA.

 

4.           This Agreement shall be governed by the laws of the State of California.  If any provision is found to be invalid under Applicable Law, it shall be ineffective only to the extent of such invalidity and the remaining provisions of this Agreement shall remain in full force and effect.

 

5.           Each notice or other communication hereunder shall be in writing, shall be sent by messenger, by telecopy or facsimile transmission, or by first-class mail, shall be deemed given when sent and shall be sent as follows:

 

	
  

	
(a)

	
If to Assignee, to the following address (or to such other address as Assignee may designate from time to time):

 

__________________________

 

__________________________

 

__________________________

 

	
  

	
(b)

	
If to Assignor, to the following address (or to such other address as Assignor may designate from time to time):

 

__________________________

 

__________________________

 

__________________________

 

Payments hereunder shall be made by wire transfer of immediately available Dollars as follows:

 

 

 

 

 

  

Exhibit B

2

  

 

 

 

If to Assignee, to the following account (or to such other account as Assignee may designate from time to time):

 

______________________________

 

______________________________

 

ABA No._______________________

 

______________________________

 

Account No.____________________

 

Reference:  _____________________

 

If to Assignor, to the following account (or to such other account as Assignor may designate from time to time):

 

______________________________

 

______________________________

 

ABA No._______________________

 

______________________________

 

Account No.____________________

 

Reference:  _____________________

 

IN WITNESS WHEREOF, this Assignment and Acceptance is executed as of _____________.

 

 

	 	  

 _______________________________

(“Assignee”)

 

By                                                                    

    Title:

_______________________________

(“Assignor”)

 

By                                                                     

    Title:

 

 

 

 

 

  

Exhibit B

3

  

 

EXHIBIT C

 

to

 

Amended and Restated

Loan and Security Agreement

 

ASSIGNMENT NOTICE

 

Reference is made to (1) the Amended and Restated Loan and Security Agreement dated as of November __, 2010, as amended (“Loan Agreement”), among CONN APPLIANCES, INC., a Texas corporation, CONN CREDIT I, LP, a Texas limited partnership, and CONN CREDIT CORPORATION, INC., a Texas corporation (collectively, “Borrowers”), BANK OF AMERICA, N.A., as agent (“Agent”) for the financial institutions from time to time party to the Loan Agreement (“Lenders”), and such Lenders; and (2) the Assignment and Acceptance dated as of ____________, 20__ (“Assignment Agreement”), between __________________ (“Assignor”) and ____________________ (“Assignee”).  Terms are used herein as defined in the Loan Agreement.

 

Assignor hereby notifies Borrowers and Agent of Assignor’s intent to assign to Assignee pursuant to the Assignment Agreement (a) a principal amount of $________ of Assignor’s outstanding Revolver Loans and $___________ of Assignor’s participations in LC Obligations, and (b) the amount of $__________ of Assignor’s Revolver Commitment (which represents ____% of the total Revolver Commitments) (the foregoing items being, collectively, the “Assigned Interest”), together with an interest in the Loan Documents corresponding to the Assigned Interest.  This Agreement shall be effective as of the date (“Effective Date”) indicated below, provided this Assignment Notice is executed by Assignor, Assignee, Agent and Borrower Agent, if applicable.  Pursuant to the Assignment Agreement, Assignee has expressly assumed all of Assignor’s obligations under the Loan Agreement to the extent of the Assigned Interest, as of the Effective Date.

 

For purposes of the Loan Agreement, Agent shall deem Assignor’s Revolver Commitment to be reduced by $_________, and Assignee’s Revolver Commitment to be increased by $_________.

 

The address of Assignee to which notices and information are to be sent under the terms of the Loan Agreement is:

 

________________________

 

________________________

 

________________________

 

________________________

 

The address of Assignee to which payments are to be sent under the terms of the Loan Agreement is shown in the Assignment and Acceptance.

 

This Notice is being delivered to Borrowers and Agent pursuant to Section 13.3 of the Loan Agreement.  Please acknowledge your acceptance of this Notice by executing and returning to Assignee and Assignor a copy of this Notice.

 

 

 

  

Exhibit C

1

  

 

 

 

IN WITNESS WHEREOF, this Assignment Notice is executed as of _____________.

 

 

	 	  

 _______________________________

(“Assignee”)

 

By                                                                    

    Title:

_______________________________

(“Assignor”)

 

By                                                                     

    Title:

 

 

ACKNOWLEDGED AND AGREED,

AS OF THE DATE SET FORTH ABOVE:

 

 

BORROWER AGENT:*

 

CONN APPLIANCES, INC.,

a Texas corporation

 

 

By                                                                                

Title:

 

* No signature required if Assignee is a Lender, U.S.-based Affiliate of a Lender or Approved Fund, or if an Event of Default exists.

 

BANK OF AMERICA, N.A., as Agent

 

By                                                                                

Title:

 

 

 

 

 

 

  

Exhibit C

2

  

 

 

SCHEDULE 1.1

 

to

 

Amended and Restated

Loan and Security Agreement

 

REVOLVER COMMITMENTS OF LENDERS

 

	
Lender

	
Revolver Commitment

	
Bank of America, N.A.

	
$75,000,000

	
JPMorgan Chase

Bank, National Association

	
$65,000,000

	
Wells Fargo Preferred Capital, Inc.

	
$40,000,000

	
Capital One, N.A.

	
$40,000,000

	
BBVA Compass Bank

	
$15,000,000

	
BBVA Compass Bank, as successor in interest to Guaranty Bank

	
$25,000,000

	
Regions Bank

	
$40,000,000

	
Union Bank, N.A.

	
$25,000,000

	
First Tennessee Bank National Association

	
$20,000,000

	
Amegy Bank

	
$20,000,000

	
CommunityBank of Texas, N.A.

	
$10,000,000

	
Total Revolver Commitments

	
$375,000,000

 

 

 

 

 

 

 

 

  

Schedule 1.1 to Amended and Restated Loan and Security Agreement

Commitments Of Lenders

1

  

 

SCHEDULE 1.1 E(1)

 

To

 

Amended and Restated

Loan and Security Agreement

 

EXISTING BANK PRODUCTS

 

 

	
BANK NAME

	
BANK PRODUCTS

	 	 
	
Bank of America Bank

	
Depository Accounts and other Cash Management Services

	 	 
	  	
Merchant Card Services for MasterCard and Visa including authorization of Discover and AMEX

	  	  
	 	 
	
CapitalOne Bank

	
Depository Accounts and other Cash Management Services

	 	 
	  	
Hedge Agreements :

	  	
$ 15MM LIBOR Floating to Fixed SWAP due 4/2011

	  	
$ 10MM LIBOR Floating to Fixed SWAP due 7/2011

	  	  
	 	 
	
JP Morgan Chase Bank

	
Depository Accounts and other Cash Management Services

	  	  
	 	 
	
BBVA Compass Bank

	
Depository Accounts and other Cash Management Services

	  	  
	 	 
	
Wells Fargo Bank

	
Depository Accounts and other Cash Management Services

	 	 
	  	
Leases for 17 Service Vans final payment due 3/2012

	 	 
	  	
Leases for 11 Service Vans final payment due 6/2013

	 	 
	  	
Commercial Insurance Brokerage Services

	  	  
	 	 
	
Community Bank of Texas

	
Depository Accounts and other Cash Management Services

 

 

 

 

 

 

 

 

 

  

Schedule 1.1E(1) to Amended and Restated Loan and Security Agreement

Existing Bank Products

1

  

 

 

SCHEDULE 1.1E(2)

 

To

 

Amended and Restated

Loan and Security Agreement

 

EXISTING LETTERS OF CREDIT

 

 

	
1.

	
$1,575,000.00 Letter of Credit issued by JPMorgan Chase Bank, N.A. (L/C Reference No. TPTS397519).

	 	 
	
2.

	
$150,000.00 Letter of Credit issued by JPMorgan Chase Bank, N.A. (L/C Reference No. D617706).

 

 

 

 

 

 

  

Schedule 1.1E(2) to Amended and Restated Loan and Security Agreement

Existing Letters of Credit

1

  

 

 

SCHEDULE 1.1(L)

 

To

 

Amended and Restated Loan and Security Agreement

 

LEASEHOLD MORTGAGES

 

 

	
Lease No.

	
Lease Name

	
Lease City

	
Lease State

	
11002

	
Gateway

	
Beaumont

	
TX

	
11005

	
Port Plaza Centre

	
Port Arthur

	
TX

	
11006

	
Lake Charles

	
Lake Charles

	
LA

	
11007

	
New Iberia

	
New Iberia

	
LA

	
11008

	
Lafayette - Karam Shopping Center

	
Lafayette

	
LA

	
11009

	
Baton Rouge - Airline

	
Baton Rouge

	
LA

	
11011

	
Ambassador Caffrey

	
Lafayette

	
LA

	
11012

	
Parkdale

	
Beaumont

	
TX

	
11014

	
Orange

	
Orange

	
TX

	
11016

	
Houston - N. Freeway

	
Houston

	
TX

	
11018

	
Houston - Gulf Freeway

	
Houston

	
TX

	
11021

	
Fry Road

	
Katy

	
TX

	
11023

	
Katy Freeway

	
Houston

	
TX

	
11024

	
Humble

	
Humble

	
TX

	
11025

	
Willowbrook

	
Houston

	
TX

	
11026

	
Uvalde

	
Houston

	
TX

	
11027

	
Northline Mall

	
Houston

	
TX

	
11028

	
Siegen Lane

	
Baton Rouge

	
LA

	
11030

	
Stella Link

	
Houston

	
TX

	
11041

	
McAllen

	
McAllen

	
TX

	
11042

	
Harlingen

	
Harlingen

	
TX

	
11043

	
Brownsville

	
Brownsville

	
TX

	
11048

	
Round Rock

	
Round Rock

	
TX

	
11061

	
SW Military

	
San Antonio

	
TX

	
11062

	
Sports Authority

	
San Antonio

	
TX

	
11064

	
West Commerce

	
San Antonio

	
TX

	
11065

	
The Vineyards

	
San Antonio

	
TX

	
11066

	
South Brook

	
Austin

	
TX

	
11067

	
Capital Plaza

	
Austin

	
TX

	
11068

	
Windsor Park

	
San Antonio

	
TX

	
11070

	
Gulf Freeway

	
Houston

	
TX

	
11071

	
Northway Shopping Center

	
Houston

	
TX

	
11072

	
Pinoak

	
Houston

	
TX

	
11073

	
Conroe

	
Conroe

	
TX

	
11075

	
SE Military

	
San Antonio

	
TX

	
11077

	
Garth Road

	
Baytown

	
TX

	
11078

	
West Oaks

	
Houston

	
TX

	
11079

	
Lufkin

	
Lufkin

	
TX

	
11081

	
Royal Lane

	
Dallas

	
TX

	
11085

	
Ridgemare

	
White Settlement

	
TX

	
11086

	
Plano

	
Plano

	
TX

	
11087

	
Cedar Hill

	
Cedar Hill

	
TX

	
11090

	
Addison

	
Dallas

	
TX

 

  

Schedule 1.1L to Amended and Restated Loan and Security Agreement

Leasehold Mortgages

1  

  

 

	
11091

	
Euless

	
Euless

	
TX

	
11092

	
Hulen

	
Fort Worth

	
TX

	
11094

	
Arlington

	
Arlington

	
TX

	
11096

	
Pavillions

	
San Antonio

	
TX

	
11097

	
Oakcliff

	
Dallas

	
TX

	
11102

	
Pearland

	
Pearland

	
TX

	
11103

	
Grapevine

	
Grapevine

	
TX

	
11104

	
North Irving

	
Irving

	
TX

	
11105

	
Pasadena

	
Pasadena

	
TX

	
11107

	
Denton

	
Denton

	
TX

	
11108

	
Eastchase

	
Fort Worth

	
TX

	
11110

	
Burleson

	
Fort Worth

	
TX

	
11111

	
Midland

	
Oklahoma City

	
OK

	
11112

	
Cypresswood

	
Spring

	
TX

	
11114

	
Rosenberg

	
Rosenberg

	
TX

	
11115

	
Edmond Plaza

	
Edmond

	
OK

	
11116

	
Walnut Square

	
Oklahoma City

	
OK

	
12001

	
Houston Warehouse

	
Houston

	
TX

	
12003

	
Beaumont Warehouse

	
Beaumont

	
TX

	
18502

	
Corporate Offices

	
Beaumont

	
TX

	
12049

	
Harlingen Crossdock

	
Harlingen

	
TX

	
83008

	
Houston Service

	
Houston

	
TX

	
83080

	
Dallas Service

	
Dallas

	
TX

 

 

  

Schedule 1.1L to Amended and Restated Loan and Security Agreement

Leasehold Mortgages

2

  

 

 

SCHEDULE 7.1(j)

 

to

 

Amended and Restated

Loan and Security Agreement

 

EQUITY INTERESTS

 

 

Conn Appliances, Inc.

	
Name

	
Percentage Interest Owned

	
CAI Holding Co.

	
100%, as its sole shareholder

	
CAI Credit Insurance Agency, Inc.

	
100%, by CAI Holding Co.

	
Conn Credit Corporation, Inc.

	
100%, by CAI Holding Co.

	
CAIAIR, Inc.

	
100%, as its sole shareholder

	
Conn Funding II GP, LLC

	
100%, as its sole member  (to be dissolved following closing)

	
Conn Funding II, L.P.

	
1%, by Conn Funding II GP, LLC (to be dissolved following closing);

99%, by Conn Appliances, LLC  (to be dissolved following closing)

	
Conn Appliances, LLC

	
100%, as its sole member  (to be dissolved following closing)

Conn Credit Corporation, Inc.

	
Name

	
Percentage Interest Owned

	
Conn Lending, LLC

	
100%, as its sole member

	
Conn Credit I, LP

	
1%, as its sole general partner

Conn Credit I, LP

NONE

 

 

 

 

  

Schedule 7.1(j) to Amended and Restated Loan and Security Agreement

Equity Interests

1

  

 

SCHEDULE 7.3

 

to

 

Amended and Restated

Loan and Security Agreement

 

REAL ESTATE

 

 

	
Address

	
City

	
State

	
Zip

	
8201 South Gessner

	
Houston

	
Texas

	
77036

	
8317 North 10th Street

 

	
McAllen

	
Texas

	
78504

	
2021 Town East Blvd.

#1049 & #1050

	
Mesquite

	
Texas

	
75149

	
2900 Oak Springs Road

	
Austin

	
Texas

	
78702

	
124 Bertrand Drive

	
Lafayette

	
Louisiana

	
70506

 

 

 

 

  

Schedule 7.3 to Amended and Restated Loan and Security Agreement

Real Estate

1

  

 

 

SCHEDULE 8.5

 

to

 

Amended and Restated

Loan and Security Agreement

 

DEPOSIT ACCOUNTS

 

 

Conn Appliances, Inc.

	
Depository Bank

	
Type of Account

	
 

	
BANK OF AMERICA

	
Store Deposit Account

	
 

	
BANK OF AMERICA

	
Letter of Credit Deposit Account

	
 

	
BANK OF AMERICA

	
LC Disbursement Account

	
 

	
CAPITALONE

	
Controlled Disbursement Account

	
 

	
CAPITALONE

	
General Operating Account

	
 

	
CAPITALONE

	
Payroll Account

	
 

	
CAPITALONE

	
Payment Center Account

	
 

	
CAPITALONE

	
Credit Card Settlement Account

	
 

	
CAPITALONE

	
Louisiana Store Depository Account

	
 

	
COMMUNITY BANK OF TEXAS

	
Store Deposit Account

	
 

	
JPMORGAN CHASE

	
Depository Account

	
 

	
JPMORGAN CHASE

	
General Operating Account

	
 

	
SUNTRUST

	
General Corporate Account

	
 

	
BBVA COMPASS BANK

	
Store Deposit Account

	
 

	
WELLS FARGO BANK

	
Store Deposit Account

	
 

	
WOODFOREST

	
Store Deposit Account

	
 

Conn Credit Corporation, Inc.

NONE.

Conn Credit I, LP

NONE.

 

 

  

Schedule 8.5 to Amended and Restated Loan and Security Agreement

Deposit Accounts

1

  

 

SCHEDULE 8.6.1

 

to

 

Amended and Restated

Loan and Security Agreement

 

CREDIT CARD AGREEMENTS

 

 

	
1.

	
Card Acceptance Agreement for Participating Appliance/Electronic Industry Dealers by and between GE Money Bank and Conn Appliances, Inc.

	 	 
	
2.

	
Merchant Agreement by and between Bank of America, N.A. and Conn Appliances, Inc.

	 	 
	
3.

	
Merchant Services Agreement by and between DFS Services LLC and Conn Appliances, Inc.

	 	 
	
4.

	
PayPal User Agreement by and between PayPal and Conn Appliances, Inc.

	 	 
	
5.

	
Agreement for American Express Card Acceptance by and between American Express Travel Related Services Company, Inc. and Conn Appliances, Inc.

	 	 
	
6.

	
Merchant Agreement by and between Phoenix Payment Systems, Inc. dba Electronic Payment Exchange (EPX) and Conn Appliances, Inc

 

 

 

 

 

  

Schedule 8.6.1 to Amended and Restated Loan and Security Agreement

Credit Card Agreements

1

  

 

 

SCHEDULE 8.7.1

 

to

 

Amended and Restated

Loan and Security Agreement

 

BUSINESS LOCATIONS

 

 

	
1.

	
Parent and Borrowers currently have the following business locations, and no others:

	 	 
	  	
Chief Executive Office:

	  
	 	 	 
	  	
Conn’s, Inc.:

	
3295 College Street, Beaumont, Texas  77701.

	 	 	 
	  	
Conn Appliances, Inc.:

	
3295 College Street, Beaumont, Texas  77701.

	 	 	 
	  	
Conn Credit Corporation, Inc.:

	
3295 College Street, Beaumont, Texas  77701.

	 	 	 
	  	
Conn Credit I, LP:

	
3295 College Street, Beaumont, Texas  77701.

	 	 	 
	  	
Other Locations:

	
See Addendum 8.7.1 attached hereto.

	 	 	 
	 	 	 
	
2.

	
In the five years preceding the Closing Date, Parent and Borrowers have had no office or place of business located in any county other than as set forth above, except:

	 	 	 
	  	
NONE.

	  
	 	 	 
	 	 	 
	
3.

	
Each of Subsidiary of Borrowers currently has the following business locations, and no others:

	 	 
	  	
Chief Executive Office:

	  
	 	 	 
	  	
CAI Holding Co.:

	
3295 College Street, Beaumont, Texas  77701.

	 	 	 
	  	
CAIAIR, Inc.:

	
3295 College Street, Beaumont, Texas  77701.

	 	 	 
	  	
CAI Credit Insurance Agency, Inc.:

	
3295 College Street, Beaumont, Texas  77701.

	 	 	 
	  	
Conn Lending, LLC:

	
103 Foulk Rd., Ste. 202, Wilmington, DE  19803.

	 	 	 
	  	
Conn Funding II GP, L.L.C.:

	
3295 College Street, Beaumont, Texas  77701.

	 	 	 
	  	
Conn Appliances, LLC:

	
103 Foulk Rd., Ste. 202, Wilmington, DE  19803.

	 	 	 
	  	
Conn Funding II, L.P.:

	
3295 College Street, Beaumont, Texas  77701.

	 	 	 
	  	
Other Locations:

	
NONE.

 

  

Schedule 8.7.1 to Amended and Restated Loan and Security Agreement

Business Locations

1

  

 

	
4.

	
In the five years preceding the Closing Date, no Subsidiary of each Borrower has had an office or place of business located in any county other than as set forth above, except:

	 	 	 
	  	
NONE.

	  
	 	 	 
	 	 	 
	
5.

	
The following bailees, warehouseman, similar parties and consignees hold inventory of a Borrower or its Subsidiary:

	 	 	 
	  	
NONE.

	  

 

 

 

 

  

Schedule 8.7.1 to Amended and Restated Loan and Security Agreement

Business Locations

2

  

 

 

Addendum 8.7.1

Business Locations

	
Name

	
Address

	
City

	
State

	
Zip

	
Gateway

	
108 Gateway Shopping Center

	
Beaumont

	
TX

	
77701

	
Port Arthur

	
7855 Memorial Blvd.

	
Port Arthur

	
TX

	
77642

	
Lake Charles

	
3129 Highway 14

	
Lake Charles

	
LA

	
70601

	
New Iberia

	
820 H East Admiral Doyle

	
New Iberia

	
LA

	
70560

	
Willow Street

	
221 B. West Willow Street

	
Lafayette

	
LA

	
70501

	
Airline

	
8888 Airline Highway

	
Baton Rouge

	
LA

	
70815

	
Ambassador Caffrey

	
3559 Ambassador Caffrey

	
Lafayette

	
LA

	
70506

	
Parkdale

	
4326 Dowlen Road

	
Beaumont

	
TX

	
77706

	
Orange

	
180 Strickland Drive

	
Orange

	
TX

	
77630

	
N. Freeway

	
9700 North Freeway

	
Houston

	
TX

	
77037

	
Gessner

	
8201 South Gessner

	
Houston

	
TX

	
77036

	
Gulf Freeway

	
10900 I-H 45 South

	
Houston

	
TX

	
77075

	
Fry Rd

	
20051 Katy Freeway

	
Katy

	
TX

	
77450

	
Katy Frwy

	
9960 Katy Freeway

	
Houston

	
TX

	
77055

	
59 @ 1960

	
19633 A Highway 59

	
Humble

	
TX

	
77338

	
Willowbrook

	
7911 C FM 1960

	
Houston

	
TX

	
77070

	
Uvalde

	
13337 1-H 10 East

	
Houston

	
TX

	
77015

	
Northline Mall

	
4446 N. Freeway

	
Houston

	
TX

	
77022

	
Siegen Lane

	
6835 Siegen Lane

	
Baton Rouge

	
LA

	
70806

	
Nasa Rd

	
1101 W. Nasa Road 1

	
Wesbster

	
TX

	
77598

	
McAllen

	
724 East Expressway 83

	
McAllen

	
TX

	
78501

	
Harlingen

	
706 S. Dixieland Road

	
Harlingen

	
TX

	
78550

	
Brownsville

	
4465 N. Expressway 77/83

	
Brownsville

	
TX

	
78520

	
Lakeline

	
11101 Pecan Park Blvd.

	
Cedar Park

	
TX

	
78613

	
Anderson Ln

	
2531 West Anderson Lane

	
Austin

	
TX

	
78757

	
Bandera

	
11751 Bandera Road

	
San Antonio

	
TX

	
78249

	
Corpus

	
4818 S. Padre Island Drive

	
Corpus Christi

	
TX

	
78411

	
Round Rock

	
1601 South 1-H 35

	
Round Rock

	
TX

	
78664

	
SW Military

	
2514 SW Military Drive

	
San Antonio

	
TX

	
78221

	
N Loop 410

	
4999 NW Loop 410

	
San Antonio

	
TX

	
78229

	
West Commerce

	
4022 West Commerce

	
San Antonio

	
TX

	
78207

	
The Vineyards

	
1211 N Loop 1604 W

	
San Antonio

	
TX

	
78258

	
S. Brook

	
6425 S. 1-H 35

	
Austin

	
TX

	
78744

	
Capital Plaza

	
5441 1-H 35 North

	
Austin

	
TX

	
78723

	
Windsor Park

	
7730 I-H 35 North

	
San Antonio

	
TX

	
78218

	
DeZavala Crossing

	
5219 DeZavala

	
San Antonio

	
TX

	
78249

	
Gulf Freeway

	
6888 Gulf Freeway

	
Houston

	
TX

	
77087

	
Northwest Freeway

	
11051 Northwest Freeway

	
Houston

	
TX

	
77092

	
Pinoak

	
5505 W. Loop South

	
Houston

	
TX

	
77401

	
Conroe

	
1420 W Loop 336 N

	
Conroe

	
TX

	
77304

	
The Woodlands

	
19075 I-H 45 N

	
Shenandoah

	
TX

	
77385

	
SE Military

	
3143 SE Military Drive

	
San Antonio

	
TX

	
78223

	
Sugarland

	
15235 SW Freeway

	
Sugarland

	
TX

	
77478

	
Garth Rd

	
5010 Garth Road

	
Baytown

	
TX

	
77521

	
West Oaks

	
2665 South Highway 6

	
Houston

	
TX

	
77082

	
Lufkin

	
3045 S. John Redditt Road

	
Lufkin

	
TX

	
75901

	
Royal Ln

	
11250 North Central Expressway

	
Dallas

	
TX

	
75243

	
Richardson

	
1300 East Beltline Road

	
Richardson

	
TX

	
75081

	
Lewisville

	
2422 S. Stemmons Freeway

	
Lewisville

	
TX

	
75067

 

  

  

  

 

	
Mesquite

	
2021 Town East Blvd.

	
Mesquite

	
TX

	
75149

	
Ridgemare

	
1705 S. Cherry Lane

	
White Settlement

	
TX

	
76108

	
Plano

	
1021 North Central Expressway

	
Plano

	
TX

	
75075

	
Cedar Hill

	
229 E FM Road 1382

	
Cedar Hill

	
TX

	
75104

	
Hurst

	
747 N. Loop 820

	
Hurst

	
TX

	
76053

	
Wheatland

	
2984 W. Wheatland Road

	
Dallas

	
TX

	
75237

	
Addison

	
5515 Arapaho Road

	
Dallas

	
TX

	
75248

	
Euless

	
1201 W. Airport Freeway

	
Euless

	
TX

	
76040

	
Hulen

	
4617 S. Hulen Street

	
Fort Worth

	
TX

	
76132

	
Arlington

	
137 Merchants Row

	
Arlington

	
TX

	
76015

	
Pavilions

	
25 NE Loop 410

	
San Antonio

	
TX

	
78216

	
Pinnacle Pt

	
4351 DFW Turnpike

	
Dallas

	
TX

	
75211

	
Pearland

	
2800 E. Broadway

	
Pearland

	
TX

	
77581

	
Grapevine

	
1217 West Hwy 114

	
Grapevine

	
TX

	
76051

	
N. Irving

	
2800 Ranch Trail Drive

	
Irving

	
TX

	
75063

	
Pasadena

	
3931 Fairway Plaza Drive

	
Pasadena

	
TX

	
77505

	
N. McAllen

	
8317 North 10th Street

	
McAllen

	
TX

	
78504

	
Denton

	
2315 Colorado Boulevard

	
Denton

	
TX

	
76205

	
Eastchase

	
8400 East Freeway

	
Fort Worth

	
TX

	
76120

	
Burleson

	
12850 South Freeway

	
Fort Worth

	
TX

	
76028

	
Midland

	
3315 NW Expressway

	
Oklahoma City

	
OK

	
73112

	
Cypresswood

	
19746 Interstate 45

	
Spring

	
TX

	
77373

	
Rosenberg

	
23835 Brazos Town Crossing

	
Rosenberg

	
TX

	
77469

	
Edmond

	
28 SE 15th Street

	
Edmond

	
OK

	
73013

	
Walnut Square

	
7301 S. Pennsylvania Avenue

	
Oklahoma City

	
OK

	
73159

	
Stella Link

(Houston Clearance)

	
9335 Stella Link

	
Houston

	
TX

	
77025

	
Mesquite Clearance

(Dallas Clearance)

	
2021 Town East Blvd.

	
Mesquite

	
TX

	
75149

	
San Antonio Call Center

	
5776 Stemmons Drive

	
San Antonio

	
TX

	
78238

	
Corporate Office

	
3295 College Street

	
Beaumont

	
TX

	
77701

	
Houston WH

	
8550-A Market Street

	
Houston

	
TX

	
77029

	
Houston Service

	
2425 Turning Basin

	
Houston

	
TX

	
77029

	
San Antonio WH/Service

	
4810 Eisenhaur

	
San Antonio

	
TX

	
78218

	
Dallas WH

	
1132 Valwood Parkway

	
Carrollton

	
TX

	
75006

	
Dallas Serv

	
4610-12 McEwen Road

	
Dallas

	
TX

	
75244

	
Beaumont WH

	
650 S. 23rd Street

	
Beaumont

	
TX

	
77701

	
Beaumont Service

	
2686 Laurel

	
Beaumont

	
TX

	
77702

	
Harlingen Crossdock

(part of Harlingen store)

	
710 S Dixieland Road

	
Harlingen

	
TX

	
78550

	
Corpus Christi Crossdock (part of Corpus Christi store)

	
4818 S. Padre Island Drive

	
Corpus Christi

	
TX

	
78411

	
Lafayette Crossdock

	
124 Bertrand Drive

	
Lafayette

	
LA

	
70506

	
Austin Crossdock

	
2900 Oak Springs Road

	
Austin

	
TX

	
78702

 

 

  

  

  

 

SCHEDULE 9.1.4

 

to

 

Amended and Restated

Loan and Security Agreement

 

NAMES AND CAPITAL STRUCTURE

 

	
1.

	
The corporate names, jurisdictions of incorporation, and authorized and issued Equity Interests of each Borrower and its Subsidiary are as follows:

 

	
Name

	
Jurisdiction

	
Number and Class of Authorized Shares

	
Number and Class of Issued Shares

	
Record Owner

	
Conn Appliances, Inc.,

as a Borrower

	
Texas

	
35,000,000 Common Shares.

300,000 Senior Preferred Shares.

	
Stock Certificate #158; 1,000 Shares.

	
Conn’s, Inc.

	
Conn Credit Corporation, Inc., as a Borrower

	
Texas

	
4,000,000 Common Shares.

	
Stock Certificate #1016; 56,500 Shares..

	
CAI Holding Co.

	
Conn Credit I, LP,

as a Borrower

	
Texas

	
N/A

	
N/A

	
1% Conn Credit Corporation, Inc.; 99% Conn Lending, LLC.

	
CAI Holding Co.

	
Delaware

	
10,000 Common Shares.

	
Stock Certificate #1; 8,000 Shares.

	
Conn Appliances, Inc.

	
CAIAIR, Inc.

	
Delaware

	
1,000,000 Common Shares.

	
Stock Certificate #1; 1,000 Shares.

	
Conn Appliances, Inc.

	
CAI Credit Insurance Agency, Inc.

	
Louisiana

	
100,000 Common Shares.

	
Stock Certificate #3; 1,000 Shares.

	
CAI Holding Co.

	
Conn Lending, LLC

	
Delaware

	
N/A

	
N/A

	
Conn Credit Corporation, Inc.

	
Conn Funding II GP, L.L.C.

	
Texas

	
N/A

	
N/A

	
Conn Appliances, Inc.

	
Conn Appliances, LLC

	
Delaware

	
N/A

	
N/A

	
Conn Appliances, Inc.

	
Conn Funding II, L.P.

	
Texas

	
N/A

	
N/A

	
1% Conn Funding GP II, L.L.C.; 99% Conn Appliances, LLC.

	
2.

	
All agreements binding on holders of Equity Interests of Borrowers and their Subsidiaries with respect to such interests are as follows:

 

NONE.

 

 

Schedule 9.1.4 to Amended and Restated Loan and Security Agreement

Names and Capital Structure

 

1

 

 

SCHEDULE 9.1.5

 

to

 

Amended and Restated

Loan and Security Agreement

 

FORMER NAMES AND COMPANIES

 

	
  

	
1.

	
Each Parent’s, Borrowers’ and its Subsidiary’s correct corporate name, as registered with the Secretary of State of its state of incorporation, is shown on Schedule 9.1.4.

 

	
  

	
2.

	
In the conduct of their businesses during five years preceding the Closing Date, Parent, Borrowers and their Subsidiaries have used the following names:

 

	
Entity

	
Fictitious, Trade or Other Name

	
Conn’s, Inc., as Parent

	
None

	  	  
	
Conn Appliances, Inc., as a Borrower

	
Conn Appliances

	  	
Conn’s

	  	  
	
Conn Credit Corporation, Inc., as a Borrower

	
Conn Credit

	  	
Conn Credit Corp.

	  	  
	
Conn Credit I, LP, as a Borrower

	
None

	  	  
	
CAI Holding Co., as a Subsidiary

	
None

	  	  
	
CAIAIR, Inc., as a Subsidiary

	
None

	  	  
	
CAI Credit Insurance Agency, Inc., as a Subsidiary

	
None

	  	  
	
Conn Lending, LLC, as a Subsidiary

	
None

	  	  
	
Conn Funding II GP, L.L.C., as a Subsidiary

	
None

	  	  
	
Conn Appliances, LLC, as a Subsidiary

	
None

	  	  
	
Conn Funding II, L.P., as a Subsidiary

	
None

	  	  

 

 

	
3.

	
In the five years preceding the Closing Date, no Borrower or its Subsidiary has been the surviving corporation of a merger or combination, except:

 

	
  

	
a.

	
Merger of CAI, L.P., a Texas limited partnership, with and into Conn Appliances, Inc., a Texas corporation, as surviving corporation, effective as of June 28, 2007.

 

	
  

	
b.

	
Merger of CAI Credit, L.L.C., a Delaware limited liability company, with and into CAI Credit Insurance Agency, Inc., a Louisiana corporation, as surviving corporation, effective as of June 28, 2007.

 

 

Schedule 9.1.5 to Amended and Restated Loan and Security Agreement

Former Names and Companies

 

1

 

 

	
  

	
c.

	
Merger of Conn CC, L.P., a Texas limited partnership, and Conn Credit, L.L.C., a Delaware limited liability company, with and into Conn Credit Corporation, Inc., a Texas corporation, as surviving corporation, effective as of June 28, 2007.

 

	
4.

	
In the five years preceding the Closing Date, no Borrower or its Subsidiary has acquired any substantial part of the assets of any Person, except:

 

NONE.

 

 

Schedule 9.1.5 to Amended and Restated Loan and Security Agreement

Former Names and Companies

 

2

 

 

SCHEDULE 9.1.11

 

to

 

Amended and Restated

Loan and Security Agreement

 

PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES

 

	
1.

	
Parent’s, Borrowers’ and their Subsidiaries’ patents:

 

NONE.

 

 

	
2.

	
Parent’s, Borrowers’ and their Subsidiaries’ trademarks:

 

	
Trademark

	
Owner

	
Status in Trademark Office

	
Federal Registration No.

	
Registration Date

	
CONN’S AWARD WINNING SERVICE SINCE 1890

 

 

	
Conn’s, Inc.

	
Registered

	
2,758,779

	
September 2, 2003

	
CONN’S

	
Conn’s, Inc.

	
Registered

	
2,824,660

	
March 23, 2004

 

 

	
3.

	
Parent’s, Borrowers’ and their Subsidiaries’ copyrights:

 

NONE.

 

 

	
4.

	
Parent’s, Borrowers’ and their Subsidiaries’ licenses (other than routine business licenses, authorizing them to transact business in local jurisdictions):

 

NONE.

 

 

  

Schedule 9.1.11 to Amended and Restated Loan and Security Agreement

Patents, Trademarks, Copyrights and Licenses

1

  

 

 

SCHEDULE 9.1.14

 

to

 

Amended and Restated

Loan and Security Agreement

 

ENVIRONMENTAL MATTERS

 

 

NONE.

 

 

 

 

 

  

Schedule 9.1.14 to Amended and Restated Loan and Security Agreement

Environmental Matters

1

  

 

 

 

SCHEDULE 9.1.15

 

to

 

Amended and Restated

Loan and Security Agreement

 

RESTRICTIVE AGREEMENTS

 

 

NONE.

 

 

 

 

 

 

 

  

Schedule 9.1.15 to Amended and Restated Loan and Security Agreement

Restrictive Agreements

1

  

 

 

SCHEDULE 9.1.16

 

to

 

Amended and Restated

Loan and Security Agreement

 

LITIGATION

 

 

 

	
1.

	
Proceedings and investigations pending against Borrowers or its Subsidiaries:

 

NONE.

 

 

	
2.

	
Threatened proceedings or investigations of which any Borrower or its Subsidiary is aware:

 

NONE.

 

 

	
3.

	
Pending Commercial Tort Claim of any Obligor:

 

NONE.

 

 

 

 

  

Schedule 9.1.16 to Amended and Restated Loan and Security Agreement

Litigation

1

  

 

 

 

SCHEDULE 9.1.18

 

to

 

Amended and Restated

Loan and Security Agreement

 

PENSION PLAN DISCLOSURES

 

 

NONE.

 

 

 

 

  

Schedule 9.1.18 to Amended and Restated Loan and Security Agreement

Pension Plan Disclosures

1

  

 

 

SCHEDULE 9.1.20

 

to

 

Amended and Restated

Loan and Security Agreement

 

LABOR CONTRACTS

 

Parent, Borrowers and their Subsidiaries are party to the following collective bargaining agreements, management agreements and consulting agreements:

 

NONE.

 

 

 

 

 

  

Schedule 9.1.20 to Amended and Restated Loan and Security Agreement

Labor Contracts

1

  

 

SCHEDULE 10.2.2

 

to

 

Amended and Restated

Loan and Security Agreement

 

EXISTING LIENS

 

 

 

 

 

 

 

 

 

  

Schedule 10.2.2 to Amended and Restated Loan and Security Agreement

Existing Liens

1

  

 

 

SCHEDULE 10.2.17

 

to

 

Amended and Restated

Loan and Security Agreement

 

EXISTING AFFILIATE TRANSACTIONS

 

	
1.

	
Contract Receivables Purchase Agreement dated as of even date herewith between Conn Credit I, LP and Conn Appliances, Inc.

	 	 
	
2.

	
Contract Receivables Purchase Agreement dated as of even date herewith between Conn Credit I, LP and Conn Credit Corporation, Inc.

	 	 
	
3.

	
Servicing Agreement dated as of even date herewith between Conn Credit I, LP and Conn Appliances, Inc.

	 	 
	
4.

	
Contract Originator Note dated as of even date herewith made by Conn Credit I, LP and payable to Conn Appliances, Inc.

	 	 
	
5.

	
Contract Originator Note dated as of even date herewith made by Conn Credit I, LP and payable to Conn Credit Corporation, Inc.

	 	 
	
6.

	
Merchant Agreement between Conn Credit Corporation, Inc. and Conn Appliances, Inc.

	 	 
	
7.

	
Purchase Agreement dated as of even date herewith between Conn Appliances, Inc. and Conn Credit Corporation, Inc.

 

 

 

 

 

 

 

Schedule 10.2.17 to Amended and Restated Loan and Security Agreement

Existing Affiliate Transactions

  

1

  

 

SCHEDULE 10.2.2

 

to

 

Loan and Security Agreement

 

EXISTING LIENS

 

	
Initial Type of Filing

	
Debtor

	
Secured Party

	
Initial Filing No. and Date

	
Jurisdiction

	
UCC-1

	
Conn Appliances, Inc.

	
General Electric Capital Corporation

	
9600056267 on March 22, 1996

	
Texas Secretary of State

	
UCC-1

	
Conn Appliances, Inc.

	
GE Commercial Distribution Finance Corporation

	
9800115926 on June 5, 1998

	
Texas Secretary of State

	
UCC-1

	
Conn Appliances, Inc.

Conn’s, Inc.

	
Electrolux Home Products

	
020007278288 on October 23, 2001

	
Texas Secretary of State

	
UCC-1

	
Conn Appliances, Inc.

	
GE Commercial Distribution Finance Corporation

	
020020382714 on February 25, 2002

	
Texas Secretary of State

	
UCC-1*1

	
Conn Appliances, Inc.

	
Wells Fargo Bank, National Association

	
030001275725 on September 13, 2002

	
Texas Secretary of State

	
UCC-1

	
Conn Appliances, Inc.

	
Husqvarna Outdoor Products, Inc.

	
060008742178 on March 17, 2006

	
Texas Secretary of State

	
UCC-1

	
Conn Appliances, Inc.

	
Textron Financial Corporation

	
070026787360 on August 7, 2007

	
Texas Secretary of State

	
UCC-1

	
Conn Appliances, Inc.

	
Daimler Trust

	
070040807501 on December 3, 2007

	
Texas Secretary of State

	
UCC-1

	
Conn Appliances, Inc.

	
Daimler Trust

	
070043216619 on December 26, 2007

	
Texas Secretary of State

	
UCC-1

	
Conn Appliances, Inc.

	
Crown Credit Company

	
080002453325 on January 22, 2008

	
Texas Secretary of State

	
UCC-1

	
Conn Appliances, Inc.

	
Crown Credit Company

	
080028513300 on August 26, 2008

	
Texas Secretary of State

	
UCC-1

	
Conn Appliances, Inc.

	
GE Money Bank

	
090014992620 on May 27, 2009

	
Texas Secretary of State

	
UCC-1

	
Conn Appliances, Inc.

	
IBM Credit LLC

	
090015569883 on June 2, 2009

	
Texas Secretary of State

	
UCC-1

	
Conn Appliances, Inc.

	
TCF Inventory Finance, Inc.

	
090032612376 on November 24, 2009

	
Texas Secretary of State

	
UCC-1

	
Conn Appliances, Inc.

	
Red Iron Acceptance, LLC

	
100003641025 on February 8, 2010

	
Texas Secretary of State

	
UCC-1

	
Conn Appliances, Inc.

	
Ikon Financial Services

	
100012127842 on April 29, 2010

	
Texas Secretary of State

	
UCC-1

	
CAIAIR, Inc.

	
CSF Air, LLC

	
20154033 on December 17, 2001

	
Delaware Secretary of State

*1  UCC to be terminated upon execution of Amended and Restated Loan and Security Agreement.a6531008ex10-95.htm

EXHIBIT 10.9.5

 

 

 

 

 

 

 

 

INTERCREDITOR AGREEMENT

 

Dated as of November 30, 2010

 

 

 

 

 
 

 

 

 

BANK OF AMERICA, N.A.,

 

 

 

as ABL Agent

 

 

 

and

 

 

 

GA CAPITAL, LLC,

 

as Term Agent

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

 

	 	Page

	
SECTION 1.    Definitions; Rules of Construction.

	
2

	
1.1

	
Defined Terms.

	
2

	
1.2

	
Construction.

	
10

	
 

SECTION 2.    Lien Priorities.

	
 

11

	
2.1

	
Relative Priorities.

	
11

	
2.2

	
Prohibition on Contesting Liens.

	
14

	
2.3

	
New Liens.

	
14

	
2.4

	
Similar Liens and Agreements.

	
15

	
 

SECTION 3.    Exercise of Remedies.

	
 

16

	
3.1

	
Standstill.

	
16

	
3.2

	
Exclusive Enforcement Rights.

	
17

	
3.3

	
Claimholders Permitted Actions.

	
17

	
3.4

	
Retention of Proceeds.

	
18

	
3.5

	
Non-Interference.

	
18

	
3.6

	
Unsecured Creditor Remedies.

	
19

	
3.7

	
Commercially Reasonable Dispositions; Notice of Exercise.

	
19

	
 

SECTION 4.    Proceeds.

	
 

19

	
4.1

	
Application of Proceeds.

	
21

	
4.2

	
Turnover.

	
22

	
4.3

	
No Subordination of the Relative Priority of Claims.

	
22

	
 

SECTION 5.    Releases; Dispositions; Other Agreements.

	
 

22

	
5.1

	
Releases.

	
22

	
5.2

	
Insurance.

	
24

	
5.3

	
Amendments; Refinancings; Legends.

	
25

	
5.4

	
Bailee for Perfection.

	
27

	
5.5

	
When Discharge of Priority Obligations Deemed to Not Have Occurred.

	
29

	
5.6

	
Purchase Option.

	
29

	
5.7

	
Injunctive Relief.

	
30

	
5.8

	
Reserves.  .

	
31

	
5.9

	
Borrowing Base Certificates.

	
31

 

 

 

-i-

 

 

 

TABLE OF CONTENTS

(continued)

 

 

	 	Page
	
 

SECTION 6.    Insolvency Proceedings.

	
 

31

	
6.1

	
Enforceability and Continuing Priority.

	
31

	
6.2

	
Intentionally Omitted.

	
31

	
6.3

	
Intentionally Omitted.

	
31

	
6.4

	
Intentionally Omitted.

	
31

	
6.5

	
Intentionally Omitted.

	
31

	
6.6

	
Section 1111(b) of the Bankruptcy Code.

	
31

	
6.7

	
Avoidance Issues.

	
32

	
6.8

	
Plan of Reorganization.

	
33

	
 

SECTION 7.    Reliance; Waivers; Etc.

	
 

33

	
7.1

	
Reliance.

	
33

	
7.2

	
No Warranties or Liability.

	
33

	
7.3

	
No Waiver of Lien Priorities.

	
34

	
7.4

	
Obligations Unconditional.

	
37

	
 

SECTION 8.    Representations and Warranties.

	
 

37

	
8.1

	
Representations and Warranties of Each Party.

	
37

	
8.2

	
Representations and Warranties of Each Agent.

	
38

	
 

SECTION 9.    Miscellaneous.

	
 

38

	
9.1

	
Conflicts.

	
38

	
9.2

	
Effectiveness; Continuing Nature of this Agreement; Severability.

	
38

	
9.3

	
Amendments; Waivers.

	
39

	
9.4

	
Information Concerning Financial Condition of the Parent and its Subsidiaries.

	
39

	
9.5

	
Appraisals and Field Examinations.

	
39

	
9.6

	
Subrogation.

	
39

	
9.7

	
SUBMISSION TO JURISDICTION; WAIVERS.

	
40

	
9.8

	
Notices.

	
41

	
9.9

	
Further Assurances.

	
41

	
9.10

	
APPLICABLE LAW.

	
41

 

 

 

 

-ii-

 

 

 

TABLE OF CONTENTS

(continued)

 

 

	 	 	Page
	
9.11

	
Binding on Successors and Assigns.

	
41

	
9.12

	
Headings.

	
41

	
9.13

	
Entire Agreement.    .

	
41

	
9.14

	
Counterparts.

	
42

	
9.15

	
No Third Party Beneficiaries.

	
42

	
9.16

	
Provisions Solely to Define Relative Rights.

	
42

	
9.17

	
Costs and Attorneys Fees.

	
42

 

 

 

 

 

 

 

-iii-

 

 

 

INTERCREDITOR AGREEMENT

 

This INTERCREDITOR AGREEMENT (this “Agreement”) is dated as of  November 30, 2010, and entered into by and between BANK OF AMERICA, N.A., in its capacity as administrative agent and collateral agent under the ABL Loan Documents (as defined below), including its successors and assigns in such capacity from time to time (“ABL Agent”), and GA CAPITAL, LLC in its capacity as administrative agent and collateral agent under the Term Loan Documents (as defined below), including its successors and assigns in such capacity from time to time (“Term Agent”).

 

RECITALS

 

CONN’S, INC., a Delaware corporation, as parent and guarantor (“Parent”), CONN APPLIANCES, INC., a Texas corporation (“CAI”), CONN CREDIT I, LP, a Texas limited partnership (“CCI”) and CONN CREDIT CORPORATION, INC., a Texas corporation (“CCCI”, and together with CAI and CCI, individually, an “ABL Borrower” and collectively, “ABL Borrowers”), the lenders party thereto, and ABL Agent, have entered into that certain Amended and Restated Loan and Security Agreement dated as of the date hereof providing for a revolving credit facility (the “ABL Loan Agreement”);

 

CAI, CCI, and CCCI, (individually, a “Term Loan Borrower” and collectively, “Term Loan Borrowers) the lenders party thereto, and Term Agent, have entered into that certain Term Loan and Security Agreement dated as of the date hereof providing for a term loan facility (the “Term Loan Agreement”);

 

Pursuant to (i) that certain Amended and Restated Continuing Guaranty dated as of the date hereof, Parent and certain of the Parent’s Subsidiaries other than ABL Borrowers (Parent and such Subsidiaries, each, “ABL Guarantor” and collectively, jointly and severally, “ABL Guarantors”) have guaranteed the Obligations (as defined in the ABL Loan Agreement) (the “ABL Guaranty”);

 

Pursuant to (i) that certain Continuing Guaranty dated as of the date hereof, Parent and certain of the Parent’s Subsidiaries other than Term Loan Borrowers (Parent and such Subsidiaries, each, “Term Loan Guarantor” and collectively, jointly and severally, “Term Loan Guarantors”) have guaranteed the Obligations (as defined in the Term Loan Agreement) (the “Term Loan Guaranty”);

 

The obligations of (i) ABL Borrowers under the ABL Loan Agreement, and (ii) ABL Guarantors under the ABL Guaranty are to be secured by liens on substantially all the assets of ABL Borrowers and ABL Guarantors;

 

The obligations of (i) Term Loan Borrowers under the Term Loan Agreement, and (ii) Term Loan Guarantors under the Term Loan Guaranty are to be secured by liens on substantially all the assets of Term Loan Borrowers and Term Loan Guarantors;

 

Each of the ABL Agent (on behalf of the ABL Claimholders) and the Term Agent (on behalf of the Term Loan Claimholders) and by their acknowledgment hereof, the ABL

 

 

 

1

 

 

 

Borrowers and ABL Guarantors, and the Term Loan Borrowers and Term Loan Guarantors desire to agree to the relative priority of the liens on the Collateral and certain other rights, priorities, and interest as provided herein; and

 

ABL Agent and Term Agent have agreed to the intercreditor and other provisions set forth in this Agreement.

AGREEMENT

 

In consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

SECTION 1. Definitions; Rules of Construction.

 

1.1           Defined Terms.

 

As used in this Agreement, the following terms shall have the following meanings:

 

ABL Agent: has the meaning set forth in the recitals to this Agreement.

 

ABL Borrowing Base:  shall mean, as of any date of determination thereof, the “Borrowing Base” as defined in the ABL Loan Agreement as in effect as of the date hereof.

 

ABL Cap: shall mean, on any date of determination thereof, an amount equal to the lesser of (a) the result of (i) the ABL Borrowing Base, plus (ii) (A) if no Inadvertent Overadvance Period exists with respect to the Borrowers, Protective Overadvances in an amount up to $10,000,000 or (B) if an Inadvertent Overadvance Period exists with respect to the Borrowers, the sum of (1) Protective Overadvances in an amount up to $10,000,000, plus (2) the Inadvertent Overadvance Amounts, minus (iii) the Minimum Excess Availability Amount; and (b) the result of (i) $375,000,000 plus (ii) prior to an Insolvency Proceeding any Revolver Increase Amount (as defined in the ABL Loan Agreement as in effect on the date hereof), but in no event an aggregate amount greater than $500,000,000 (inclusive of the amount set forth in clause (b)(i) above); minus (iii) the Minimum Excess Availability Amount, minus (iv) the amount of all permanent reductions of the commitments under the ABL Loan Agreement (other than in connection with a Refinancing thereof).

 

Notwithstanding anything in this definition to the contrary, the ABL Agent and the ABL Lenders hereby agree that upon the occurrence of (i) a store closing, going-out-of-business or similar sale by any Grantor, in each case, of all or substantially all of their retail operations or inventory, (ii) a foreclosure by the ABL Agent of its Liens on a material portion of the Collateral of any Grantor, or (iii) a Disposition of a material portion of the Collateral granted by any Grantor, the commitments under the ABL Loan Agreement shall be permanently reduced by an amount equal to the proceeds received and applied to the repayment of loans under the ABL Loan Agreement from such sale or Disposition.

 

ABL Claimholders: at any relevant time, the holders of ABL Obligations at that time, including ABL Lenders and ABL Agent.

 

 

 

 

2

 

 

 

ABL Collateral: all of the assets and property of any Grantor, whether real, personal or mixed, with respect to which a consensual Lien is granted as security for any ABL Obligation.

 

ABL Collateral Documents: the ABL Loan Agreement, the ABL Mortgages, and any other agreement, document, or instrument pursuant to which a Lien is granted by such Grantor for the benefit of the ABL Claimholders securing any ABL Obligation or under which rights or remedies with respect to such Liens are governed.

 

ABL Default: any “Event of Default”, as such term is defined in any ABL Loan Agreement.

 

ABL Guaranty: has the meaning set forth in the recitals to this Agreement, but shall also include each other guaranty made by any other guarantor in favor of ABL Agent.

 

ABL Lenders: the “Lenders” as defined in the ABL Loan Agreement.

 

ABL Loan Agreement: has the meaning set forth in the recitals to this Agreement, and includes any restatement, Refinancing or replacement thereof made in compliance with the terms hereof.

 

ABL Loan Documents: the ABL Collateral Documents, the ABL Loan Agreement, the ABL Guaranty, this Agreement, and each of the other Loan Documents (as defined in the ABL Loan Agreement).

 

ABL Mortgages: each mortgage, deed of trust, and other document or instrument under which any Lien on real property owned or leased by any Grantor is granted by such Grantor for the benefit of the ABL Claimholders to secure any ABL Obligations or under which rights or remedies with respect to any such Liens are governed.

 

ABL Obligations: all Obligations (as defined in the ABL Loan Agreement), including without limitation all obligations and all amounts owing, due, or secured under the terms of the ABL Loan Agreement or any other ABL Loan Document, whether now existing or arising hereafter, including all principal, premium, interest, fees, attorneys fees, costs, charges, expenses, reimbursement obligations, obligations to post cash collateral in respect of Letters of Credit or Bank Product Obligations or indemnities in respect thereof, any other indemnities or guarantees, and all other amounts payable under or secured by any ABL Loan Document (including, in each case, all amounts accruing on or after the commencement of any Insolvency Proceeding relating to any Grantor, or that would have accrued or become due under the terms of the ABL Loan Documents but for the effect of the Insolvency Proceeding and irrespective of whether a claim for all or any portion of such amounts is allowable or allowed in such Insolvency Proceeding).

 

ABL Post-Default Disposition: has the meaning set forth in Section 5.1(b)

 

 

 

3

 

 

 

ABL Priority Collateral shall mean all Collateral other than the Term Loan Priority Collateral.

 

ABL Priority Obligations: all ABL Obligations exclusive of the Excess ABL Obligations, which Excess ABL Obligations shall be excluded from (and shall not constitute) ABL Priority Obligations.

 

ABL Recovery: has the meaning set forth in Section 6.8(a).

 

ABL Specified Event of Default: means an ABL Loan Default under Sections 11.1 (a) and Section 11.1(c) (with respect to Sections 8.1, 10.1.1, 10.1.2(a), 10.1.2(b), 10.1.2(c), 10.1.2(d), 10.2.3, 10.3, 10.4 and 10.7).

 

Agent: means ABL Agent or Term Loan Agent, as applicable.

 

Agreement: has the meaning set forth in the recitals to this Agreement.

 

Bank Product Cap: the amount of $5,000,000.

 

Bank Product Obligations: the “Bank Product Debt,” as that term is defined in the ABL Loan Agreement.

 

Bank Product Reserve: the “Bank Product Reserve,” as that term is defined in the ABL Loan Agreement.

 

Bankruptcy Code: Title 11 of the United States Code.

 

Bankruptcy Law: the Bankruptcy Code and any other federal, state, or foreign law for the relief of debtors.

 

Borrower and Borrowers: the ABL Borrower(s) or Term Loan Borrower(s), as applicable.

 

Borrowing Base Certificate the “Borrowing Base Certificate” as that term is defined in the ABL Loan Agreement.

 

Business Day: any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, North Carolina, Texas, New York and California.

 

CAI: has the meaning set forth in the recitals to this Agreement.

 

CCI: has the meaning set forth in the recitals to this Agreement.

 

CCCI: has the meaning set forth in the recitals to this Agreement.

 

Claimholders: ABL Claimholders and Term Loan Claimholders.

 

 

 

4

 

 

 

Collateral: all of the assets and property of each Grantor, whether real, personal or mixed, constituting ABL Collateral or Term Loan Collateral.

 

Collateral Documents: with respect to the ABL Claimholders, all ABL Collateral Documents, and with respect to the Term Loan Claimholders, all Term Loan Collateral Documents.

 

Discharge of ABL Priority Obligations: except to the extent otherwise expressly provided in Section 5.5:

 

(a)           payment in full in cash of the ABL Priority Obligations (other than outstanding Letters of Credit and Bank Product Obligations and then unasserted contingent obligations);

 

(b)           termination or expiration of all commitments, if any, to extend credit that would constitute ABL Priority Obligations; and

 

(c)           termination or cash collateralization (in an amount and in the manner provided for in the ABL Loan Agreement) of all outstanding Letters of Credit and all Bank Product Obligations, but only to the extent such Letters of Credit and Bank Product Obligations constitute ABL Priority Obligations.

 

Discharge of Term Loan Priority Obligations: except to the extent otherwise expressly provided in Section 5.5, payment in full in cash of the Term Loan Priority Obligations (other than and then unasserted contingent obligations).

 

Disposition or Dispose: the sale, assignment, transfer, license, lease (as lessor), exchange, or other disposition (including any sale and leaseback transaction) of any property by any person (or the granting of any option or other right to do any of the foregoing).

 

Excess ABL Obligations: the sum of (a) the portion of the principal amount of the loans outstanding under the ABL Loan Documents and the undrawn amount of all outstanding Letters of Credit that in the aggregate exceed the ABL Cap (without giving effect to the LC Reserve), plus (b) the outstanding amount of the Bank Product Obligations in excess of the Bank Product Cap or for which the ABL Agent did not actually implement a Bank Product Reserve, plus (c) the portion of interest and fees on account of such portion of the loans, Letters of Credit, and Bank Product Obligations described in clause (a) and (b) of this definition, plus (d) any commitment termination fee, early termination fee or prepayment fee payable under the ABL Loan Agreement.

 

Excess Term Loan Obligations: the sum of (a) the portion of the principal amount of the loans outstanding under the Term Loan Documents in excess of the Term Loan Cap, plus (b) the portion of interest and fees on account of such portion of the loans described in clause (a) of this definition, plus (c) any commitment termination fee, early termination fee or prepayment fee payable under the Term Loan Agreement.

 

Exercise any Secured Creditor Remedies or Exercise of Secured Creditor Remedies: (a) the taking of any action to enforce any Lien in respect of the Collateral, including

 

 

 

5

 

 

 

the institution of any foreclosure proceedings, the noticing of any public or private sale or other disposition pursuant to Article 9 of the UCC or any diligently pursued in good faith attempt to vacate or obtain relief from a stay or other injunction restricting any other action described in this definition, (b) the exercise of any right or remedy provided to a secured creditor under the ABL Loan Documents or the Term Loan Documents (including, in either case, any delivery of any notice to otherwise seek to obtain payment directly from any account debtor of any Grantor or the taking of any action or the exercise of any right or remedy in respect of the setoff or recoupment against the Collateral or proceeds of Collateral), under applicable law, at equity, in an Insolvency Proceeding or otherwise, including the acceptance of Collateral in full or partial satisfaction of a Lien, (c) the sale, assignment, transfer, lease, license, or other Disposition of all or any portion of the Collateral, by private or public sale or any other means, (d) the solicitation of bids from third parties to conduct the liquidation of all or a material portion of Collateral granted by a Grantor to the extent undertaken and being diligently pursued in good faith to consummate the Disposition of such Collateral within a commercially reasonable time, (e) the engagement or retention of sales brokers, marketing agents, investment bankers, accountants, appraisers (other than pursuant to Section 10.1.1 of the ABL Loan Agreement or Section 10.1.1 of the Term Loan Agreement), auctioneers, or other third parties for the purposes of valuing, marketing, or Disposing of, all or a material portion of the Collateral granted by a Grantor to the extent undertaken and being diligently pursued in good faith to consummate the Disposition of such Collateral within a commercially reasonable time, (f) the exercise of any other enforcement right relating to the Collateral (including the exercise of any voting rights relating to any capital stock composing a portion of the Collateral) whether under the ABL Loan Documents, the Term Loan Documents, under applicable law of any jurisdiction, in equity, in an Insolvency Proceeding, or otherwise, (h) the pursuit of Post-Default Lender Dispositions relative to all or a material portion of the Collateral granted by a Grantor to the extent undertaken and being diligently pursued in good faith to consummate the Disposition of such Collateral within a commercially reasonable time, or (i) the commencement of, or the joinder with any creditor in commencing, any Insolvency Proceeding against any Grantor or any assets of any Grantor.

 

Governmental Authority: any federal, state, municipal, foreign or other governmental department, agency, commission, board, bureau, court, tribunal, instrumentality, political subdivision, or other entity or officer exercising executive, legislative, judicial, regulatory or administrative functions for or pertaining to any government or court, in each case whether associated with the United States, a state, district or territory thereof, or a foreign entity or government.

 

Grantors: ABL Borrowers, ABL Guarantors, Term Loan Borrowers, Term Loan Guarantors and each other person that may from time to time execute and deliver an ABL Collateral Document or a Term Loan Collateral Document as a “debtor,” “grantor,” or “pledgor” (or the equivalent thereof).

 

Inadvertent Overadvance Amounts shall mean the aggregate amount of all Overadvances resulting from any and all Inadvertent Overadvances.

 

Inadvertent Overadvance Period shall mean the period of time following the occurrence of an Inadvertent Overadvance and continuing until such time as no Inadvertent

 

 

 

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Overadvance is outstanding; provided that any repayments with respect to such Overadvances shall be applied first to Inadvertent Overadvances and second to Protective Overadvances.

 

Inadvertent Overadvances shall mean the funding of any loan or advance under the ABL Loan Agreement or the issuance, renewal or amendment of a Letter of Credit by an Issuing Bank which did not result in an Overadvance when made based upon the most recent Borrowing Base Certificate received by the ABL Agent prior to such funding or issuance, renewal or amendment of a Letter of Credit but which has, on the relevant date of determination, become an Overadvance as the result of any of the following which are beyond the reasonable control of the ABL Claimholders: (i) a decline in the value of the Collateral included in the (A) ABL Borrowing Base; or (B) the Term Loan Borrowing Base resulting in an increase in the Term Loan Borrowing Base Reserve, (ii) errors or fraud on a Borrowing Base Certificate, or (iii) the return of uncollected checks or other items of payment applied to the reduction of Revolving Loans.

 

Insolvency Proceeding: any case or proceeding commenced by or against a Grantor under any Bankruptcy Law or any agreement of such Grantor to, (a) the entry of an order for relief under any Bankruptcy Law; (b) the appointment of a receiver, trustee, liquidator, administrator, conservator or other custodian for such Grantor or any part of its property; or (c) an assignment or trust mortgage for the benefit of creditors.

 

LC Reserve: any “LC Reserve” as that term is defined in the ABL Loan Agreement.

 

Letters of Credit: the “Letters of Credit,” as that term is defined in the ABL Loan Agreement.

 

Lien: any Person’s interest in property securing an obligation owed to, or a claim by, such Person, whether such interest is based on common law, statute or contract, including liens, security interests, pledges, hypothecations, statutory trusts, reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting property.

 

Lien Protection Notice:  written notice by ABL Agent or Term Agent given to the other Agent of any action taken after the date hereof by ABL Agent or Term Agent, respectively (together with copies of any financing statement (including any amendment thereto or continuation thereof), mortgage or other perfection document (including any federal U.S. Copyright Office or U.S. Patent and Trademark Office intellectual property lien filing, any account control agreement, or any marking of a legend on any chattel paper) filed, recorded or obtained by ABL Agent or Term Agent, respectively), which action was taken to perfect, continue the perfection, or enhance the perfected status of any Lien of ABL Agent or Term Agent, respectively, on any Collateral.

 

Minimum Excess Availability Amount   means $25,000,000.

 

Overadvance any “Overadvance” as such term is defined in the ABL Loan Agreement.

 

 

 

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Parent: has the meaning set forth in the recitals to this Agreement.

 

Person: any individual, corporation, limited liability company, partnership, joint venture, joint stock company, land trust, business trust, unincorporated organization, Governmental Authority or other entity.

 

Pledged Collateral: has the meaning set forth in Section 5.4(a).

 

Post-Default Lender Disposition: means either an ABL Post-Default Disposition or Term Loan Post-Default Disposition, as applicable.

 

Priority Collateral: with respect to the ABL Claimholders, all ABL Priority Collateral, and with respect to the Term Loan Claimholders, all Term Loan Priority Collateral.

 

Protective Overadvances: shall mean an Overadvance which the ABL Agent in its reasonable business judgment in the performance of its duties under the ABL Loan Agreement, determines to be necessary or desirable to (i) maintain, protect or preserve the value of the Collateral, or (ii) enhance the likelihood, or maximize, the repayment of the ABL Obligations.

 

Purchase Notice: has the meaning set forth in Section 5.6(a).

 

Refinance: in respect of any indebtedness, to refinance, extend, renew, defease, supplement, restructure, replace, refund or repay, or to issue other indebtedness in exchange or replacement for such indebtedness, in whole or in part, whether with the same or different lenders, arrangers or agents, provided that the terms of such indebtedness shall not contravene the provisions of this Agreement.   “Refinanced” and “Refinancing” shall have correlative meanings.

 

Reserves means the “CCI Availability Reserve”, the “CAI Availability Reserve” “Term Loan Borrowing Base Reserve” (as each term is defined in the ABL Loan Agreement), LC Reserve, and any other reserve set forth the ABL Loan Agreement.

 

Standstill Notice: a written notice from either Term Agent or ABL Agent to the other stating that an ABL Default or  Term Loan Default, as applicable, has occurred and is continuing.

 

Standstill Period: means the period of (i) (a) with respect to Term Loan Default, arising under Sections 11.1(j) of the Term Loan Agreement, zero (0) days, (b) with respect to any Term Loan Specified Event of Default, thirty (30) days, and (c) with respect to any other Term Loan Default, thirty (45) days, in the case of clause (b) and (c) each commencing on the date on which the ABL Agent receives the applicable Standstill Notice; and (ii) (a) with respect to ABL Default, arising under Sections 11.1(j) of the ABL Loan Agreement, zero (0) days, (b) with respect to any ABL Specified Event of Default, thirty (30) days, and (c) with respect to any other ABL Default, forty five (45) days, in the case of clause (b) and (c) each commencing on the date on which the Term Loan Agent receives the applicable Standstill Notice.

 

 

 

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Subsidiary: any entity at least 50% of whose voting securities or equity interests is owned by a Person (including indirect ownership by such Person through other entities in which the Person directly or indirectly owns 50% of the voting securities or equity interests).

 

Term Agent: has the meaning set forth in the recitals to this Agreement.

 

Term Loan Agreement: has the meaning set forth in the recitals to this Agreement.

 

Term Loan Borrowing Base Reserve: has the meaning set forth in the ABL Loan Agreement as in effect as of the date hereof.

 

Term Loan Cap: the result of (a) $115,000,000, plus (b)  the amount of any interest or fees that have accrued and been added to the principal amount, minus (c) the aggregate amount of all payments of the principal of the obligations under the Term Loan Documents (other than payments of such obligations in connection with a Refinancing thereof).

 

Term Loan Claimholders: at any relevant time, the holders of Term Loan Obligations at that time, including Term Loan Lenders and the Term Agent.

 

Term Loan Collateral: all of the assets and property of any Grantor, whether real, personal, or mixed, with respect to which a consensual Lien is granted by such Grantor to Term Agent for the benefit of the Term Loan Claimholders as security for any Term Loan Obligations.

 

Term Loan Collateral Documents: the “Collateral Documents” as such term is defined in the Term Loan Agreement.

 

Term Loan Default: any “Event of Default”, as such term is defined in any Term Loan Document.

 

Term Loan Documents: the Term Loan Collateral Documents, the Term Loan Agreement, the Term Loan Guaranty, and each of the other Loan Documents (as defined in the Term Loan Agreement), this Agreement, and each of the other documents entered into in connection with the Term Loan Agreement.

 

Term Loan Guarantors:  has the meaning set forth in the recitals to this Agreement.

 

Term Loan Guaranty: has the meaning set forth in the recitals to this Agreement, but shall also include each other guaranty made by any other guarantor in favor of Term Agent.

 

Term Loan Lenders: has the meaning set forth in the recitals to the Agreement.

 

Term Loan Mortgages: each mortgage, deed of trust, and any other document or instrument under which any Lien on real property owned or leased by any Grantor is granted to secure any Term Loan Obligations or under which rights or remedies with respect to any such Liens are governed.

 

 

 

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Term Loan Obligations: all obligations and all amounts owing, due, or secured under the terms of the Term Loan Agreement or any other Term Loan Document, whether now existing or arising hereafter, including all principal, premium, make whole payments, interest, fees, attorneys fees, costs, charges, expenses, reimbursement obligations, indemnities, guarantees, and all other amounts payable under or secured by any Term Loan Document (including, in each case, all amounts accruing on or after the commencement of any Insolvency Proceeding relating to any Grantor, or that would have accrued or become due under the terms of the Term Loan Documents but for the effect of the Insolvency Proceeding and irrespective of whether a claim for all or any portion of such amounts is allowable or allowed in such Insolvency Proceeding).

 

Term Loan Post-Default Disposition has the meaning set forth in Section 5.1(c)

 

Term Loan Priority Collateral any and all fee interests in any real property owned by a Grantor, all fixtures and equipment located at or used in connection with the foregoing and all proceeds of the foregoing, to the extent a Lien is granted therein to Term Agent.

 

Term Loan Priority Obligations: all Term Loan Obligations exclusive of the Excess Term Loan Obligations, which Excess Term Loan Obligations shall be excluded from (and shall not constitute) Term Loan Priority Obligations.

 

Term Loan Recovery: has the meaning set forth in Section 6.8(b).

 

Term Loan Specified Event of Default: means a Term Loan Default under Sections 11.1(a) and Section 11.1(c) (with respect to Sections 8.1, 10.1.1, 10.1.2(a), 10.1.2(b), 10.1.2(c), 10.1.2(d), 10.2.3, 10.3, 10.4 and 10.7).

 

Triggering Event: (i) the acceleration of the ABL Priority Obligations, (ii) ABL Agent’s Exercise of Secured Creditor Remedies with respect to all or a material portion of the Collateral granted by a Grantor, (iii) the acceleration of the Term Loan Priority Obligations, or (iv) the commencement of an Insolvency Proceeding with respect to any Grantor.

 

UCC: the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.

 

Use Period:  the period commencing on the date that either the ABL Agent or the Term Agent commences the Exercise of Secured Creditors Remedies and ending 120 days thereafter.  If any stay or other order that prohibits any of the ABL Agent or the other ABL Claimholders from commencing and continuing the Exercise of Secured Creditor Remedies or to liquidate and sell the ABL Priority Collateral has been entered by a court of competent jurisdiction, such 120-day period shall be tolled during the pendency of any such stay or other order and the Use Period shall be so extended.

 

1.2           Construction.   The definitions of terms in this Agreement shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine, and neuter forms.  The words “include,” “includes,” and  “including” shall be deemed to be followed by the phrase “without limitation.”  The word “will” shall be construed to have the same meaning and effect as the word “shall.”  

 

 

 

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The term “or” shall be construed to have, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.”  Any term used in this Agreement and not defined in this Agreement shall have the meaning set forth in the ABL Loan Agreement.  Unless the context requires otherwise:

 

(a)           except as otherwise provided herein, any definition of or reference to any agreement, instrument, or other document herein shall be construed as referring to such agreement, instrument, or other document as from time to time amended, restated, supplemented, modified, renewed, extended, Refinanced, refunded, or replaced;

 

(b)           any reference to any agreement, instrument, or other document herein “as in effect on the date hereof” shall be construed as referring to such agreement, instrument, or other document without giving effect to any amendment, restatement, supplement, modification, or Refinance after the date hereof;

 

(c)           any definition of or reference to ABL Obligations or the Term Loan Obligations herein shall be construed as referring to the ABL Obligations or the Term Loan Obligations (as applicable) as from time to time amended, restated, supplemented, modified, renewed, extended, Refinanced, refunded, or replaced;

 

(d)           any reference herein to any person shall be construed to include such person’s successors and assigns;

 

(e)           the words “herein,” “hereof,” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof;

 

(f)           all references herein to Sections shall be construed to refer to Sections of this Agreement; and

 

(g)           the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts, and contract rights.

 

SECTION 2.   Lien Priorities.

 

2.1           Relative Priorities.   Notwithstanding the date, time, method, manner, or order of grant, attachment, or perfection of any Liens securing the Term Loan Obligations granted with respect to the Collateral or of any Liens securing the ABL Obligations granted with respect to the Collateral and notwithstanding any contrary provision of the UCC or any other applicable law or the Term Loan Documents, or (subject to the last paragraph of this Section 2.1) any defect or deficiencies in, or avoidance of, the Liens securing the ABL Obligations or the Term Loan Obligations, the Term Agent and ABL Agent each hereby agree that:

 

(a)           subject to the last sentence of this Section 2.1 and to the provisions of Section 4.1 , any Lien with respect to the ABL Priority Collateral securing any ABL Priority Obligations now or hereafter held by or on behalf of, or created for the benefit of, ABL Agent or any ABL Claimholders or any agent or trustee therefore shall be senior in all respects and prior to any Lien with respect to the ABL Priority Collateral securing any Term Loan Obligations;

 

 

 

  

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(b)           subject to the last sentence of this Section 2.1 and to the provisions of Section 4.1, any Lien with respect to the ABL Priority Collateral securing any Term Loan Priority Obligations now or hereafter held by or on behalf of, or created for the benefit of, Term Agent, any Term Loan Claimholders or any agent or trustee therefor shall be junior and subordinate in all respects to all Liens with respect to the ABL Priority Collateral securing any ABL Priority Obligations;

 

(c)           subject to the last sentence of this Section 2.1 and to the provisions of Section 4.1 , any Lien with respect to the Term Loan Priority Collateral securing any Term Loan Priority Obligations now or hereafter held by or on behalf of, or created for the benefit of, Term Agent or any Term Loan Claimholders or any agent or trustee therefore shall be senior in all respects and prior to any Lien with respect to the Term Loan Priority Collateral securing any ABL Obligations;

 

(d)           subject to the last sentence of this Section 2.1 and to the provisions of Section 4.1, any Lien with respect to the Term Loan Priority Collateral securing any ABL Priority Obligations now or hereafter held by or on behalf of, or created for the benefit of, ABL Agent, any ABL Claimholders or any agent or trustee therefor shall be junior and subordinate in all respects to all Liens with respect to the Term Loan Priority Collateral securing any Term Loan Priority Obligations;

 

(e)           subject to the last sentence of this Section 2.1, and to the provisions of Section 4.1, any Lien with respect to the ABL Priority Collateral securing any Term Loan Priority Obligations now or hereafter held by or on behalf of, or created for the benefit of, Term Agent, any Term Loan Claimholders or any agent or trustee therefor shall be senior in all respects to all Liens with respect to the ABL Priority Collateral securing any Excess ABL Obligations;

 

(f)           subject to the last sentence of this Section 2.1, and to the provisions of Section 4.1, any Lien with respect to the ABL Priority Collateral securing any Excess ABL Obligations now or hereafter held by or on behalf of, or created for the benefit of, ABL Agent, any ABL Claimholders or any agent or trustee therefor shall be junior and subordinate in all respects to all Liens with respect to the ABL Priority Collateral securing any Term Loan Priority Obligations;

 

(g)           subject to the last sentence of this Section 2.1, and to the provisions of Section 4.1, any Lien with respect to the Term Loan Priority Collateral securing any ABL Priority Obligations now or hereafter held by or on behalf of, or created for the benefit of, ABL Agent, any ABL Claimholders or any agent or trustee therefor shall be senior in all respects to all

 

Liens with respect to the Term Loan Priority Collateral securing any Excess Term Loan Obligations;

 

(h)           subject to the last sentence of this Section 2.1, and to the provisions of Section 4.1, any Lien with respect to the Term Loan Priority Collateral securing any Excess Term Loan Obligations now or hereafter held by or on behalf of, or created for the benefit of, Term Agent, any Term Loan Claimholders or any agent or trustee therefor shall be junior and subordinate in all respects to all Liens with respect to the Term Loan Priority Collateral securing any ABL Priority Obligations;

 

 

  

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(i)           subject to the last sentence of this Section 2.1, and to the provisions of Section 4.1, any Lien with respect to the ABL Priority Collateral securing any Excess ABL Obligations now or hereafter held by or on behalf of, or created for the benefit of, ABL Agent, any ABL Claimholders or any agent or trustee therefor shall be senior in all respects to all Liens with respect to the ABL Priority Collateral securing any Excess Term Loan Obligations;

 

(j)           subject to the last sentence of this Section 2.1, and to the provisions of Section 4.1, any Lien with respect to the ABL Priority Collateral securing any Excess Term Loan Obligations now or hereafter held by or on behalf of, or created for the benefit of, Term Agent, any Term Loan Claimholders or any agent or trustee therefor shall be junior and subordinate in all respects to all Liens with respect to the ABL Priority Collateral securing any ABL Obligations;

 

(k)           subject to the last sentence of this Section 2.1, and to the provisions of Section 4.1, any Lien with respect to the Term Loan Priority Collateral securing any Excess Term Loan Obligations now or hereafter held by or on behalf of, or created for the benefit of, term Agent, any Term Loan Claimholders or any agent or trustee therefor shall be senior in all respects to all Liens with respect to the Term Loan Priority Collateral securing any Excess ABL Obligations; and

 

(l)           subject to the last sentence of this Section 2.1, and to the provisions of Section 4.1, any Lien with respect to the Term Loan Priority Collateral securing any Excess ABL Obligations now or hereafter held by or on behalf of, or created for the benefit of, ABL Agent, any ABL Claimholders or any agent or trustee therefor shall be junior and subordinate in all respects to all Liens with respect to the Term Loan Priority Collateral securing any Excess Term Loan Obligations.

 

Subject to the last sentence of this Section 2.1 and to the provisions of Section 4.1, the Lien priorities set forth above shall be and remain in effect for all purposes, whether or not such Liens securing any ABL Obligations or Term Loan Obligations, as applicable, are subordinated to any Lien securing any other obligation of any Grantor or any other person (but only to the extent that such subordination is permitted pursuant to the terms of the ABL Loan Agreement and the Term Loan Agreement).

 

The foregoing and any other provision to the contrary contained in this Agreement notwithstanding, (i) the subordination of Liens provided for in this Agreement shall cease to be effective with respect to any part of the Collateral from and after the date on which the Liens of ABL Agent and ABL Claimholders, or Term Agent or Term Loan Claimholders, as applicable, are declared, or ruled to be, invalid, defective, deficient, unenforceable, void or not allowed or are equitably subordinated by a court of competent jurisdiction in a final, non-appealable order (“Lien Avoidance”) as a result of any action taken by ABL Agent, ABL Claimholders, Term Agent, or Term Loan Claimholders, as applicable, or any failure by ABL Agent or Term Agent, as applicable, to take any action, with respect to any financing statement (including any amendment thereto or continuation thereof), mortgage or other perfection document (including any federal U.S. Copyright Office or U.S. Patent and Trademark Office intellectual property lien filing, any account control agreement, or any marking of a legend on any chattel paper), respectively. in 
 

 

 

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which event Term Agent and Term Loan Claimholders, or ABL Agent and ABL Claimholders, respectively, shall be entitled to receive and retain, from and after such date, all proceeds with respect to such Collateral to the extent the Liens of Term Agent and Term Loan Claimholders, or of ABL Agent and ABL Claimholders, respectively, are valid, enforceable, not void and allowed with respect to such Collateral (provided that if ABL Agent or Term Agent has not been given a Lien Protection Notice from the other Agent as to action taken by the other Agent, which, if such action had been promptly taken by ABL Agent or Term Agent, respectively, would have resulted in the applicable Liens not being subject to Lien Avoidance, then this clause (i) shall not be applicable to such Lien Avoidance such that the subordination of Liens of Term Agent or ABL Agent, respectively, as otherwise provided for in this Agreement shall remain effective (and the inapplicability of this clause (i) shall be the sole consequence of any failure to provide a Lien Protection Notice), and (ii) except as expressly provided in this Agreement, each of ABL Agent and Term Agent agrees not to contractually subordinate its Lien in any Collateral to the Lien of any other creditor of Grantors without the prior written consent of Term Agent or ABL Agent, respectively.

 

2.2           Prohibition on Contesting Liens.  Each of Term Agent, for itself and on behalf of each Term Loan Claimholder, and ABL Agent, for itself and on behalf of each ABL Claimholder, agrees that it will not (and hereby waives any right to), directly or indirectly, contest, or support any other person in contesting, in any proceeding (including any Insolvency Proceeding), the priority, validity, or enforceability of a Lien held by or on behalf of any ABL Claimholders in the ABL Collateral or by or on behalf of any Term Loan Claimholders in the Term Loan Collateral, as the case may be, or the provisions of this Agreement; provided, however that nothing in this Agreement shall be construed to prevent or impair the rights of ABL Agent, any ABL Claimholder, Term Agent, or any Term Loan Claimholder to enforce the terms of this Agreement, including the provisions of this Agreement relating to the priority of the Liens securing the ABL Obligations as provided in Sections 2.1 and 3.

 

2.3           New Liens.  Whether or not an Insolvency Proceeding has been commenced by or against any Grantor, the parties hereto agree that no Grantor shall:

 

(a)           so long as the Discharge of ABL Priority Obligations has not occurred, grant any additional Liens on any asset to secure any Term Loan Obligation unless such Grantor

 

gives ABL Agent at least five (5) Business Days prior written notice thereof and unless such notice also offers to grant a Lien on such asset to secure the ABL Obligations concurrently with the grant of a Lien thereon in favor of Term Agent; or

 

(b)           so long as the Discharge of Term Loan Priority Obligations has not occurred, grant any additional Liens on any asset to secure any ABL Obligations unless such Grantor gives Term Agent at least five (5) Business Days prior written notice thereof and unless such notice also offers to grant a Lien on such asset to secure the Term Loan Obligations concurrently with the grant of a Lien thereon in favor of ABL Agent.

 

 

 

 

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To the extent that the foregoing provisions are not complied with for any reason, without limiting any other rights and remedies available to an Agent or Claimholders, each Agent, on behalf its Claimholders, agrees that any amounts received by or distributed to any of them pursuant to or as a result of Liens granted in contravention of this Section 2.3 shall be subject to Section 4.1.

 

2.4           Similar Liens and Agreements.

 

The parties hereto agree that it is their intention that the ABL Collateral and the Term Loan Collateral be identical, and that all Grantors shall be party to the ABL Loan Documents and the Term Loan Documents.  In furtherance of the foregoing and of Section 9.9, the parties hereto agree, subject to the other provisions of this Agreement:

 

(a)           upon request by ABL Agent or Term Agent, to cooperate in good faith (and to direct their counsel to cooperate in good faith) from time to time in order to determine the specific items included in the ABL Collateral and the Term Loan Collateral and the steps taken or to be taken to perfect their respective Liens thereon and the identity of the respective parties obligated under the ABL Loan Documents and the Term Loan Documents;

 

(b)           that the ABL Collateral Documents and Term Loan Collateral Documents and guarantees for the ABL Obligations and the Term Loan Obligations shall be in all material respects the same forms of documents other than with respect to the first lien and the second lien nature thereof; and

 

(c)           upon request by Term Agent after the Discharge of the ABL Priority Obligations, ABL Agent will provide written notice thereof to each depository institution which maintains a Deposit Account or Security Account of any Grantor and which is subject to a control agreement and other party in possession or control of the Collateral with which ABL Agent has entered into a control agreement which has not been terminated (including, without limitation, landlords, warehousemen and other bailees) that such Collateral is to be held for the benefit of, and disposed of in accordance with the directions from, the Term Agent.

 

The foregoing to the contrary notwithstanding, it is understood by each of the parties that to the extent that ABL Agent or Term Agent obtains a Lien in an asset (of a type that is not included in the types of assets included in the Collateral as of the date hereof or which would not constitute Collateral without a grant of a security interest or lien separate from the ABL Loan Documents or Term Loan Documents, as applicable, as in effect immediately prior to obtaining such Lien on such asset) which the other party to this Agreement elects not to obtain after receiving prior written notice thereof in accordance with the provisions of Section 2.3, the Collateral securing the ABL Loan Obligations and the Term Loan Obligations will not be identical, and the provisions of the documents, agreements and instruments evidencing such Liens also will not be substantively similar, and any such difference in the scope or extent of perfection with respect to the Collateral resulting therefrom are hereby expressly permitted by this Agreement.

 

 

  

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SECTION 3.   Exercise of Remedies.

 

3.1           Standstill.

 

(a)           Standstill by Term Agent. Until the Discharge of ABL Priority Obligations has occurred or any Insolvency Proceeding has been commenced by or against any Grantor, Term Agent and Term Loan Claimholders:

 

(i)           will not exercise or seek to exercise any rights or remedies with respect to any ABL Priority Collateral (including any Exercise of Secured Creditor Remedies with respect to any ABL Priority Collateral); provided, however, that if an Insolvency Proceeding has been commenced or if  a Term Loan Default has occurred and is continuing, Term Agent may Exercise any Secured Creditor Remedies after the passage of the applicable Standstill Period (it being understood that if at any time after the delivery of a Standstill Notice that commences a Standstill Period, the specific Term Loan Default which gave rise to the Standstill Notice is waived by the Term Agent and requisite Term Loan Claimholders, Term Agent may not Exercise any Secured Creditor Remedies until the passage of a new Standstill Period commenced by a new Standstill Notice relative to the occurrence of a new Term Loan Default that had not occurred as of the date of the delivery of the earlier Standstill Notice; provided further, however, that in no event shall Term Agent or any Term Loan Claimholder exercise any rights or remedies with respect to the ABL Priority Collateral if, notwithstanding the expiration of the Standstill Period, ABL Agent or ABL Claimholders shall have commenced prior to the expiration of the Standstill Period (or thereafter but prior to the commencement of any Exercise of Secured Creditor Remedies by Term Agent with respect to all or any material portion of the ABL Priority Collateral) and be diligently pursuing in good faith the Exercise of Secured Creditor Remedies with respect to all or any material portion of the ABL Priority Collateral;

 

(ii)           will not contest, protest, or object to any Exercise of Secured Creditor Remedies by ABL Agent or any ABL Claimholder and has no right to direct ABL Agent to Exercise any Secured Creditor Remedies or take any other action under the ABL Loan Documents; and

 

(iii)           will not object to (and waive any and all claims with respect to) the forbearance by ABL Agent or ABL Claimholders from Exercising any Secured Creditor Remedies, provided, however such forbearance shall not affect the Term Agent’s right to issue a Standstill Notice or toll or stay the running of any Standstill Period.

 

(b)           Standstill by ABL Agent. Until the Discharge of Term Loan Priority Obligations has occurred or any Insolvency Proceeding has been commenced by or against any Grantor, ABL Agent and ABL Loan Claimholders:

 

(i)           will not exercise or seek to exercise any rights or remedies with respect to any Term Priority Collateral (including any Exercise of Secured Creditor Remedies with respect to any Term Priority Collateral); provided, however, that if an Insolvency Proceeding has been commenced or if  an ABL Default has occurred and is continuing, ABL Agent may Exercise any Secured Creditor Remedies after the passage of the applicable Standstill Period (it being understood that if at any time after the delivery of a Standstill Notice that commences a Standstill Period, the specific ABL Default which gave rise to the Standstill Notice is waived by the 

 

 

 

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ABL Agent and requisite ABL Claimholders, ABL Agent may not Exercise any Secured Creditor Remedies until the passage of a new Standstill Period commenced by a new Standstill Notice relative to the occurrence of a new ABL Default that had not occurred as of the date of the delivery of the earlier Standstill Notice; provided further, however, that in no event shall ABL Agent or any ABL Claimholder exercise any rights or remedies with respect to the Term Priority Collateral if, notwithstanding the expiration of the Standstill Period, Term Agent or Term Loan Claimholders shall have commenced prior to the expiration of the Standstill Period (or thereafter but prior to the commencement of any Exercise of Secured Creditor Remedies by Term Agent with respect to all or any material portion of the Term Priority Collateral) and be diligently pursuing in good faith the Exercise of Secured Creditor Remedies with respect to all or any material portion of the Term Priority Collateral;

 

(ii)           will not contest, protest, or object to any Exercise of Secured Creditor Remedies by Term Agent or any Term Loan Claimholder and has no right to direct Term Agent to Exercise any Secured Creditor Remedies or take any other action under the Term Loan Documents; and

 

(iii)           will not object to (and waive any and all claims with respect to) the forbearance by Term Agent or Term Loan Claimholders from Exercising any Secured Creditor Remedies, provided, however such forbearance shall not affect the ABL Agent’s right to issue a Standstill Notice or toll or stay the running of any Standstill Period.

 

3.2           Exclusive Enforcement Rights.   Until the Discharge of ABL Priority Obligations has occurred, subject to the first proviso to Section 3.1(a)(i), ABL Agent and ABL Claimholders shall have the exclusive right to Exercise any Secured Creditor Remedies with respect to the ABL Priority Collateral without any consultation with or the consent of Term Agent or any Term Loan Claimholder; and (b) until the Discharge of Term Loan Priority Obligations has occurred, subject to the first proviso to Section 3.1(b)(i), Term Agent and Term Loan Claimholders shall have the exclusive right to Exercise any Secured Creditor Remedies with respect to the Term Loan Priority Collateral without any consultation with or the consent of ABL Agent or any ABL Claimholder  In connection with any Exercise of Secured Creditor Remedies, each of ABL Agent, ABL Claimholders, Term Agent and Term Loan Claimholders may enforce the provisions of the ABL Loan Documents and Term Loan Documents, as applicable, and exercise remedies thereunder, all in such order and in such manner as they may determine in the exercise of their reasonable discretion.  Such exercise and enforcement shall include the rights of an agent appointed by them to Dispose of Collateral, to incur expenses in connection with such Disposition, and to exercise all the rights and remedies of a secured creditor under applicable law.

 

3.3           Claimholders Permitted Actions.  Anything to the contrary in this Section 3 notwithstanding, ABL Agent, any ABL Claimholder, Term Agent and any Term Loan Claimholder may:

 

 

  

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(a)           if an Insolvency Proceeding has been commenced by or against any Grantor, file a claim or statement of interest with respect to the ABL Obligations or the Term Loan Obligations, as applicable;

 

(b)           take any action (not adverse to the priority status of the Liens on the Collateral of the other, or the rights of any other Claimholders to Exercise any Secured Creditor Remedies) in order to create or perfect its Lien in and to the Collateral;

 

(c)           file any necessary responsive or defensive pleadings in opposition to any motion, claim, adversary proceeding, or other pleading made by any person objecting to or otherwise seeking the disallowance of the claims of Term Loan Claimholders or ABL Claimholders, as applicable, including any claims secured by the Collateral, if any;

 

(d)           vote on any plan of reorganization and make any filings and motions that are, in each case, not in contravention of, the terms of this Agreement, with respect to the Term Loan Obligations, or ABL Obligations, as applicable, and the Collateral;

 

(e)           join (but not exercise any control with respect to) any judicial foreclosure proceeding or other judicial lien enforcement proceeding with respect to the Priority Collateral of the other party initiated by such party to the extent that any such action could not reasonably be expected, in any material respect, to restrain, hinder, limit, delay for any material period or otherwise interfere with the Exercise of Secured Creditor Remedies by such other party (it being understood that, (i) with respect to the ABL Priority Collateral  neither Term Agent nor any Term Loan Claimholder shall be entitled to receive any proceeds thereof unless otherwise expressly permitted herein; and (ii) with respect to the Term Loan Priority Collateral  neither ABL Agent nor any ABL Claimholder shall be entitled to receive any proceeds thereof unless otherwise expressly permitted herein); and

 

(f)           Exercise any Secured Creditor Remedies after the termination of the Standstill Period if and to the extent specifically permitted by Section 3.1.

 

3.4           Intentionally omitted.

 

3.5           Non-Interference. Subject to Sections 3.1, 3.3 and 3.6, Term Agent, for itself and on behalf of Term Loan Claimholders, and ABL Agent, for itself and on behalf of ABL Loan Claimholders the hereby:  agrees that it will not take any action that would restrain, hinder, limit, delay, or otherwise interfere with any Exercise of Secured Creditor Remedies by the other, except to the extent otherwise prohibited hereunder, including any Disposition of the Collateral, whether by foreclosure or otherwise;

 

(b)           subject to Section 3.7, waives any and all rights it or its Claimholders may have as a junior lien creditor or otherwise to object to the manner in which the other party seek to enforce or collect such other party’s respective Obligations or the Liens securing such Obligations granted in any of such other party’s Collateral, regardless of whether any action or failure to act by or on behalf of such other person is adverse to the interest of it or its Claimholders; and

 

 

  

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(c)           acknowledges and agrees that no covenant, agreement or restriction contained in its Collateral Documents shall be deemed to restrict in any way the rights and remedies of the other party with respect to the Collateral as set forth in this Agreement and the other party’s Collateral Documents.

 

3.6           Unsecured Creditor Remedies.  Except as set forth in Sections 3.1 and 3.5, ABL Agent, ABL Claimholders, Term Agent and Term Loan Claimholders may exercise rights and remedies as unsecured creditors against any Grantor in accordance with the terms of the ABL Loan Documents, Term Loan Documents, as applicable, and applicable law; provided, however, that in the event that any Claimholder becomes a judgment Lien creditor in respect of Collateral as a result of its enforcement of its rights as an unsecured creditor with respect to the Obligations, such judgment Lien shall be subject to the terms of this Agreement for all purposes as the other Liens securing the Obligations.

 

3.7           Commercially Reasonable Dispositions; Notice of Exercise.  ABL Agent agrees that any Exercise of Secured Creditor Remedies by ABL Agent with respect to Collateral subject to Article 9 of the UCC shall be conducted by ABL Agent in a commercially reasonable manner including, without limitation, as to the method, time, place and other terms of Disposition.  Term Agent agrees that any Exercise of Secured Creditor Remedies by Term Agent with respect to Collateral subject to Article 9 of the UCC shall be conducted by Term Agent in a commercially reasonable manner, including, without limitation, as to the method, time, place and other terms of Disposition.  ABL Agent shall provide reasonable prior notice (but in no event less than that notice required by the UCC) to Term Agent of any Exercise of Secured Creditor Remedies.  Term Agent shall provide reasonable prior notice (but in no event less than that notice required by the UCC) to ABL Agent of any Exercise of Secured Creditor Remedies.

 

3.8           Inspection and Access Rights.

 

(a)           Without limiting any rights the ABL Agent or any other ABL Claimholder may otherwise have under applicable law or by agreement, in the event of any liquidation (including, without limitation, by means of a sale pursuant to Section 363 of the Bankruptcy Code) of the ABL Priority Collateral (or any other Exercise of any Secured Creditor Remedies by the ABL Agent) and whether or not the Term Agent or any other Term Loan Claimholder has commenced and is continuing the Exercise of any Secured Creditor Remedies of the Term Agent, the ABL Agent or any other Person acting with the consent, or on behalf, of the ABL Agent, shall have the right (i) during normal business hours on any Business Day, to access ABL Priority Collateral that (x) is stored or located in or on, (y) has become an accession with respect to (within the meaning of Section 9-335 of the Uniform Commercial Code), or (z) has been commingled with (within the meaning of Section 9-336 of the Uniform Commercial Code), Term Loan Priority Collateral, and (ii) during the Use Period and after reasonable prior notice, shall have the right to use the Term Loan Priority Collateral in order to assemble, inspect, copy or download information stored on, take actions to perfect its Lien on, complete a production run of Inventory involving, take possession of, move, prepare and advertise for sale, sell (by public auction, private sale or a “store closing”, “going out of business” or similar sale, whether in bulk, in lots or to customers in the ordinary course of business or otherwise), store or otherwise deal with the ABL Priority Collateral, in each case without the involvement of or interference by any Term Secured Party or liability to any Term Secured Party.  In the event that ABL Agent has commenced and is continuing the Exercise of 
 

 

 

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Secured Creditor Remedies with respect to any ABL Priority Collateral or any other sale or liquidation of the ABL Priority Collateral has been commenced by ABL Agent, the Term Agent may not sell, assign or otherwise transfer the related Term Priority Collateral prior to the expiration of the Use Period unless the purchaser, assignee or transferee thereof agrees to be bound by the provisions of this Section 3.8.

 

(b)           During the period of actual occupation, use and/or control by the ABL Claimholders and/or the ABL Agent (or their respective employees, agents, advisers and representatives) of any Term Loan Priority Collateral, the ABL Claimholders and the ABL Agent shall be obligated to repair at their expense any physical damage (but not any diminution in value) to such Term Loan Priority Collateral resulting directly from such occupancy, use or control, and to leave such Term Loan Priority Collateral in substantially the same condition as it was at the commencement of such occupancy, use or control, ordinary wear and tear excepted.  Notwithstanding the foregoing, in no event shall the ABL Claimholders or the ABL Agent have any liability to the Term Loan Claimholders and/or to the Term Agent pursuant to this Section 3.8 as a result of any condition (including any environmental condition, claim or liability) on or with respect to the Term Loan Priority Collateral existing prior to the date of the exercise by the ABL Agent or any ABL Claimholder of its rights under this Section 3.8, and the ABL Claimholders shall have no duty or liability to maintain the Term Loan Priority Collateral in a condition or manner better than that in which it was maintained prior to the use thereof by the ABL Claimholders, or for any diminution in the value of the Term Loan Priority Collateral that results from ordinary wear and tear resulting from the use of the Term Loan Priority Collateral by the ABL Claimholders in the manner and for the time periods specified under this Section 3.8.  Without limiting the rights granted in this Section 3.8, the ABL Claimholders and the ABL Agent shall cooperate with the Term Loan Claimholders and/or the Term Agent in connection with any efforts made by the Term Loan Claimholders and/or the Term Agent to sell the Term Loan Priority Collateral.

 

(c)           The ABL Agent and the ABL Claimholders shall not be obligated to pay any amounts to the Term Agent or the Term Loan Claimholders (or any person claiming by, through or under the Term Loan Claimholders, including any purchaser of the Term Loan

 

Priority Collateral), for or in respect of the use by the ABL Agent and the ABL Claimholders of the Term Loan Priority Collateral prior to the termination of the Use Period.

 

(d)           The ABL Secured Parties shall (i) use the Term Loan Priority Collateral in accordance with applicable law; (ii) insure for damage to property and liability to persons, including property and liability insurance for the benefit of the Term Loan Claimholders; and (iii) indemnify the Term Loan Claimholders from any claim, loss, damage, cost or liability arising directly from the ABL Claimholders use of the Term Loan Priority Collateral (except for those arising from the gross negligence or willful misconduct of any Term Loan Claimholder).

 

(e)           The Term Agent and the other Term Loan Claimholders shall use commercially reasonable efforts to not hinder or obstruct the ABL Agent and the other ABL Secured Parties from exercising the rights described in Section 3.8(a) hereof.

 

(f)           Subject to the terms hereof, the Term Agent may advertise and conduct public auctions or private sales of the Term Loan Priority Collateral without notice (except as required by applicable law) to ABL Agent or any ABL Claimholder, the involvement of or interference by ABL Agent or any ABL Claimholder or liability to ABL Agent or any ABL Claimholder as long as, in the case of an actual sale, the respective purchaser assumes and agrees to the obligations of the Term Agent and the Term Loan Claimholders under this Section 3.8.

 

 

  

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SECTION 4.   Proceeds.

 

4.1           Application of Proceeds.  Application of Proceeds of ABL Priority Collateral.  Each Agent hereby agrees that, subject to the last sentence of Section 2.1, all ABL Priority Collateral and all proceeds thereof, received by either of them (i) in connection with any Exercise of Secured Creditor Remedies with respect to the ABL Priority Collateral, (ii) in connection with the exercise of any right or remedy (including set off) relating to the ABL Priority Collateral, or (iii) following the commencement of any Insolvency Proceeding, in each case, shall be applied,

 

first, to the payment of reasonable costs and expenses of the ABL Agent in connection with such Exercise of Secured Creditor Remedies,

 

second, to the payment of the ABL Priority Obligations in accordance with the ABL Documents until the Discharge of ABL Priority Obligations shall have occurred,

 

third, to the payment of the Term Loan Priority Obligations in accordance with the Term Loan Documents until the Discharge of Term Loan Priority Obligations shall have occurred,

 

fourth, to the payment of the Excess ABL Obligations in accordance with the ABL Documents,

 

fifth, to the payment of Excess Term Loan Obligations in accordance with the Term Loan Documents, and

 

sixth, the balance, if any, to the Grantors or as a court of competent jurisdiction may direct.

 

(b)           Application of Proceeds of Term Priority Collateral.  Each Agent hereby agrees that, subject to the last sentence of Section 2.1, all Term Loan Priority Collateral and all proceeds thereof, received by either of them (i) in connection with any Exercise of Secured Creditor Remedies with respect to the Term Loan Priority Collateral, (ii) in connection with the exercise of any right or remedy (including set off) relating to the Term Loan Priority Collateral, or (iii) following the commencement of any Insolvency Proceeding, in each case, shall be applied,

 

first, to the payment of reasonable costs and expenses of the Agent in connection with such Exercise of Secured Creditor Remedies,

 

 

  

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second, to the payment of the Term Loan Priority Obligations (in accordance with the Term Documents until the Discharge of Term Loan Priority Obligations shall have occurred,

 

third, to the payment of the ABL Priority Obligations in accordance with the ABL Documents until the Discharge of ABL Priority Obligations shall have occurred,

 

fourth, to the payment of the Excess Term Loan Obligations in accordance with the Term Loan Documents,

 

fifth, to the payment of the Excess ABL Obligations in accordance with the ABL Documents, and

 

sixth, the balance, if any, to the Grantors or as a court of competent jurisdiction may direct.

 

4.2           Turnover.  Unless and until the Discharge of ABL Priority Obligations has occurred, except as otherwise provided in this Agreement, any proceeds of ABL Priority Collateral received by the Term Agent or any Term Loan Claimholder in connection with the Exercise of any Secured Creditor Remedies with respect to the ABL Priority Collateral by the Term Agent or Term Loan Claimholder, shall be segregated and held in trust and forthwith paid over to the ABL Agent for the benefit of the ABL Claimholders. Unless and until the Discharge of Term Loan Priority Obligations has occurred, except as otherwise provided in this Agreement, any proceeds of Term Loan Priority Collateral received by the ABL Agent or any ABL Claimholder in connection with the Exercise of Secured Creditor Remedies with respect to the Term Loan Priority Collateral by the ABL Agent or any ABL Claimholder, shall be segregated and held in trust and forthwith paid over to the Term Agent for the benefit of the Term Loan Claimholders.

 

4.3           No Subordination of the Relative Priority of Claims.  Anything to the contrary contained herein notwithstanding, the subordination of the Liens of an Agent for the benefit of its Claimholders to the Liens of the other Agent for the benefit of its Claimholders as set forth herein is with respect to the priority of the respective Liens held by or on behalf of them only and shall not constitute a subordination of the Term Loan Obligations to the ABL Obligations or ABL Loan Obligations to the Term Loan Obligations, as applicable.

 

SECTION 5.   Releases; Dispositions; Other Agreements.

 

5.1           Releases.

 

(a)           Except as otherwise expressly provided herein, ABL Agent shall have the exclusive right to make determinations regarding the release or Disposition of any Collateral pursuant to the terms of the ABL Loan Documents without any consultation with, consent of, or notice to Term Agent or any Term Loan Claimholder. Except as otherwise expressly provided herein, Term Agent shall have the exclusive right to make determinations regarding the release or Disposition of any Collateral pursuant to the terms of the Term Loan Documents in each case without any consultation with, consent of, or notice to ABL Agent or any ABL Claimholder.

 

 

  

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(b)           Other than in connection with an Insolvency Proceeding, if, prior to the Discharge of the ABL Priority Obligations, in connection with the Exercise of Secured Creditor Remedies by ABL Agent as provided for in Section 3 (with the proceeds thereof being applied as set forth in Section 4.1), ABL Agent releases any of its Liens on any part of the ABL Priority Collateral or in connection with a Disposition of the equity interests of any Grantor, releases such Grantor from its obligations in respect of the ABL Obligations (collectively, an “ABL Post-Default Disposition”), then the Lien, of Term Agent on such ABL Priority Collateral, and the obligations of such Grantor in respect of the Term Loan Obligations, shall be automatically, unconditionally, and simultaneously released; provided that ABL Agent provides Term Agent ten (10) Business Day notice of any such Disposition (which notice shall include a summary of the terms thereof and the expected date of the proposed Disposition) prior to such release by ABL Agent and such Disposition is consummated on substantially the terms set forth in such notice within thirty (30) days thereafter.  Term Agent, for itself or on behalf of any such Term Loan Claimholders, promptly shall execute and deliver to ABL Agent such termination or amendment statements, releases, and other documents as ABL Agent may request to effectively confirm such release.

 

(c)           Other than in connection with an Insolvency Proceeding, if, prior to the Discharge of the Term Loan Priority Obligations, in connection with the Exercise of Secured Creditor Remedies by Term Agent as provided for in Section 3 (with the proceeds thereof being applied as set forth in Section 4.1), Term Agent releases any of its Liens on any part of the Term Loan Priority Collateral or in connection with a Disposition of the equity interests of any Grantor, releases such Grantor from its obligations in respect of the Term Loan Obligations (collectively, a “Term Loan Post-Default Disposition”), then the Liens, of ABL Agent on such Term Loan Priority Collateral, and the obligations of such Grantor in respect of the ABL Obligations, shall be automatically, unconditionally, and simultaneously released; provided that Term Agent provides ABL Agent ten (10) Business Day notice of any such Disposition (which notice shall include a summary of the terms thereof and the expected date of the proposed Disposition) prior to such release by Term Agent and such Disposition is consummated on substantially the terms set forth in such notice within thirty (30) days thereafter.  ABL Agent, for

 

itself or on behalf of any such ABL Claimholders, promptly shall execute and deliver to Term Agent such termination or amendment statements, releases, and other documents as Term Agent may request to effectively confirm such release.

 

(d)           Except as provided in Section 5.1(b) and (c), as applicable, neither the ABL Agent nor the Term Agent shall have any obligation to release any of its Liens on any portion of the Collateral that is the subject of any Disposition, or release any Grantor from its obligations in respect of the ABL Obligations or Term Loan Obligations, as applicable, unless such Disposition is permitted under both the ABL Loan Documents as in effect as of the date hereof and the Term Loan Documents as in effect as of the date hereof.

 

(e)           Until the Discharge of ABL Priority Obligations occurs, to the extent that ABL Agent or ABL Claimholders (i) have released any Lien on ABL Priority Collateral or any Grantor with respect to the ABL Obligations, and any such Liens or obligations are later reinstated, or (ii) obtain any new Liens from any Grantor with respect to any ABL Priority Collateral or obtain a guaranty from any Grantor of the ABL Obligations, then Term Agent, for itself and for Term Loan Claimholders, shall be entitled to obtain a Lien on any such Collateral, subject to the terms (including the lien subordination provisions) of this Agreement, and a guaranty from such Grantor, as the 
 

 

 

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case may be. No such reinstatement of the Liens of the ABL Agent and ABL Claimholders shall in any event require the Term Agent or the Term Loan Claimholders to pay over to the ABL Agent or the ABL Claimholders any amounts which the Term Agent or the Term Loan Claimholders may have received in connection with and after the release of their Liens on such Collateral prior to such reinstatement.

 

(f)           Until the Discharge of Term Loan Priority Obligations occurs, to the extent that Term Agent or Term Loan Claimholders (i) have released any Lien on Term Loan Priority Collateral or any Grantor with respect to the Term Loan Obligations, and any such Liens or obligations are later reinstated, or (ii) obtain any new Liens from any Grantor with respect to any Term Loan Priority Collateral or obtain a guaranty from any Grantor of the Term Loan Obligations, then ABL Agent, for itself and for ABL Claimholders, shall be entitled to obtain a Lien on any such Collateral, subject to the terms (including the lien subordination provisions) of this Agreement, and a guaranty from such Grantor, as the case may be. No such reinstatement of the Liens of the Term Agent and Term Loan Claimholders shall in any event require the ABL Agent or the ABL Claimholders to pay over to the Term Agent or the Term Loan Claimholders any amounts which the ABL Agent or the ABL Claimholders may have received in connection with and after the release of their Liens on such Collateral prior to such reinstatement.

 

5.2           Insurance.   (i) Unless and until the Discharge of ABL Priority Obligations has occurred, subject to the provisions of Section 3.7, ABL Agent and ABL Claimholders shall have the sole and exclusive right, subject to the rights of Grantors under the ABL Loan Documents, and subject to the consent of the Term Agent (which consent shall not be unreasonably withheld), to adjust and settle any claim under any insurance policy covering the ABL Priority Collateral in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding (or any deed in lieu of condemnation) affecting the ABL Priority Collateral; and (ii) all proceeds of any such insurance policy and any such award (or any payments with respect to a deed in lieu of condemnation) shall be paid, subject to the rights of Grantors under the ABL Loan Documents and the Term Loan Documents, first to ABL Claimholders and Term Loan Claimholders in accordance with the priorities set forth in Section 4.1, until paid in full in cash, and second, to the owner of the subject property, such other person as may be entitled thereto, or as a court of competent jurisdiction may otherwise direct;

 

(b)           (i) Unless and until the Discharge of Term Loan Priority Obligations has occurred, subject to the provisions of Section 3.7, Term Agent and Term Loan Claimholders shall have the sole and exclusive right, subject to the rights of Grantors under the Term Loan Documents, and subject to the consent of the ABL Agent (which consent shall not be unreasonably withheld), to adjust and settle any claim under any insurance policy covering the Term Loan Priority Collateral in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding (or any deed in lieu of condemnation) affecting the Term Loan Priority Collateral; and (ii) all proceeds of any such insurance policy and any such award (or any payments with respect to a deed in lieu of condemnation) shall be paid, subject to the rights of Grantors under the Term Loan Documents and the ABL Loan Documents, first to Term Loan Claimholders and ABL Loan Claimholders in accordance with the priorities set forth in Section 4.1, until paid in full in cash, and second, to the owner of the subject property, such other person as may be entitled thereto, or as a court of competent jurisdiction may otherwise direct

 

 

  

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(c)           Except as provided in Section 5.2(a), neither the ABL Agent nor the Term Agent shall have any obligation to release any of its Liens or rights with respect to any claim under any insurance policy covering the Collateral in the event of any loss thereunder or to approve any award granted in any condemnation or similar proceeding (or any deed in lieu of condemnation) affecting the Collateral; and

 

(d)           if any Agent or any Claimholders shall, at any time, receive any proceeds of any such insurance policy or any such award or payment in contravention of this Section 5.2, it shall pay such proceeds over to  the other Agent in accordance with the terms of Section 4.2 to be applied in accordance with Section 4.1.

 

5.3           Amendments; Refinancings; Legends.

 

(a)           The ABL Loan Documents may be amended, supplemented, or otherwise modified in accordance with their terms and the ABL Obligations may be Refinanced, in each case without notice to, or the consent of, Term Agent or Term Loan Claimholders, all without affecting the lien subordination or other provisions of this Agreement; provided, however, that, in the case of a Refinancing, the holders of such Refinancing debt bind themselves (in a writing addressed to Term Agent for the benefit of itself and the Term Loan Claimholders) to the terms of this Agreement; provided further, however, that any such amendment, supplement, modification, or Refinancing shall not, without the prior written consent of Term Agent:

 

(i)           contravene the provisions of this Agreement;

 

(ii)           increase the outstanding principal amount of the loans plus the amount of outstanding undrawn Letters of Credit and outstanding Bank Product

 

Obligations to an amount that would exceed the ABL Cap (without giving effect to any LC Reserve);

 

(iii)           increase the “Applicable Margin” or similar component of the interest rate due under the ABL Loan Agreement, the LC Facility Fees, or Unused Line Fees, in each case by more than 2.00 percentage points per annum (excluding increases to interest rate resulting from the accrual of interest at the default rate as set forth in the ABL Loan Agreement as in effect as of the date hereof);

 

(iv)           shorten the scheduled final maturity of the ABL Loan Agreement or any Refinancing thereof;

 

(v)           change the definition of “Borrowing Base Certificate” or modify Section 8.1 or waive the delivery for any period in excess of 15 days of the Borrowing Base Certificates in accordance with the terms and conditions of the ABL Loan Agreement, as in effect as of the date hereof.

 

 

  

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(vi)           modify the financial covenant provisions of the ABL Loan Agreement or any ABL Loan Document, including Sections 10.2.3, 10.3, 10.4, or 10.7 of the ABL Loan Agreement;

 

(vii)           add any conditions, covenants, defaults or events of default thereunder that restricts any Term Loan Borrower or Term Loan Guarantor from making payments of the Term Loan Obligations that would otherwise be permitted under the ABL Loan Agreement other than as expressly provided herein;

 

(viii)           change the definitions of “Borrowing Base” or “Adjusted Borrowing Base” contained in the ABL Loan Agreement and any component definition thereof, and any definitions relating to reserves (including, without limitation, the definitions for “Availability Covenant Amount”, “Bank Product Reserve”, “CAI Availability Reserve”, “CAI Borrowing Base”, “CCI Availability Reserve”, “CCI Borrowing Base”, “Contract Formula Amount”, “Credit Card Account Formula Amount”, “Customer Deposit Reserve”, “Eligible Contracts”, “Eligible Credit Card Accounts”, “Eligible Inventory”, “Inventory Formula Amount”, “Gift Card Reserve”, “Inventory Reserve”, “LC Reserve”, “Net Eligible Contract Payments”, “NOLV Percentage”, “Rent and Charges Reserve”; “Sales Tax Reserve”; “Term Loan Borrowing Base”, “Term Loan Borrowing Base Reserve”, “Value” or any component definition thereof), or change the methodology for the calculation of such reserves each as set forth in the ABL Loan Agreement, in each case in a manner which would effect an increase in the ABL Borrowing Base;

 

(ix)           change the definitions of “Base Rate”, “LIBOR” “Borrowing Base Certificate”, “Dominion Trigger Period” “Increased Reporting Period”, and any component definition thereof;

 

(x)           modify Sections 8.1 or 10.1.1 in a manner that would reduce the frequency or required content in any material respect of the collateral reports and appraisals required therein; or

 

(xi)           provide for any amendment, waiver or other fees that are not due and payable in full when charged.

 

(b)           The Term Loan Documents may be amended, supplemented, or otherwise modified in accordance with their terms and the Term Loan Obligations may be Refinanced, in each case without notice to, or the consent of, ABL Agent or ABL Claimholders, all without affecting the lien subordination or other provisions of this Agreement; provided, however, that, in the case of a Refinancing, the holders of such Refinancing debt (either themselves or by their authorized representative) bind themselves (in a writing addressed to ABL Agent for the benefit of itself and the ABL Claimholders) to the terms of this Agreement; provided further, however, that any such amendment, supplement, modification, or Refinancing shall not:

 

(i)           contravene the provisions of this Agreement;

 

(ii)           increase the outstanding principal amount of the loans to an amount that would exceed the Term Loan Cap;

 

 

  

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(iii)           change to earlier dates any dates upon which payments of principal or interest are due thereon or modify Section 5.2.2 (mandatory prepayments);

 

(iv)           increase the interest rate due under the Term Loan Documents by more than 5.00 percentage points per annum (excluding increases to interest rate resulting from the accrual of interest at the default rate as set forth in the Term Loan Agreement as in effect as of the date hereof);

 

(v)           shorten the scheduled final maturity of the Term Loan Agreement or any Refinancing thereof;

 

(vi)           modify the financial covenant provisions of the Term Loan Agreement or any Term Loan Document;

 

(vii)           change the definition of “Permitted Contract Transfer”;

 

(viii)           add any conditions, covenants, defaults or events of default thereunder that restricts any ABL Borrower or ABL Guarantor from making payments of the ABL Obligations that would otherwise be permitted under the Term Loan Agreement other than as expressly provided herein; or

 

(ix)           provide for any amendment, waiver or other fees that are not due and payable in full when charged.

 

(c)           Each Borrower agrees that each ABL Collateral Document and each Term Loan Collateral Document shall at all times include the following language (or language to similar effect approved by ABL Agent or Term Agent, as applicable):

 

“Anything herein to the contrary notwithstanding, the liens and security interests granted by this agreement, the exercise of any right or remedy with respect thereto, and certain of the rights of the

 

holder hereof are subject to the provisions of the Intercreditor Agreement dated as of November 30, 2010, (as amended, restated, supplemented, or otherwise modified from time to time, the “Intercreditor Agreement”), by and between Bank of America, N.A., as ABL Agent, and GA Capital, LLC, as Term Agent.  In the event of any conflict between the terms of the Intercreditor Agreement and this agreement, the terms of the Intercreditor Agreement shall govern and control.”

 

5.4           Bailee for Perfection.

 

(a)           ABL Agent and Term Agent each agree to hold or control that part of the Collateral that is in its possession or control (or in the possession or control of its agents or bailees,) to the extent that possession or control thereof is taken to perfect a Lien thereon under the UCC or other applicable law (such Collateral being referred to as the “Pledged Collateral”), as bailee and as a non-fiduciary agent for Term Agent or ABL Agent, as applicable (such bailment and agency being intended, among other things, to satisfy the requirements of Sections 8-301(a)(2), 9-313(c), 9-104, 9-105, 9-106, and 9-107 of the UCC), solely for the purpose of perfecting the security 
 

 

 

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interest granted under the Term Loan Documents or the ABL Loan Documents, as applicable, subject to the terms and conditions of this Section 5.4.  Unless and until the Discharge of the ABL Priority Obligations, Term Agent agrees to promptly notify ABL Agent of any Pledged Collateral held by it or by any Term Loan Claimholders, and, immediately upon the request of ABL Agent at any time prior to the Discharge of the ABL Priority Obligations, Term Agent agrees to deliver to ABL Agent any such Pledged Collateral held by it or by any Term Loan Claimholders, together with any necessary endorsements (or otherwise allow ABL Agent to obtain control of such Pledged Collateral). ABL Agent hereby agrees that upon the Discharge of the ABL Priority Obligations, upon the written request of Term Agent, to the extent that the applicable control agreement is in full force and effect and has not been terminated, ABL Agent shall continue to act as such a bailee and non-fiduciary agent for Term Agent (solely for the purpose of perfecting the security interest granted under the Term Loan Documents and at the expense of Term Agent) with respect to the deposit account or securities account that is the subject of such control agreement, until the earlier to occur of (x) thirty (30) days after the date when the Discharge of the ABL Priority Obligations has occurred, and (y) the date when a control agreement is executed in favor of Term Agent with respect to such deposit account or securities account.

 

(b)           ABL Agent shall have no obligation whatsoever to Term Agent or any Term Loan Claimholder to ensure that the Pledged Collateral is genuine or owned by any of Grantors or to preserve rights or benefits of any person except as expressly set forth in this Section 5.4.  Term Agent shall have no obligation whatsoever to ABL Agent or any ABL Claimholder to ensure that the Pledged Collateral is genuine or owned by any of Grantors or to preserve rights or benefits of any person except as expressly set forth in this Section 5.4.  The duties or responsibilities of ABL Agent under this Section 5.4 shall be limited solely to holding or controlling the Pledged Collateral as bailee and agent in accordance with this Section 5.4 and delivering the Pledged Collateral upon a Discharge of ABL Priority Obligations as provided in paragraph (d) of this Section 5.4.  The duties or responsibilities of Term Agent under this Section 5.4 shall be limited solely to holding or controlling the Pledged Collateral as bailee and agent in accordance with this Section 5.4.

 

(c)           ABL Agent acting pursuant to this Section 5.4 shall not have by reason of the ABL Collateral Documents, the Term Loan Collateral Documents, or this Agreement a fiduciary relationship in respect of Term Agent or any Term Loan Claimholder.  Term Agent acting pursuant to this Section 5.4 shall not have by reason of the ABL Collateral Documents, the Term Loan Collateral Documents, or this Agreement a fiduciary relationship in respect of ABL Agent or ABL Claimholder.

 

(d)           Upon the payment (or cash collateralization, as applicable) in full in cash of all ABL Obligations, ABL Agent shall deliver the remaining Pledged Collateral (if any) together with any necessary endorsements, first, to Term Agent to the extent Term Loan Obligations remain outstanding as confirmed in writing by Term Agent, and, to the extent that Term Agent confirms no Term Loan Obligations are outstanding, second, to Borrowers to the extent no ABL Obligations or Term Loan Obligations remain outstanding (in each case, so as to allow such person to obtain possession or control of such Pledged Collateral).  At such time, ABL Agent further agrees to take all other action reasonably requested by Term Agent at the expense of Borrowers (including amending any outstanding control agreements) to enable Term Agent to obtain a first priority security interest in the Collateral.

 

 

  

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5.5           When Discharge of Priority Obligations Deemed to Not Have Occurred.

 

If Borrowers enters into any Refinancing of the ABL Priority Obligations, then a Discharge of ABL Priority Obligations shall be deemed not to have occurred for all purposes of this Agreement, and the obligations under such Refinancing of such ABL Priority Obligations shall be treated as ABL Priority Obligations for all purposes of this Agreement, including for purposes of the Lien priorities and rights in respect of Collateral set forth herein, and ABL Agent under the ABL Loan Documents effecting such Refinancing shall be ABL Agent for all purposes of this Agreement.  ABL Agent under such ABL Loan Documents shall agree (in a writing addressed to Term Agent for the benefit of itself and the Term Loan Claimholders) to be bound by the terms of this Agreement. If Borrowers enter into any Refinancing of the Term Loan Priority Obligations, then the Term Loan Priority Obligations shall be deemed to remain outstanding for all purposes of this Agreement, and the obligations under such Refinancing of such Term Loan Obligations shall be treated as Term Loan Obligations for all purposes of this Agreement, including for purposes of the Lien priorities and rights in respect of Collateral set forth herein, and Term Agent under the Term Loan Documents effecting such Refinancing shall be Term Agent for all purposes of this Agreement.  Term Agent under such Term Loan Documents shall agree (in a writing addressed to ABL Agent for the benefit of itself and the ABL Claimholders) to be bound by the terms of this Agreement.

 

5.6           Purchase Option.

 

(a)           Upon the occurrence and during the continuation of a Triggering Event, then, in any such case, any one or more of Term Loan Claimholders (acting in their individual capacity or through one or more affiliates) shall have the right, but not the obligation (each Term Loan Claimholder having a ratable right to make the purchase, with each Term Loan Claimholder’s right to purchase being automatically proportionately increased by the amount not purchased by another Term Loan Claimholder), upon 5 Business Days advance written notice from such Term Loan Claimholders (a “Purchase Notice”) to ABL Agent, for the benefit of ABL

 

Claimholders, to acquire from ABL Claimholders all (but not less than all) of the right, title, and interest of ABL Claimholders in and to the ABL Priority Obligations and the ABL Loan Documents.  The Purchase Notice, if given, shall be irrevocable. Upon receipt of such notice, the ABL Agent and the Term Agent shall not Exercise any Secured Creditor Remedies (or shall discontinue the exercise of such remedies), shall not release its Liens on any Collateral, or consent to any Disposition.

 

(b)           On the date specified by Term Agent in the Purchase Notice (which shall not be more than ten (10) Business Days after the receipt by ABL Agent of the Purchase Notice), ABL Claimholders shall sell to the purchasing Term Loan Claimholders and purchasing Term Loan Claimholders shall purchase from ABL Claimholders, the ABL Priority Obligations.

 

(c)           On the date of such purchase and sale, purchasing Term Loan Claimholders shall (i) pay to ABL Agent, for the benefit of ABL Claimholders, as the purchase price therefor the full amount of all the ABL Obligations (other than the Excess ABL Obligations and other than ABL Obligations cash collateralized in accordance with clause (c)(ii) below) then outstanding and unpaid, (ii) furnish cash collateral to ABL Agent in such amounts 
 

 

 

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as ABL Agent determines is reasonably necessary to secure ABL Agent and ABL Claimholders in connection with (A) any issued and outstanding Letters of Credit (but not in any event in an amount greater than 105% of the aggregate undrawn amount of such Letters of Credit) and (B) Bank Product Obligations (but not in any event in an amount greater than the Bank Product Reserve), and (iii) agree to reimburse ABL Agent and ABL Claimholders for all expenses to the extent earned or due and payable in accordance with the ABL Loan Documents (including the reimbursement of actual, reasonable and documented extraordinary expenses, financial examination expenses, and appraisal fees).  Interest shall be calculated to but excluding the Business Day on which such purchase and sale shall occur if the amounts so paid by purchasing Term Loan Claimholders to the bank account designated by ABL Agent are received in such bank account prior to 2:00 p.m., New York City time, and interest shall be calculated to and including such Business Day if the amounts so paid by purchasing Term Loan Claimholders to the bank account designated by ABL Agent are received in such bank account later than 2:00 p.m., New York City time.

 

(d)           Such purchase shall be expressly made without representation or warranty of any kind by ABL Agent and ABL Claimholders as to the ABL Obligations so purchased or otherwise and without recourse to ABL Agent or any ABL Claimholder, except that each ABL Claimholder shall represent and warrant:  (i) that the amount quoted by such ABL Claimholder as its portion of the purchase price represents the amount shown as owing with respect to the claims transferred as reflected on its books and records, (ii) it owns, or has the right to transfer to purchasing Term Loan Claimholders, the rights being transferred, and (iii) such transfer will be free and clear of Liens.

 

(e)           In the event that any one or more of Term Loan Claimholders exercises and consummates the purchase option set forth in this Section 5.6, (i) ABL Agent shall have the right, but not the obligation, to immediately resign under the ABL Loan Agreement, and (ii) purchasing Term Loan Claimholders shall have the right, but not the obligation, to require ABL Agent to immediately resign under the ABL Loan Agreement.  In the event of the consummation of the purchase option, the Excess ABL Obligations shall be treated pursuant to Section 4.1 hereof.

 

5.7           Injunctive Relief.

 

Should any Term Loan Claimholder in any way take, attempt to, or threaten to take any action contrary to terms of this Agreement with respect to the Collateral, or fail to take any action required by this Agreement, ABL Agent or any ABL Claimholder may obtain relief against such Term Loan Claimholder by injunction, specific performance, or other appropriate equitable relief, it being understood and agreed by Term Agent that (a) ABL Claimholders’ damages from such actions may at that time be difficult to ascertain and may be irreparable, and (b) each Term Loan Claimholder waives any defense that such Grantor and/or ABL Claimholders cannot demonstrate damage and/or be made whole by the awarding of damages.  Should any ABL Claimholder in any way take, attempt to, or threaten to take any action contrary to terms of this Agreement with respect to the Collateral, or fail to take any action required by this Agreement, Term Agent or any Term Loan Claimholder (in its or their own name or in the name of any Grantor) or any Grantor may obtain relief against such ABL Claimholder by injunction, specific performance, and/or other appropriate equitable relief, it being understood and agreed by ABL that (i) Term Loan Claimholders’ damages from such actions may at that time be difficult to ascertain and may be irreparable, and (ii) each ABL 
 

 

 

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Claimholder waives any defense that such Grantor and/or Term Loan Claimholders cannot demonstrate damage and/or be made whole by the awarding of damages. ABL Agent and Term Agent hereby irrevocably waive any defense based on the adequacy of a remedy at law and any other defense which might be asserted to bar the remedy of specific performance in any action which may be brought by ABL Agent or ABL Claimholders or Term Agent or Term Loan Claimholders, as the case may be.

 

5.8           Reserves.  ABL Agent agrees that upon the request of the Term Agent, it shall make itself available for discussion with the Term Agent regarding the amount or computation of the any Reserves that are permitted to be established pursuant to the ABL Loan Agreement and the determination of the eligibility of any Collateral included in the ABL Borrowing Base, provided that, except as provided below, the foregoing agreement shall not limit or impair the ABL Agent’s rights to establish, increase, reduce or eliminate any such Reserves or determine the eligibility of such Collateral or require any prior notice to, or consent from, the Term Agent or the Term Loan Lenders thereto; provided further that the ABL Agent shall not eliminate any category of Reserves existing as of the date hereof or change the methodology for the calculation of such Reserves or eligibility which would have the effect of increasing the ABL Borrowing Base or decreasing Reserves without the consent of the Term Agent.  Furthermore, the ABL Agent agrees that, it shall establish and maintain the Term Loan Borrowing Base Reserve as such Reserve is calculated by the Term Agent.

 

5.9           Borrowing Base Certificates.  ABL Agent shall calculate Availability and the ABL Borrowing Base based upon the most current Borrowing Base Certificate available to it (whether such Borrowing Base Certificate was originally delivered to the ABL Agent or the Term Agent in accordance with the ABL Loan Agreement or Term Loan Agreement, as applicable, but only in the case of a Borrowing Base Certificate delivered to Term Agent if it is the most current Borrowing Base Certificate and it results in a decrease in borrowing availability).

 

SECTION 6.   Insolvency Proceedings.

 

6.1           Enforceability and Continuing Priority.

 

This Agreement shall be applicable, as to Collateral and the proceeds thereof in existence before the commencement of any Insolvency Proceeding, both before and after the commencement of any Insolvency Proceeding and all converted or succeeding cases in respect thereof.  The relative rights of Claimholders in or to any distributions from or in respect of any such Collateral or proceeds of such Collateral, shall continue after the commencement of any Insolvency Proceeding.  Accordingly, the provisions of this Agreement are intended to be and shall be enforceable as a subordination agreement within the meaning of Section 510 of the Bankruptcy Code.

 

6.2           Intentionally Omitted.

 

6.3           Intentionally Omitted.

 

6.4           Intentionally Omitted.

 

6.5           Intentionally Omitted.

 

6.6           Section 1111(b) of the Bankruptcy Code.

 

 

  

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(a)           Term Agent, for itself and on behalf of Term Loan Claimholders, shall not object to, oppose, support any objection, or take any other action to impede, the right of any ABL Claimholder to make an election under Section 1111(b)(2) of the Bankruptcy Code.  Term Agent, for itself and on behalf of Term Loan Claimholders, waives any claim it may hereafter have against any ABL Claimholder arising out of the election by any ABL Claimholder of the application of Section 1111(b)(2) of the Bankruptcy Code.

 

(b)           ABL Agent, for itself and on behalf of ABL Claimholders, shall not object to, oppose, support any objection, or take any other action to impede, the right of any Term Loan Claimholder to make an election under Section 1111(b)(2) of the Bankruptcy Code.  ABL Agent, for itself and on behalf of ABL Claimholders, waives any claim it may hereafter have against any Term Loan Claimholder arising out of the election by any Term Loan Claimholder of the application of Section 1111(b)(2) of the Bankruptcy Code.

 

6.7           Avoidance Issues.

 

(a)           If any ABL Claimholder is required in any Insolvency Proceeding or otherwise to turn over, disgorge or otherwise pay to the estate of any Grantor any amount paid in respect of ABL Obligations (an “ABL Recovery”), then such ABL Claimholders shall be entitled to a reinstatement of ABL Obligations with respect to all such recovered amounts, and all rights, interests, priorities and privileges recognized in this Agreement shall apply from and after the date of such turn over, disgorgement or other payment with respect to any such ABL Recovery.  If this Agreement shall have been terminated prior to such ABL Recovery, this Agreement shall be reinstated from and after the date of such turn over, disgorgement or other payment in full force and effect, and such prior termination shall not diminish, release, discharge, impair, or

 

otherwise affect the obligations of the parties hereto from such date of reinstatement and to the extent the ABL Cap was decreased in connection with such payment of the ABL Obligations, the ABL Cap shall be increased to such extent. No such reinstatement shall in any event require the Term Agent or the Term Loan Claimholders to pay over to the ABL Agent or the ABL Claimholders any amounts which the Term Agent or the Term Loan Claimholders may have received prior to such reinstatement.

 

(b)           If any Term Loan Claimholder is required in any Insolvency Proceeding or otherwise to turn over, disgorge or otherwise pay to the estate of any Grantor any amount paid in respect of Term Loan Obligations (a “Term Loan Recovery”), then such Term Loan Claimholders shall be entitled to a reinstatement of Term Loan Obligations with respect to all such recovered amounts, and all rights, interests, priorities and privileges recognized in this Agreement shall apply from and after the date of such turn over, disgorgement or other payment with respect to any such Term Loan Recovery.  If this Agreement shall have been terminated prior to such Term Loan Recovery, this Agreement shall be reinstated from and after the date of such turn over, disgorgement or other payment in full force and effect, and such prior termination shall not diminish, release, discharge, impair, or otherwise affect the obligations of the parties hereto from such date of reinstatement and to the extent the Term Loan Cap was decreased in connection with such payment of the Term Loan Obligations, the Term Loan Cap shall be increased to such extent. No such reinstatement shall in any event require the ABL Agent or the ABL Claimholders to pay over to the Term Agent or the Term Loan Claimholders any amounts which the ABL Agent or the ABL Claimholders may have received prior to such reinstatement.

 

 

  

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6.8           Plan of Reorganization.

 

(a)           If, in any Insolvency Proceeding involving a Grantor, debt obligations of the reorganized debtor secured by Liens upon any property of the reorganized debtor are distributed pursuant to a plan of reorganization or similar dispositive restructuring plan, both on account of ABL Obligations and on account of Term Loan Obligations, then, to the extent the debt obligations distributed on account of the ABL Obligations and on account of the Term Loan Obligations are secured by Liens upon the same property, the provisions of this Agreement will survive the distribution of such debt obligations pursuant to such plan and will apply with like effect to the Liens securing such debt obligations. Nothing contained herein shall require the Term Loan Claimholders to turn over to any ABL Claimholders any securities of the reorganized Grantor which such Term Loan Claimholders may receive as part of the plan of reorganization; such securities shall remain the sole property of the Term Loan Claimholders.

 

(b)           Neither the ABL Claimholders nor the Term Loan Claimholders shall propose or support any plan of reorganization that is inconsistent with the priorities or other provisions of this Agreement.

 

SECTION 7.   Reliance; Waivers; Etc.

 

7.1           Reliance.  Other than any reliance on the terms of this Agreement, ABL Agent acknowledges that it and such ABL Claimholders have, independently and without reliance on Term Agent or any Term Loan Claimholders, and based on documents and information deemed by them appropriate, made their own credit analysis and decision to enter into such ABL Loan Documents and be bound by the terms of this Agreement and they will continue to make their own credit decision in taking or not taking any action under the ABL Loan Agreement or this Agreement.  Term Agent acknowledges that it and Term Loan Claimholders have, independently and without reliance on ABL Agent or any ABL Claimholder, and based on documents and information deemed by them appropriate, made their own credit analysis and decision to enter into each of the Term Loan Documents and be bound by the terms of this Agreement and they will continue to make their own credit decision in taking or not taking any action under the Term Loan Documents or this Agreement.

 

7.2           No Warranties or Liability.  ABL Agent acknowledges and agrees that each of Term Agent and Term Loan Claimholders have made no express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectability, or enforceability of any of the Term Loan Documents, the ownership of any Collateral, or the perfection or priority of any Liens thereon.  Except as otherwise expressly provided herein, Term Loan Claimholders will be entitled to manage and supervise their respective loans and extensions of credit under the Term Loan Documents in accordance with law and as they may otherwise, in their sole discretion, deem appropriate.  Term Agent acknowledges and agrees that ABL Agent and ABL Claimholders have made no express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectability, or enforceability of any of the ABL Loan Documents, the ownership of any Collateral, or the perfection or priority of any Liens thereon.  Except as otherwise expressly provided herein, ABL Claimholders will be entitled to manage and supervise their respective loans and extensions of credit under their respective ABL Loan Documents in accordance with law and as they may otherwise, in their sole discretion, deem appropriate.  Term Agent and 
 

 

 

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Term Loan Claimholders shall have no duty to ABL Agent or any ABL Claimholders, and ABL Agent and ABL Claimholders shall have no duty to Term Agent or any Term Loan Claimholders, to act or refrain from acting in a manner that allows, or results in, the occurrence or continuance of an event of default or default under any agreements with any Grantor (including the ABL Loan Documents and the Term Loan Documents), regardless of any knowledge thereof which they may have or be charged with.

 

7.3           No Waiver of Lien Priorities.

 

(a)           No Prejudice or Impairment.

 

(i)           No right of ABL Claimholders, ABL Agent or any of them to enforce any provision of this Agreement or any ABL Loan Document shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Grantor

 

or by any act or failure to act by any ABL Claimholder or ABL Agent, or by any noncompliance by any person with the terms, provisions, and covenants of this Agreement, any of the ABL Loan Documents or any of the Term Loan Documents, regardless of any knowledge thereof which ABL Agent or ABL Claimholders, or any of them, may have or be otherwise charged with.

 

(ii)           No right of Term Loan Claimholders, Term Agent or any of them to enforce any provision of this Agreement or any Term Loan Document shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Grantor or by any act or failure to act by any Term Loan Claimholder or Term Agent, or by any noncompliance by any person with the terms, provisions, and covenants of this Agreement, any of the Term Loan Documents or any of the ABL Loan Documents, regardless of any knowledge thereof which Term Agent or Term Loan Claimholders, or any of them, may have or be otherwise charged with.

 

(b)           Permitted Actions.

 

(i)           Without in any way limiting the generality of the foregoing paragraph (but subject to any rights of Grantors under the ABL Loan Documents and subject to the provisions of this Agreement), ABL Claimholders, ABL Agent and any of them may, at any time and from time to time in accordance with the ABL Loan Documents and/or applicable law, without the consent of, or notice to, Term Agent or any Term Loan Claimholders, without incurring any liabilities to Term Agent or any Term Loan Claimholders and without impairing or releasing the Lien priorities and other benefits provided in this Agreement (even if any right of subrogation or other right or remedy of Term Agent or any Term Loan Claimholders is affected, impaired, or extinguished thereby) do any one or more of the following without the prior written consent of Term Agent:

 

 

  

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(1)           Subject to Section 5.3(a), change the manner, place, or terms of payment or change or extend the time of payment of, or amend, renew, exchange, increase, or alter, the terms of any of the ABL Obligations or any Lien on any ABL Collateral or guarantee thereof or any liability of any Grantor, or any liability incurred directly or indirectly in respect thereof (including any increase in or extension of the ABL Obligations, without any restriction as to the tenor or terms of any such increase or extension) or otherwise amend, renew, exchange, extend, modify, or supplement in any manner any Liens held by ABL Agent or any ABL Claimholders, the ABL Obligations, or any of the ABL Loan Documents;;

 

(2)           sell, exchange, release, surrender, realize upon, enforce or otherwise deal with in any manner and in any order any part of the ABL Collateral or any liability of any Grantor to ABL Claimholders or ABL Agent, or any liability incurred directly or indirectly in respect thereof;

 

(3)           settle or compromise any ABL Obligation or any other liability of any Grantor or any security therefor or any liability incurred directly or

 

indirectly in respect thereof and apply any sums by whomsoever paid and however realized to any liability (including the ABL Obligations) in any manner or order; and

 

(4)           exercise or delay in or refrain from exercising any right or remedy against any Grantor or any other person, elect any remedy and otherwise deal freely with any Grantor or any ABL Collateral and any security and any guarantor or any liability of any ABL Grantor to ABL Claimholders or any liability incurred directly or indirectly in respect thereof.

 

(ii)           Without in any way limiting the generality of the foregoing paragraph (but subject to any rights of Grantors under the Term Loan Documents and subject to the provisions of this Agreement, Term Loan Claimholders, Term Agent and any of them may, at any time and from time to time in accordance with the Term Loan Documents and/or applicable law, without the consent of, or notice to, ABL Agent or any ABL Claimholders, without incurring any liabilities to ABL Agent or any ABL Claimholders and without impairing or releasing the Lien priorities and other benefits provided in this Agreement (even if any right of subrogation or other right or remedy of ABL Agent or any ABL Claimholders is affected, impaired, or extinguished thereby) do any one or more of the following without the prior written consent of ABL Agent:

 

(1)           Subject to Section 5.3(b), change the manner, place, or terms of payment or change or extend the time of payment of, or amend, renew, exchange, increase, or alter, the terms of any of the Term Loan Obligations or any Lien on any Term Loan Collateral or guarantee thereof or any liability of any Grantor, or any liability incurred directly or indirectly in respect thereof (including any increase in or extension of the Term Loan Obligations, without any restriction as to the tenor or terms of any such increase or extension) or otherwise amend, renew, exchange, extend, modify, or supplement in any manner any Liens held by Term Agent or any Term Loan Claimholders, the Term Loan Obligations, or any of the Term Loan Documents;

 

(2)           sell, exchange, release, surrender, realize upon, enforce or otherwise deal with in any manner and in any order any part of the Term Loan Collateral or any liability of any Grantor to Term Loan Claimholders or ABL Agent, or any liability incurred directly or indirectly in respect thereof;

 

 

  

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(3)           settle or compromise any Term Loan Obligation or any other liability of any Grantor or any security therefor or any liability incurred directly or indirectly in respect thereof and apply any sums by whomsoever paid and however realized to any liability (including the Term Loan Obligations) in any manner or order; and

 

(4)           exercise or delay in or refrain from exercising any right or remedy against any Grantor or any other person, elect any remedy and otherwise deal freely with any Grantor or any Term Loan Collateral and any security and any guarantor or any liability of any Grantor to Term Loan Claimholders or any liability incurred directly or indirectly in respect thereof.

 

(c)           No Liability.

 

(i)           Except as otherwise provided herein, Term Agent also agrees that ABL Claimholders and ABL Agent shall have no liability to Term Agent or any Term Loan Claimholders, and Term Agent hereby waives any claim against any ABL Claimholder or ABL Agent, arising out of any and all actions which ABL Claimholders or ABL Agent may, pursuant to the terms hereof, take, permit or omit to take with respect to:

 

(1)           the ABL Loan Documents;

 

(2)           the collection of the ABL Obligations; or

 

(3)           the foreclosure upon, or sale, liquidation, or other disposition of, or the failure to foreclose upon, or sell, liquidate, or otherwise dispose of, any ABL Collateral.  Term Agent agrees that ABL Claimholders and ABL Agent have no duty to them in respect of the maintenance or preservation of the ABL Collateral, the ABL Obligations, or otherwise.

 

(ii)           Except as otherwise provided herein, ABL Agent also agrees that Term Loan Claimholders and Term Agent shall have no liability to ABL Agent or any ABL Claimholders, and ABL Agent hereby waives any claim against any Term Loan Claimholder or Term Agent, arising out of any and all actions which Term Loan Claimholders or Term Agent may, pursuant to the terms hereof, take, permit or omit to take with respect to:

 

(1)           the Term Loan Documents;

 

(2)           the collection of the Term Loan Obligations; or

 

(3)           the foreclosure upon, or sale, liquidation, or other disposition of, or the failure to foreclose upon, or sell, liquidate, or otherwise dispose of, any Term Loan Collateral.  ABL Agent agrees that Term Loan Claimholders and Term Agent have no duty to them in respect of the maintenance or preservation of the Term Loan Collateral, the Term Loan Obligations, or otherwise.

 

 

  

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(d)           No Marshalling.

 

(i)           Until the Discharge of ABL Priority Obligations, Term Agent agrees not to assert and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead, or otherwise assert, or otherwise claim the benefit of, any marshaling, appraisal, valuation, or other similar right that may otherwise be available under applicable law with respect to the Collateral or any other similar rights a junior secured creditor may have under applicable law.

 

(ii)           Until Discharge of Term Loan Priority Obligations, ABL Agent agrees not to assert and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead, or otherwise assert, or otherwise claim the benefit of, any

 

marshaling, appraisal, valuation, or other similar right that may otherwise be available under applicable law with respect to the Collateral or any other similar rights a junior secured creditor may have under applicable law.

 

7.4           Obligations Unconditional.  For so long as this Agreement is in full force and effect, all rights, interests, agreements and obligations of ABL Agent and ABL Claimholders and Term Agent and Term Loan Claimholders, respectively, hereunder shall remain in full force and effect irrespective of:

 

(a)           any lack of validity or enforceability of any ABL Loan Documents or any Term Loan Documents;

 

(b)           except as otherwise expressly restricted in this Agreement, any change in the time, manner, or place of payment of, or in any other terms of, all or any of the ABL Obligations or Term Loan Obligations, or any amendment or waiver or other modification, including any increase in the amount thereof, whether by course of conduct or otherwise, of the terms of any ABL Loan Document or any Term Loan Document;

 

(c)           except as otherwise expressly restricted in this Agreement, any exchange of any security interest in any Collateral or any other collateral, or any amendment, waiver or other modification, whether in writing or by course of conduct or otherwise, of all or any of the ABL Obligations or Term Loan Obligations or any guarantee thereof;

 

(d)           the commencement of any Insolvency Proceeding in respect of any Grantor; or

 

(e)           any other circumstances which otherwise might constitute a defense available to, or a discharge of, any Grantor in respect of ABL Agent, the ABL Obligations, any ABL Claimholder, Term Agent, the Term Loan Obligations or any Term Loan Claimholder in respect of this Agreement.

 

SECTION 8.   Representations and Warranties.

 

8.1           Representations and Warranties of Each Party.  Each party hereto represents and warrants to the other parties hereto as follows:

 

 

  

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(a)           Such party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder.

 

(b)           This Agreement has been duly executed and delivered by such party and constitutes a legal, valid and binding obligation of such party, enforceable in accordance with its terms.

 

(c)           The execution, delivery, and performance by such party of this Agreement (i) do not require any consent or approval of, registration or filing with or any other action by

 

any governmental authority and (ii) will not violate any provision of law, statute, rule or regulation, or of the certificate or articles of incorporation or other constitutive documents or by-laws of such party or any order of any governmental authority or any provision of any indenture, agreement or other instrument binding upon such party.

 

8.2           Representations and Warranties of Each Agent.

 

ABL Agent and Term Agent each represents and warrants to the other that it has been authorized by ABL Lenders or Term Lenders, as applicable, under the ABL Loan Agreement or the Term Loan Agreement, as applicable, to enter into this Agreement and that each of the agreements, covenants, waivers, and other provisions hereof is valid, binding, and enforceable against the ABL Lenders or Term Lenders, as applicable, as fully as if they were parties hereto.

 

SECTION 9.   Miscellaneous.

 

9.1           Conflicts.

 

In the event of any conflict between the provisions of this Agreement and the provisions of any of the ABL Loan Documents or any of the Term Loan Documents, the provisions of this Agreement shall govern and control.

 

9.2           Effectiveness; Continuing Nature of this Agreement; Severability.  This Agreement shall become effective when executed and delivered by the parties hereto.  This is a continuing agreement of lien subordination and the Claimholders may continue, at any time and without notice to the other Agent or any other Claimholder, to extend credit and other financial accommodations to or for the benefit of any Grantor constituting Priority Obligations in reliance hereof.  Each Agent hereby waives any right it may have under applicable law to revoke this Agreement or any of the provisions of this Agreement.  The terms of this Agreement shall survive, and shall continue in full force and effect, in any Insolvency Proceeding.  Any provision of this Agreement that is prohibited or unenforceable shall not invalidate the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  All references to any Grantor shall include such Grantor as debtor and debtor-in-possession and any receiver or agent for such Grantor in any Insolvency Proceeding.  This Agreement shall terminate and be of no further force and effect:

 

(a)           with respect to ABL Agent, ABL Claimholders, and the ABL Obligations, on the date that the ABL Obligations are paid in full as set forth in the ABL Loan Agreement; and

 

 

  

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(b)           with respect to Term Agent, Term Loan Claimholders, and the Term Loan Obligations, on the date that the Term Loan Obligations are paid in full.

 

9.3           Amendments; Waivers.  No amendment, modification, or waiver of any of the provisions of this Agreement shall be effective unless the same shall be in writing signed on behalf of each party hereto or its authorized agent and each waiver, if any, shall be a waiver only with respect to the specific instance involved and shall in no way impair the rights of the parties making such waiver or the obligations of the other parties to such party in any other respect or at any other time.

 

9.4           Information Concerning Financial Condition of the Parent and its Subsidiaries.  ABL Agent and ABL Claimholders, on the one hand, and Term Loan Claimholders and Term Agent, on the other hand, shall each be responsible for keeping themselves informed of (a) the financial condition of the Parent and its subsidiaries and all endorsers and/or guarantors of the ABL Obligations or the Term Loan Obligations and (b) all other circumstances bearing upon the risk of nonpayment of the ABL Obligations or the Term Loan Obligations.  ABL Agent and ABL Claimholders shall have no duty to advise Term Agent or any Term Loan Claimholder of information known to it or them regarding such condition or any such circumstances or otherwise.  Term Agent and Term Loan Claimholders shall have no duty to advise ABL Agent or any ABL Claimholder of information known to it or them regarding such condition or any such circumstances or otherwise.  In the event either Agent or any of its Claimholders, in its or their sole discretion, undertakes at any time or from time to time to provide any such information to the other Agent or any of its Claimholder, it or they shall be under no obligation:

 

(a)           to make, and such Agent and its Claimholders shall not make, any express or implied representation or warranty, including with respect to the accuracy, completeness, truthfulness, or validity of any such information so provided;

 

(b)           to provide any additional information or to provide any such information on any subsequent occasion;

 

(c)           to undertake any investigation; or

 

(d)           to disclose any information, which pursuant to accepted or reasonable commercial practices, such party wishes to maintain confidential or is otherwise required to maintain confidential.

 

9.5           Appraisals and Field Examinations.  The ABL Agent and Term Agent shall each promptly provide to the other copies of all collateral reports, appraisals, results of field examinations, results of internal audits, physical inventories and Borrowing Base Certificates that it receives.

 

9.6           Subrogation.  With respect to any payments or distributions in cash, property, or other assets that any Term Loan Claimholders or Term Agent pays over to ABL Agent or ABL Claimholders under the terms of this Agreement, Term Loan Claimholders and Term Agent shall be subrogated to the rights of ABL Agent and ABL Claimholders; provided, however, that, Term Agent hereby agrees not to assert or enforce any such rights of 
 

 

 

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subrogation it may acquire as a result of any payment hereunder until the Discharge of all ABL Priority Obligations has occurred.  Any payments or distributions in cash, property or other assets received by Term Agent or Term Loan Claimholders that are paid over to ABL Agent or ABL Claimholders pursuant to this Agreement shall not reduce any of the Term Loan Obligations.

 

9.7           SUBMISSION TO JURISDICTION; WAIVERS.

 

(a)           ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY ARISING OUT OF OR RELATING HERETO SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY, AND CITY OF NEW YORK.  BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY:

 

(i)           ACCEPTS GENERALLY AND UNCONDITIONALLY THE JURISDICTION AND VENUE OF SUCH COURTS;

 

(ii)           WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;

 

(iii)           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, TO THE APPLICABLE PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 9.8; AND

 

(iv)           AGREES THAT SERVICE AS PROVIDED IN CLAUSE (iii) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.

 

(b)           EACH OF THE PARTIES HERETO (INCLUDING THE PARENT ON BEHALF OF ITSELF AND ITS SUBSIDIARIES) HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER.  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 HEREOF, 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 
 

 

 

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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 9.7(b) AND EXECUTED BY THE PARTIES, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS HERETO.  IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

9.8           Notices.  All notices to Term Loan Claimholders and ABL Claimholders permitted or required under this Agreement shall also be sent to Term Agent and ABL Agent, respectively.  Unless otherwise specifically provided herein, any notice hereunder shall be in writing and may be personally served or sent by telefacsimile or United States mail or courier service or electronic mail and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of telefacsimile or electronic mail, or 3 Business Days after depositing it in the United States mail with postage prepaid and properly addressed.  For the purposes hereof, the addresses of the parties hereto shall be as may be designated by such party in a written notice pursuant to this Section 9.8 to all of the other parties.

 

9.9           Further Assurances.  ABL Agent and Term Agent each agrees to take such further action and shall execute and deliver such additional documents and instruments (in recordable form, if requested) as ABL Agent or Term Agent may reasonably request to effectuate the terms of and the Lien priorities contemplated by this Agreement, all at the expense of Borrowers.

 

9.10          APPLICABLE LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

9.11          Binding on Successors and Assigns.  This Agreement shall be binding upon ABL Agent, ABL Claimholders, Term Agent, Term Loan Claimholders, and their respective successors and assigns.

 

9.12          Headings.  Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect.

 

9.13          Entire Agreement.    This Agreement constitute the entire agreement among the parties relating to the subject matter hereof, and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.

 

 

  

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9.14          Counterparts.  This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed counterpart of a signature page of this Agreement or any document or instrument delivered in connection herewith by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement or such other document or instrument, as applicable.

 

9.15          No Third Party Beneficiaries.  This Agreement and the rights and benefits hereof shall inure to the benefit of each of the parties hereto and its respective successors and assigns and shall inure to the benefit of and bind each of ABL Claimholders and Term Loan Claimholders.  In no event shall any Grantor be a third party beneficiary of this Agreement.

 

9.16          Provisions Solely to Define Relative Rights.  The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of ABL Agent and ABL Claimholders on the one hand and Term Agent and Term Loan Claimholders on the other hand.  No Grantor or any other creditor thereof shall have any rights hereunder and no Grantor may rely on the terms hereof.  Nothing in this Agreement shall impair, as between Grantors and ABL Agent and ABL Claimholders, or as between Grantors and Term Agent and Term Loan Claimholders, the obligations of Grantors to pay principal, interest, fees and other amounts as provided in the ABL Loan Documents and the Term Loan Documents, respectively.

 

9.17          Costs and Attorneys Fees.  In the event it becomes necessary for ABL Agent, any ABL Claimholder, Term Agent, or any Term Loan Claimholder to commence or become a party to any proceeding or action to enforce the provisions of this Agreement, the court or body before which the same shall be tried shall award to the prevailing party all costs and expenses thereof, including reasonable attorneys fees, the usual and customary and lawfully recoverable court costs, and all other expenses in connection therewith.

 

[signature pages follow]

 

 

 

  

42

  

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

 

	  	
BANK OF AMERICA, N.A.,

as ABL Agent

	  	
 

 

By:

	
 

 

/s/ Matthew R. Van Steenhuyse

	  	
Name:

	
Matthew R. Van Steenhuyse

	  	Title:	
Senior Vice President

 

 

 

 

 

 

 

 

 

 

Intercreditor Agreement

 

  

  

  

 

 

 

 

	  	
GA CAPITAL, LLC,

as Term Agent

	  	
 

 

By:

	
 

 

/s/ David Storer

	  	
Name:

	
David Storer

	  	Title:	
Director

 

 

 

 

 

 

 

 

 

 

Intercreditor Agreement

 

  

  

  

 

 

ACKNOWLEDGMENT

 

The Parent and each of the Parent’s undersigned Subsidiaries each hereby acknowledge that they have received a copy of the foregoing Intercreditor Agreement and consent thereto, agree to recognize all rights granted thereby to ABL Agent, ABL Claimholders, Term Agent, and Term Loan Claimholders, and will not do any act or perform any obligation which is not in accordance with the agreements set forth therein.  The Parent and each of the Parent’s undersigned Subsidiaries each further acknowledge and agree that they are not an intended beneficiary or third party beneficiary under the foregoing Intercreditor Agreement.

 

[signature pages follow]

 

 

 

 

  

  

  

 

 

ACKNOWLEDGED AS OF THE DATE FIRST WRITTEN ABOVE:

 

	
CONN’S, INC.,

a Delaware corporation

	  
	
 

 

By:

	
 

 

/s/ Michael J. Poppe

	  
	
Name:

	
Michael J. Poppe

	  
	
Title:

	
Executive Vice President and Chief Financial Officer

	  
	  	  	  
	  	  	  
	
CONN APPLIANCES, INC.,

a Texas corporation

	  
	
 

 

By:

	
 

 

/s/ Michael J. Poppe

	  
	
Name:

	
Michael J. Poppe

	  
	
Title:

	
Chief Financial Officer

	  
	  	  	  
	  	  	  
	
CONN CREDIT I, LP,

a Texas limited partnership

	  
	
 

 

By:

	
 

 

/s/ Michael J. Poppe

	  
	
Name:

	
Michael J. Poppe

	  
	
Title:

	
Chief Financial Officer

	  
	  	  	  
	  	  	  
	
CONN CREDIT CORPORATION, INC.,

a Texas corporation

	  
	
 

 

By:

	
 

 

/s/ Michael J. Poppe

	  
	
Name:

	
Michael J. Poppe

	  
	
Title:

	
Chief Financial Officer

	  
	  	  	  
	  	  	  
	
CAI CREDIT INSURANCE AGENCY, INC.,

a Louisiana corporation

	  
	
 

 

By:

	
 

 

/s/ Michael J. Poppe

	  
	
Name:

	
Michael J. Poppe

	  
	
Title:

	
Chief Financial Officer

	  

 

 

Acknowledgment

  

  

  

 

 

	
CAI HOLDING CO.,

a Delaware corporation

	  
	
 

 

By:

	
 

 

/s/ Michael J. Poppe

	  
	
Name:

	
Michael J. Poppe

	  
	
Title:

	
Chief Financial Officer

	  
	  	  	  
	  	  	  
	
CONN LENDING, LLC,

a Delaware limited liability company

	  
	
 

 

By:

	
 

 

/s/ Mary Stawikey

	  
	
Name:

	
Mary Stawikey

	  
	
Title:

	
President and Secretary

	  
	  	  	  
	  	  	  
	
CAIAIR, INC.,

a Delaware corporation

	  
	
 

 

By:

	
 

 

/s/ Michael J. Poppe

	  
	
Name:

	
Michael J. Poppe

	  
	
Title:

	
Chief Financial Officer and Treasurer

	  

 

 

 

 

Acknowledgment

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