Document:

exhibit4july312009.htm

  

  

  

EXHIBIT 4.1

 

THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

by and among

 

CHARMING SHOPPES, INC.

CHARMING SHOPPES OF DELAWARE, INC.

CSI INDUSTRIES, INC.

CATHERINES STORES CORPORATION

LANE BRYANT, INC.

and

 

FB APPAREL, INC.

 

as Borrowers,

 

and

 

CHARMING SHOPPES OF DELAWARE, INC.

 

as Administrative Borrower,

 

certain other Subsidiaries of Charming Shoppes, Inc.

 

as Guarantors

 

and

 

THE LENDERS AND ISSUING BANKS FROM TIME TO TIME PARTY HERETO

 

WELLS FARGO RETAIL FINANCE, LLC,

 

as Administrative Agent

 

and

 

WELLS FARGO SECURITIES, LLC and

 

BANC OF AMERICA SECURITIES LLC,

 

as Joint Lead Arrangers and Bookrunners

 

and

 

BANK OF AMERICA, N.A.,

 

as Syndication Agent

 

and

 

GMAC COMMERCIAL FINANCE LLC,

 

as Documentation Agent

 

 

Dated: July 31, 2009

 

  

  

  

TABLE OF CONTENTS

 

	 	
Page

	
SECTION 1. DEFINITIONS
	
2

	
SECTION 2. CREDIT FACILITIES
	
42

	
  2.1    Loans.
	
42

	
  2.2  ..Letters of Credit.
	
44

	
  2.3  ..Joint and Several Liability
	
48

	
  2.4  ..Increase in the Maximum Credit.
	
49

	
SECTION 3. INTEREST AND FEES
	
51

	
  3.1  ..Interest.
	
51

	
  3.2  ..Fees.
	
52

	
  3.3  ..Changes in Laws and Increased Costs of Loans.
	
53

	
  3.4  ..Mitigation Obligations; Replacement of Lenders.
	
56

	
SECTION 4. CONDITIONS PRECEDENT
	
57

	
  4.1  ..Conditions Precedent to Initial Loans and Letters of Credit
	
57

	
  4.2  ..Conditions Precedent to All Loans and Letters of Credit
	
59

	
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
	
59

	
  5.1  ..Grant of Security Interest
	
59

	
  5.2  ..Excluded Property
	
60

	
  5.3  ..Special Provisions Regarding Collateral
	
61

	
  5.4  ..Perfection of Security Interests.
	
61

	
  5.5  ..Authorization for UCC Release Documents.
	
65

	
SECTION 6. COLLECTION AND ADMINISTRATION
	
65

	
  6.1  ..Borrowers’ Loan Accounts
	
65

	
  6.2  ..Statements
	
66

	
  6.3  ..Collection of Accounts.
	
66

	
  6.4  ..Payments.
	
68

	
  6.5  ..Taxes.
	
69

	
  6.6  ..Authorization to Make Loans
	
71

	
  6.7  ..Use of Proceeds
	
72

	
  6.8  ..Pro Rata Treatment
	
72

	
  6.9  ..Sharing of Payment, Etc.
	
72

	
  6.10..Settlement Procedures.
	
73

	
  6.11..Obligations Several; Independent Nature of Lenders’ Rights
	
77

	
  6.12..Appointment of Administrative Borrower as Agent for Requesting Loans and Receipts of Loans and Statements.
	
78

	
  6.13..Bank Products
	
78

  

(i)

  

 

 

	 	 Page
	
SECTION 7. COLLATERAL COVENANTS
	
79

	
  7.1  ..Intentionally Deleted.
	
79

	
  7.2  ..Accounts Covenants.
	
79

	
  7.3  ..Inventory Covenants
	
80

	
  7.4  ..Bills of Lading and Other Documents of Title
	
81

	
  7.5  ..Power of Attorney
	
82

	
  7.6  ..Right to Cure
	
83

	
  7.7  ..Access to Premises
	
83

	
SECTION 8. REPRESENTATIONS AND WARRANTIES
	
84

	
  8.1  ..Corporate Existence, Power and Authority; Subsidiaries
	
84

	
  8.2  ..Financial Statements; No Material Adverse Effect
	
84

	
  8.3  ..Collateral Locations
	
85

	
  8.4  ..Priority of Liens’ Title to Properties
	
85

	
  8.5  ..Tax Returns
	
85

	
  8.6  ..Litigation
	
85

	
  8.7  ..Compliance with Other Agreements and Applicable Laws.
	
86

	
  8.8  ..Environmental Compliance.
	
86

	
  8.9  ..Employee Benefits.
	
87

	
  8.10..Bank Accounts
	
87

	
  8.11..Intellectual Property
	
87

	
  8.12..Capitalization.
	
88

	
  8.13..Labor Disputes.
	
89

	
  8.14..Corporate Names; Prior Transactions
	
89

	
  8.15..Inactive Subsidiaries
	
89

	
  8.16..Restrictions on Subsidiaries
	
89

	
  8.17..Material Contracts
	
89

	
  8.18..Credit Card Agreements
	
90

	
  8.19..Interrelated Businesses
	
90

	
  8.20..OFAC.
	
90

	
  8.21..No Material Adverse Effect.
	
91

	
  8.22..Accuracy and Completeness of Information
	
91

	
  8.23..Survival of Warranties; Cumulative
	
91

	
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
	
91

	
  9.1  ..Maintenance of Existence
	
91

	
  9.2  ..New Collateral Locations
	
92

	
  9.3  ..Compliance with Laws, Regulations, Etc.
	
92

	
  9.4  ..Payment of Taxes and Claims
	
93

	
  9.5  ..Insurance
	
94

	
  9.6  ..Financial Statements, Collateral Reporting and Other Information.
	
94

	
  9.7  ..Consolidation and Merger; Dissolution
	
98

	
  9.8  ..Sales of Assets and Equity Issuances
	
99

	
  9.9  ..Encumbrances
	
102

	
  9.10..Indebtedness
	
104

 

 

 

(ii)

 

 

	 	Page 
	
  9.11..Loans, Advances and Investments
	
107

	
  9.12..Acquisitions
	
109

	
  9.13..Guarantees
	
113

	
  9.14..New Subsidiaries
	
113

	
  9.15..Dividends and Redemptions
	
115

	
  9.16..Transactions with Affiliates
	
116

	
  9.17..Compliance with ERISA
	
116

	
  9.18..End of Fiscal Years: Fiscal Quarters
	
117

	
  9.19..Change in Business
	
117

	
  9.20..Limitation of Restrictions Affecting Subsidiaries
	
117

	
  9.21..Fixed Charge Coverage Ratio
	
118

	
  9.22..Credit Card Agreements
	
118

	
  9.23..Use of Private Label Credit Cards.
	
119

	
  9.24..Change of Control of Parent’s Subsidiaries
	
119

	
  9.25..Foreign Assets Control Regulations, Etc
	
120

	
  9.26..Costs and Expenses
	
121

	
  9.27..Further Assurances.
	
122

	
  9.28..Modifications to Other Agreements.
	
122

	
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
	
122

	
10.1  ..Events of Default
	
122

	
10.2  ..Remedies.
	
125

	
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
	
128

	
11.1  ..Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.
	
128

	
11.2  ..Waiver of Notices
	
130

	
11.3  ..Amendments and Waivers.
	
130

	
11.4  ..Waiver of Counterclaims
	
133

	
11.5  ..Indemnification
	
133

	
SECTION 12. THE AGENT
	
134

	
12.1  ..Appointment, Powers and Immunities
	
134

	
12.2  ..Reliance by Agent
	
134

	
12.3  ..Events of Default.
	
134

	
12.4  ..Wells Fargo in its Individual Capacity
	
135

	
12.5  ..Indemnification
	
135

	
12.6  ..Non-Reliance on Agent and Other Lenders
	
136

	
12.7  ..Failure to Act
	
136

	
12.8  ..Additional Revolving Loans
	
136

	
12.9  ..Concerning the Collateral and the Related Financing Agreements
	
137

	
12.10..Field Audit, Examination Reports and other Information; Disclaimer by Lenders
	
137

	
12.11..Collateral Matters.
	
138

	
12.12..Agency for Perfection.
	
140

	
12.13..Successor Agent
	
140

	
12.14..Other Agent Designations
	
140

 

 

 

(iii)

 

 

 

	 	 Page 
	
12.15..Resignation of Issuing Bank
	
141

	
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
	
141

	
13.1  ..Term.
	
141

	
13.2  ..Interpretative Provisions.
	
142

	
13.3  ..Notices
	
144

	
13.4  ..Partial Invalidity
	
145

	
13.5  ..Confidentiality.
	
145

	
13.6  ..Successors
	
146

	
13.7  ..Assignments; Participations.
	
147

	
13.8  ..Entire Agreement
	
149

	
13.9  ..USA Patriot Act
	
149

	
13.10..Counterparts
	
149

	
SECTION 14. ACKNOWLEDGMENT AND RESTATEMENT
	
150

	
14.1  ..Acknowledgment of Existing Obligations
	
150

	
14.2  ..Acknowledgment of Security Interests.
	
150

	
14.3  ..Existing Financing Agreements
	
150

	
14.4  ..Restatement.
	
151

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

(iv)

  

 

INDEX

 

TO

 

EXHIBITS AND SCHEDULES

 

 

	
Exhibit A
	
Form of Assignment and Acceptance

	
Exhibit B
	
Form of Compliance Certificate

	
Exhibit C
	
Form of Investment Property Control Agreement

	
Exhibit D
	
Form of Guarantor Joinder Agreement

	
Exhibit E
	
Form of Borrowing Base Certificate

	
Exhibit F
	
Form of UCC Release for Excluded Property

	
Exhibit G
	
Form of Inventory Report

	
Omnibus Schedule 1
	
Part (1) Subsidiaries; Part (7) Excluded Subsidiaries

	
Omnibus Schedule 2
	
Inventory Locations/Real Property Locations

	
Omnibus Schedule 5
	
Pledged Stock

	
Omnibus Schedule 8
	
Litigation/Investigations

	
Omnibus Schedule 11
	
Environmental Compliance

	
Omnibus Schedule 16
	
Tax Returns

	
Schedule 1.40
	
Commitments

	
Schedule 1.79
	
Existing Letters of Credit

	
Schedule 1.93
	
Guarantors

	
Schedule 1.93A
	
Names of Certain Obligor Signatories to the Loan and Security Agreement

	
Schedule 1.93B
	
Names of Certain Obligor Signatories to the Loan and Security Agreement

	
Schedule 5.4(e)
	
Investment Accounts

	
Schedule 6.3
	
Deposit Accounts and Merchant Payment Arrangements

	
Schedule 8.11
	
Intellectual Property

	
Schedule 8.13
	
Collective Bargaining Agreements

	
Schedule 8.14
	
Prior Corporate Transactions

	
Schedule 8.17
	
Material Contracts

	
Schedule 8.18
	
Credit Card Agreements

  

(v)

  

THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This Third Amended and Restated Loan and Security Agreement, dated July 31, 2009 is entered into by and among Charming Shoppes, Inc., a Pennsylvania corporation (“Parent”), Charming Shoppes of Delaware, Inc., a Pennsylvania corporation (“CS Delaware”), CSI Industries, Inc., a Delaware corporation (“CSI”),
FB Apparel, Inc., an Indiana corporation (“FB Apparel”), Catherines Stores Corporation, a Tennessee corporation (“Catherines”), Lane Bryant, Inc., a Delaware corporation (“Lane Bryant” and, together with Parent, CS Delaware, CSI, FB Apparel and Catherines hereinafter referred to individually as a “Borrower” and collectively as “Borrowers” as hereinafter further defined), CS Delaware in its capacity as agent for itself as a Borrower and for the other
Borrowers (“Administrative Borrower”), those certain Subsidiaries of Parent parties hereto, whether by execution of this Agreement or by a Guarantor Joinder Agreement (collectively, the “Guarantors”), the financial institutions from time to time parties hereto as lenders, whether by execution of this Agreement or an Assignment and Acceptance (each individually, a “Lender” and collectively, “Lenders” as hereinafter further defined) and Wells Fargo Retail Finance,
LLC, a Delaware limited liability company (as replacement and successor agent to Wachovia Bank, National Association, a national banking association) , in its capacity as agent for Lenders (in such capacity, “Agent” as hereinafter further defined).

 

W I T N E S S E T H:

 

WHEREAS, Borrowers and certain Subsidiaries of Parent operate a chain of retail apparel stores and certain related businesses and certain other Subsidiaries of Parent operate a direct marketing business selling apparel, food and specialty gifts; and

 

WHEREAS, Agent, certain lenders, Borrowers and certain Subsidiaries of Parent entered into financing arrangements pursuant to which such lenders made loans and advances and provided other financial accommodations to Borrowers as set forth in the Second Amended and Restated Loan and Security Agreement, dated July 28, 2005, as amended by Amendment
No. 1 to Second Amended and Restated Loan and Security Agreement, dated as of May 17, 2006, by and among Wachovia Bank National Association, as Agent, the lenders parties thereto, Borrowers and certain Subsidiaries of Parent (the “Existing Loan Agreement”, and together with all agreements, documents and instruments at any time executed and/or delivered in connection therewith or related thereto, as from time to time amended, modified, supplemented, extended, renewed, restated or replaced prior to
the date hereof (as hereinafter defined) collectively, the “Existing Financing Agreements”); and

 

WHEREAS, prior to the execution of this Agreement, Wachovia Bank, National Association has resigned as Agent and Wells Fargo Retail Finance, LLC has been appointed by the Required Lenders (as such term is defined in the Existing Loan Agreement) as the successor Agent hereunder and the other Existing Financing Agreements; and

 

WHEREAS, Borrowers and the other Obligors (as defined below) have requested that Agent and Lenders amend and restate the Existing Loan Agreement and continue to provide financing arrangements to Borrowers pursuant to which each Lender from time to time party hereto (severally and not jointly) may make loans and provide other financial accommodations
to Borrowers; and

 

  

  

  

WHEREAS, Agent and Lenders have agreed to amend and restate the Existing Loan Agreement and each Lender (severally and not jointly) has agreed to continue to make such loans and provide such other financial accommodations to Borrowers on a pro rata basis according to its Commitment (as defined below) on the terms and conditions set forth
herein and Agent has agreed to continue to act as agent for Lenders on the terms and conditions set forth herein and the other Financing Agreements.

 

NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

SECTION 1. DEFINITIONS

 

For purposes of this Agreement, the following terms shall have the respective meanings given to them below:

 

1.1  “Accounts” shall have the meaning given to such term in the UCC and shall also include, without limitation, all present and future rights of each Obligor to payment of a monetary obligation whether or not earned by performance, which is not evidenced by chattel paper or an instrument, (a) for property that has been
or is to be sold, leased, licensed, assigned or otherwise disposed of, (b) for services rendered or to be rendered, (c) for a secondary obligation incurred or to be incurred, or (d) consisting of Credit Card Receivables.

 

1.2  “Additional L/C Accommodations” shall mean the Letters of Credit (including, without limitation, Existing Letters of Credit), guarantees and other financial accommodations provided by Issuing Bank to the Additional L/C Debtors pursuant to the Trade Financing Agreements.

 

1.3  “Additional L/C Collateral” shall mean the “Collateral” as defined in the Trade Financing Agreements as in effect on the date hereof.

 

1.4  “Additional L/C Debt” shall mean, collectively, the reimbursement obligations with respect to the Additional L/C Accommodations and other indebtedness owed by the Additional L/C Debtors to Agent pursuant to the Trade Financing Agreements.

 

1.5  “Additional L/C Debtors” shall mean, individually and collectively, Sentani Trading Limited, Trimoland Limited, Huambo Limited, CS Insurance Ltd. and any other Subsidiary of Parent designated as an Additional L/C Debtor in a writing by Administrative Borrower delivered to Agent after the date hereof so long as such
Additional L/C Debtor executes a Trade Financing Agreement and such other documents as Agent may reasonably request.

 

1.6  “Adjusted Eurodollar Rate” shall mean, with respect to each Interest Period for any Eurodollar Rate Loan comprising part of the same borrowing (including conversions, extensions and renewals), the rate per annum determined by dividing (a)  the London Interbank Offered Rate for such Interest Period by (b)
a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage.  For purposes hereof, “Reserve Percentage” shall mean for any day, that percentage (expressed as a decimal) which is in effect from time to time under Regulation D of the Board of

 

  

2

  

Governors of the Federal Reserve System (or any successor), as such regulation may be amended from time to time or any successor regulation, as the maximum reserve requirement (including, without limitation, any basic, supplemental, emergency, special, or marginal reserves) applicable with respect to Eurocurrency liabilities as that term is
defined in Regulation D (or against any other category of liabilities that includes deposits by reference to which the interest rate of Eurodollar Loans is determined), whether or not any Lender has any Eurocurrency liabilities subject to such reserve requirement at that time.  Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credits for proration, exceptions or offsets that may be available from time
to time to a Lender.  The Adjusted Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Reserve Percentage and shall be applicable to all Eurodollar Rate Loans requested on or after such date.

 

1.7  “Administrative Borrower” shall mean CS Delaware, in its capacity as Administrative Borrower on behalf of itself and the other Borrowers pursuant to Section 6.12 hereof and it successors and assigns in such capacity.

 

1.8  “Affiliates” shall mean, with respect to a specified Person, a partnership, corporation or any other person which directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with such Person, and without limiting the generality of the foregoing, includes (a)
any Person which beneficially owns or holds ten (10%) percent or more of any class of Voting Stock of such Person or other equity interests in such Person, (b) any Person of which such Person beneficially owns or holds ten (10%) percent or more of any class of Voting Stock and (c) any director or executive officer of such Person.  For the purposes of this definition, the term “control” (including with correlative meanings, the terms “controlled by” and “under common control
with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock or by agreement or otherwise.  For purposes of Section 9.16 hereof only, with respect to Obligors, the term “Affiliate” shall exclude Parent and any Subsidiary of Parent.

 

1.9  “Agent” shall mean Wells Fargo Retail Finance, LLC, in its capacity as agent on behalf of Lenders pursuant to the terms hereof and any replacement or successor agent hereunder.

 

1.10  “Agent Payment Account” shall mean account no.4945088607 of Agent, at Wells Fargo Bank, National Association, or such other account of Agent as Agent may from time to time designate to Administrative Borrower as the Agent Payment Account for purposes of this Agreement and the other Financing Agreements.

 

1.11  “Agreement” shall mean this Third Amended and Restated Loan and Security Agreement, as amended, modified, extended or restated from time to time.

 

1.12  “Applicable L/C Fee Rate” shall mean, at any time, as to the letter of credit fees and banker’s acceptance fees to be charged by Agent in accordance with Section 3.2(b) hereof in respect of Letters of Credit and banker’s acceptances, subject to the provisions below, the

 

  

3

  

applicable percentage (on a per annum basis) set forth below if Monthly Average Liquidity is at or within the amounts indicated for such percentage:

 

	
 

Tier
	
Monthly

Average Liquidity
	
Documentary

LC Fee Percentage
	
Standby

LC Fee Percentage
	
Bankers’

Acceptances

	
1
	
Greater than $150,000,000
	
1.875%
	
3.75%
	
3.75%

	
2
	
Less than or equal to $150,000,000 and greater than $62,500,000
	
2.00%
	
4.00%
	
4.00%

	
3
	
Less than or equal to $62,500,000
	
2.125%
	
4.25%
	
4.25%

provided, that, (i) the Applicable L/C Fee Rate shall be calculated and adjusted each fiscal month as of the 16th day of such fiscal
month (the “Applicable L/C Fee Rate Adjustment Date”) based upon the Monthly Average Liquidity for the immediately preceding month and shall be effective on the Applicable L/C Fee Rate Adjustment Date as to all Letters of Credit and banker’s acceptances; (ii) from the date hereof through and including August 15, 2009, the Applicable L/C Fee Rate shall the amounts set forth in Tier 1 above; and (iii) in the event that Borrowers fail to provide any Borrowing Base Certificate for any period
within two (2) Business Days of the date required hereunder, effective as of the date on which such Borrowing Base Certificate was due, at Agent’s option, the Applicable L/C Fee Rate shall be based on the highest rate above until the next Business Day after the Borrowing Base Certificate is provided for the applicable period at which time the Applicable L/C Fee Rate shall be adjusted as otherwise provided herein.  In the event that at any time after the end of any fiscal month period the actual
amount of the Monthly Average Liquidity for such fiscal month was less than the Monthly Average Liquidity for such fiscal month used for the determination of the Applicable L/C Fee Rate for such period as a result of the inaccuracy of information provided by or on behalf of Borrowers to Agent for the calculation of Monthly Average Liquidity, at Agent’s option, the Applicable L/C Fee Rate for such prior period shall be adjusted to the applicable percentage based on such actual Monthly Average Liquidity and
any additional letter of credit fees and banker’s acceptance fees for the applicable period as a result of such recalculation shall be paid to Agent promptly (but in any event within five (5) Business Days) following Agent’s written demand therefor; provided, however, that, in the event that at any time after
the end of any fiscal month period the actual amount of the Monthly Average Liquidity for such fiscal month was greater than the Monthly Average Liquidity for such fiscal month used for the determination of the Applicable L/C Fee Rate for such period and the Applicable L/C Fee Rate based on such actual Monthly Average Liquidity would have been lower, the amount of any additional payment required in accordance with this sentence shall be reduced by the amount of any such overpayment by Borrowers.  The
foregoing shall not be construed to limit the rights of Agent and Lenders with respect to the amount of letter of credit fees and banker’s acceptance fees payable after an Event of Default whether based on such recalculated percentage or otherwise.

 

  

4

  

1.13  “Applicable Margin” shall mean, at any time, as to the Interest Rate for Base Rate Loans and Eurodollar Rate Loans, subject to the provisions below, the applicable percentage (on a per annum basis) set forth below if Monthly Average Liquidity is at or within the amounts indicated for such percentage:

 

	
 

 

Tier
	
 

Monthly

Average Liquidity
	
Applicable 

Eurodollar Rate

Margin
	
Applicable

Base Rate

Margin

	
1
	
Greater than $150,000,000
	
3.75%
	
2.75%

	
2
	
Less than or equal to $150,000,000 and greater than $62,500,000
	
4.00%
	
3.00%

	
3
	
Less than or equal to $62,500,000
	
4.25%
	
3.25%

 

provided, that, (i) the Applicable Margin shall be calculated and adjusted each fiscal month as of the 16th day of such fiscal month
(the “Applicable Margin Adjustment Date”) based upon the Monthly Average Liquidity for the immediately preceding month and shall be effective on the Applicable Margin Adjustment Date as to all Base Rate Loans and for each Eurodollar Rate Loan requested on or after such Applicable Margin Adjustment Date; (ii) as to each Eurodollar Rate Loan outstanding on such Applicable Margin Adjustment Date, the new Applicable Margin shall be effective as to each such Eurodollar Rate Loan on the first day of the
Interest Period commencing on or after such Applicable Margin Adjustment Date; (iii) from the date hereof through and including August 15, 2009, the Applicable Margin shall the amounts set forth in Tier 1 above; and (iv) in the event that Borrowers fail to provide any Borrowing Base Certificate for any period within two (2) Business Days of the date required hereunder, effective as of the date on which such Borrowing Base Certificate was due, at Agent’s option, the Applicable Margin shall be based
on the highest rate above until the next Business Day after the Borrowing Base Certificate is provided for the applicable period at which time the Applicable Margin shall be adjusted as otherwise provided herein.  In the event that at any time after the end of any fiscal month period the actual amount of the Monthly Average Liquidity for such fiscal month was less than the Monthly Average Liquidity for such fiscal month used for the determination of the Applicable Margin for such period as a result
of the inaccuracy of information provided by or on behalf of Borrowers to Agent for the calculation of Monthly Average Liquidity, at Agent’s option, the Applicable Margin for such prior period shall be adjusted to the applicable percentage based on such actual Monthly Average Liquidity and any additional interest for the applicable period as a result of such recalculation shall be paid to Agent promptly (but in any event within five (5) Business Days) following Agent’s written demand therefor; provided, however, that,
in the event that at any time after the end of any fiscal month period the actual amount of the Monthly Average Liquidity for such fiscal month was greater than the Monthly Average Liquidity for such fiscal month used for the determination of the Applicable Margin for such period and the Applicable Margin based on such actual Monthly Average Liquidity would have been lower, the amount of any additional payment required in accordance with this sentence shall be reduced by the amount of any such overpayment by
Borrowers.  The foregoing shall not

 

  

5

  

be construed to limit the rights of Agent and Lenders with respect to the amount of interest payable after an Event of Default whether based on such recalculated percentage or otherwise

 

1.14  “Assignment and Acceptance” shall mean an Assignment and Acceptance Agreement substantially in the form of Exhibit A attached hereto (with blanks appropriately completed) delivered to Agent in connection with an assignment of a Lender’s interest hereunder in accordance with the provisions of Section 13.7
hereof.

 

1.15  “Bank Group Hedge Agreement” shall mean a Hedge Agreement between any Obligor and any Bank Product Provider; sometimes being collectively referred to herein as “Bank Group Hedge Agreements”.

 

1.16  “Bank Product Provider” shall mean any Lender or any Affiliate of any Lender that provides any Bank Products to Borrowers or Guarantors.

 

1.17  “Bank Products” shall mean any one or more of the following types of services or facilities provided to an Obligor by a Bank Product Provider: (a) credit cards, debit cards or stored value cards or the processing of credit card, debit card or stored value card sales
or receipts, (b) cash management or related services, including (i) the automated clearinghouse transfer of funds for the account of an Obligor pursuant to agreement or overdraft for any accounts of Obligors maintained at Wachovia or any Affiliate of Agent or any other Bank Product Provider that are subject to the control of Agent pursuant to any Deposit Account Control Agreement to which Agent or such Bank Product Provider is a party, as applicable (to the extent such Deposit Account Control Agreement is required
hereunder), and (ii) controlled disbursement services,  (c) Bank Group Hedge Agreements if and to the extent permitted hereunder, and (d) supply chain finance services including, without limitation, trade payable services and supplier accounts receivable purchases, but excluding any factoring services.

 

1.18  “Bankruptcy Code” shall mean the United States Bankruptcy Code, being Title 11 of the United States Code as enacted in 1978, as the same has heretofore been or may hereafter be amended, recodified, modified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto.

 

1.19  “BAS” shall mean Banc of America Securities LLC and its successors and assigns.

 

1.20  “Base Rate” shall mean, on any date, the highest of (a) the Prime Rate, (b) the London Interbank Offered Rate in effect on such date for one (1) month dollar deposits, plus one (1%) percent, or (c) the Federal Funds Rate in effect on such date plus one-half (1⁄2%) percent.  Each change in the
Base Rate shall take effect simultaneously with the corresponding change or changes in the Prime Rate, the London Interbank Offered Rate or the Federal Funds Rate, as applicable.

 

1.21  “Base Rate Loans” shall mean, any Revolving Loans or portion thereof on which interest is payable based on the Base Rate in accordance with the terms hereof.

 

1.22  “Blocked Accounts” shall have the meaning set forth in Section 6.3 hereof.

 

  

6

  

1.23  “Borrowers” shall mean, collectively, the following (together with their respective successors and assigns): (a) Charming Shoppes, Inc., a Pennsylvania corporation, (b) Charming Shoppes of Delaware, Inc., a Pennsylvania corporation, (c) CSI Industries, Inc., a Delaware corporation, (d) FB Apparel, Inc., an Indiana
corporation, (e) Catherines Stores Corporation, a Tennessee corporation, (f) Lane Bryant, Inc., a Delaware corporation, and (g) any other Person that at any time after the date hereof becomes a Borrower; each sometimes being referred to herein individually as a “Borrower”.

 

1.24  “Borrowing Base” shall mean, at any time the amount equal to the sum of:

 

(a) the lesser of: eighty-five (85%) percent of the Value of the Eligible Inventory (excluding food of the Figi Companies) or  eighty-five (85%) percent of the Net Recovery Cost Percentage multiplied by the Value of such Eligible
Inventory, plus

 

(b) the lesser of: (i) the sum of: (A) the lesser of (1) fifty (50%) percent of the Value of the Eligible Inventory of the Figi Companies which is food or (2) eighty-five (85%) percent of the Net Recovery Cost Percentage multiplied
by the Value of such Eligible Inventory , plus (B) seventy-five (75%) percent of the Net Amount of Eligible Installment Sales Receivables, or (ii) $10,000,000, plus

 

(c) eighty-five (85%) percent of the Net Amount of Eligible Credit Card Receivables, plus

 

(d) 100% of Qualified Cash, minus

 

(e) any Reserves.

 

1.25  “Borrowing Base Certificate” shall mean a report substantially in the form of Exhibit E hereto, as the same may from time to time be modified by Agent in consultation with Administrative Borrower, which is duly completed as provided in Section 9.6 hereof and executed by a financial officer of Administrative Borrower
on behalf of all Obligors and delivered to Agent.

 

1.26  “Business Day” shall mean any day other than a Saturday, Sunday, or other day on which commercial banks are authorized or required to close under the laws of the State of New York, or the State of North Carolina, and a day on which Agent is open for the transaction of business, except that if a determination of
a Business Day shall relate to any Eurodollar Rate Loans, the term Business Day shall also exclude any day on which banks are closed for dealings in dollar deposits in the London interbank market or other applicable Eurodollar Rate market.

 

1.27           “Capital Expenditures” shall mean all expenditures for any fixed or capital assets or improvements, including, but not limited to, the purchase or construction of equipment or other physical assets.

 

1.28  “Capital Leases” shall mean, as applied to any Person, any lease of (or any agreement conveying the right to use) any property (whether real, personal or mixed) by such

 

  

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Person as lessee which in accordance with GAAP, is required to be reflected as a liability on the balance sheet of such Person.

 

1.29  “Capital Stock” shall mean, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of such Person’s capital stock, partnership interests or limited liability company interests at any time outstanding, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock or other interests (but excluding any debt security that is exchangeable for or convertible into such capital stock).

 

1.30  “Cash Dominion Event” shall mean a period either (a) commencing on the date that an Event of Default shall exist or have occurred and be continuing and ending on the date that such Event of Default ceases to exist or be continuing or (b) commencing on the date that Excess Availability has been less than, at any
time, the amount equal to $40,000,000 and ending on the date that Excess Availability has been greater than such amount for any thirty (30) consecutive day period thereafter; provided, that, a Cash Dominion Event period resulting from the event described in clause (b) may not be terminated on more than two (2) occasions in any period of 365 consecutive days.

 

1.31  “Cash Equivalents” shall mean, at any time, (a) obligations of states and local governments or agencies thereof (including variable rate demand notes) with a maturity date or reset period of one (1) year or less from the date of determination; (b) certificates of deposit, time deposits or bankers’ acceptances
with a maturity of one (1) year or less of any Lender or any financial institution that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $250,000,000; (c) commercial paper with a maturity of one hundred eighty (180) days or less issued by a corporation (except an Affiliate of Borrower) organized under the laws of any State of the United States of America or the District of Columbia and rated at least A-1 by Standard & Poor’s Ratings
Service, a division of The McGraw Hill Companies, Inc. or at least P-1 by Moody’s Investors Service, Inc.; (d) corporate bonds or notes (including variable rate demand notes and Eurodollar notes) issued by a corporation (except an Affiliate of Borrower) organized under the laws of any State of the United States of America or the District of Columbia and rated at least A-1 by Standard & Poor’s Rating Service, a division of The McGraw Hill Companies, Inc. or at least A by Moody’s Investors
Service, Inc.; (e) repurchase obligations with a term of not more than thirty (30) days for underlying securities of the types described in clause (a) above entered into with any financial institution having combined capital and surplus and undivided profits of not less than $250,000,000; (f) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the United States of America or issued by any governmental agency thereof and backed
by the full faith and credit of the United States of America, in each case maturing within one (1) year or less from the date of determination; provided, that, the terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository Institutions with Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985; (g) municipal securities (including variable rate demand notes) issued by states and local governments or agencies thereof
and rated at least A by Standard & Poor’s Rating Service, a division of The McGraw Hill Companies, Inc. or at least VMIG-1 by Moody’s Investors Service, Inc.; and

 

  

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(h) investments in money market funds and mutual funds which invest substantially all of their assets in securities of the types described in clauses (a) through (g) above.

 

1.32  “Catherines Card” shall mean the private label credit card or cards issued by a Credit Card Issuer or the Financing Subsidiaries (or any subsequent Credit Card Issuer replacing the Financing Subsidiaries with respect to such private label credit card or cards) to customers or prospective customers of Catherines
or any Subsidiary thereof.

 

1.33  “C.D. Credit Plan Agreement” shall mean the Consumer Credit Plan Agreement dated as of August 12, 1994, as amended and restated as of March 26, 1996 and as of June 1, 1999, between CS Delaware and FSC, as amended, modified, supplemented or restated from time to time.

 

1.34  “Change of Control” shall mean the acquisition by any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act) of beneficial ownership, directly or indirectly, of fifty (50%) percent or more of the voting power of the total outstanding Voting Stock of Parent.

 

1.35  “Co-Branded Card” shall mean a revolving Visa or Mastercard which account is co-branded with “Fashion Bug” stores or the name of any Obligor.

 

1.36  “Code” shall mean the Internal Revenue Code of 1986, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto.

 

1.37  “Collateral” shall mean have the meaning set forth in Section 5.1 hereof.

 

1.38  “Collateral Access Agreement” shall mean an agreement in writing in form and substance reasonably satisfactory to Agent from (a) any lessor of premises on which Collateral is located, any owner or operator of any premises on which Collateral is located, or any mortgagee of any premises owned by any Subsidiary of
Parent (excluding, in any such case, the following premises: (i) any Retail Store location, (ii) any premises on which Inventory not in excess of $1,000,000 at any time is located, or (iii) any chief executive office of an Obligor if (A) the Inventory at such location does not exceed $1,000,000 at any time and (B) either (1) no Records are stored or maintained at such location or (2) the Records stored or maintained at such location are also stored or maintained at a location for which Agent has received a Collateral
Access Agreement) or (b) any other person to whom any Collateral is consigned or who has custody, control or possession of any such Collateral (excluding any common carrier or any other Person transporting any such Collateral).

 

1.39  “Concentration Account” shall mean individually and collectively, (a) the collection and cash management accounts of CS Delaware maintained at Wachovia on the date hereof and (b) such other collection and cash management accounts established by Borrowers and Guarantors in accordance with the provisions of this
Agreement.

 

1.40  “Commitment” shall mean, at any time, as to each Lender, the principal amount designated as its Commitment set forth next to such Lender’s name on Schedule 1.40 hereto, as

 

  

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the same may be adjusted from time to time in accordance with Section 2.4 hereof or on Schedule 1 to the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 13.7 hereof, as the same may be adjusted from time to time in accordance with the terms hereof; sometimes being
collectively referred to herein as “Commitments”.

 

1.41  “Consolidated Net Income” shall mean, with respect to any Person for any period, the aggregate of the net income (loss) of such person and its Subsidiaries, on a consolidated basis, for such period (excluding to the extent included therein any extraordinary and/or unusual and non-recurring gains and non-cash losses
with respect to the write down of fixed and intangible assets) after deducting all charges which should be deducted before arriving at the net income (loss) for such period and, without duplication, after deducting the Provision for Taxes for such period, all as determined in accordance with GAAP consistently applied; provided, that, (a) the net income for any Person that is not a
wholly owned Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid or payable to such Person or a wholly owned Subsidiary of such Person; (b) except to the extent included pursuant to the foregoing clause, the net income of any Person accrued prior to the date it becomes a wholly owned Subsidiary of such Person or is merged into or consolidated with such Person or any of its wholly owned Subsidiaries or that
Person’s assets are acquired by such Person or by its wholly owned Subsidiaries shall be excluded; and (c) the net income (if positive) of any wholly owned Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such wholly owned Subsidiary to such Person or to any other wholly owned Subsidiary of such Person is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such wholly owned Subsidiary shall be excluded.  For the purposes of this definition, net income excludes any gain or loss (exclusive of non-cash losses with respect to the write down of fixed assets), together with any related Provision for Taxes for such gain, realized upon the sale or other disposition of any assets that are sold out of the ordinary course of business (including, without limitation, dispositions pursuant to sale and leaseback transactions) or of any Capital
Stock of such Person or a Subsidiary of such Person and any net income realized or loss incurred as a result of changes in accounting principles or the application thereof to such Person.

 

1.42  “Convertible 2007 Senior Note Agreements” shall mean, individually and collectively, the Convertible 2007 Senior Notes, the Convertible 2007 Senior Note Indenture and all other agreements, documents and instruments now or at any time hereafter executed and/or delivered by Parent, any other Obligor or any other
Person in connection with the issuance of the Convertible 2007 Senior Notes, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

 

1.43  “Convertible 2007 Senior Note Indenture” shall mean the Indenture, dated as of April 30, 2007, between Parent and Convertible 2007 Senior Note Trustee, with respect to the Convertible 2007 Senior Notes, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

 

1.44  “Convertible 2007 Senior Notes” shall mean, the 1.125% Senior Convertible Notes due May 1, 2014, issued by Parent pursuant to the Convertible 2007 Senior Note Indenture.

 

  

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1.45  “Convertible 2007 Senior Note Trustee” shall mean Wells Fargo Bank, N.A., in its capacity as trustee under the Convertible 2007 Senior Note Indenture, and its successors and assigns, and any replacement trustee permitted pursuant to the terms and conditions of the Convertible 2007 Senior Note Indenture.

 

1.46  “Cost” shall mean, as to the Inventory as of any date, the cost of such Inventory as of such date, determined under the retail method of accounting in accordance with GAAP.  For purposes of determining “cost” of Inventory hereunder, with respect to any Inventory sold by an Obligor to another
Obligor, such term shall mean the original cost thereof to such Obligor which originally purchased such Inventory and shall not include any mark up or profit on such intercompany sale.

 

1.47  “Credit Balance Cash Collateral” shall have the meaning set forth in Section 6.4(b) hereof.

 

1.48  “Credit Card Acknowledgments” shall mean, individually and collectively, the agreements in favor of  Agent by Credit Card Issuers or Credit Card Processors who are parties to Credit Card Agreements acknowledging the security interest of  Agent in the monies due and to become due to any Obligor
(including, without limitation, credits and reserves) under the Credit Card Agreements, and agreeing to transfer all such amounts to the Blocked Accounts, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

 

1.49  “Credit Card Agreements” shall mean the C.D. Credit Plan Agreement and all other agreements now or hereafter entered into by any Obligor 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, including,
but not limited to, as to Borrowers, the agreements set forth on Schedule 8.18 hereto.

 

1.50  “Credit Card Issuer” shall mean any Person (including each of the Financing Subsidiaries and any applicable Obligor) who issues or whose members issue credit cards, including, without limitation, MasterCard or VISA bank credit or debit cards or other bank credit or debit cards issued through MasterCard International,
Inc., Visa, U.S.A., Inc. or Visa International and American Express, Discover, Diners Club, any Private Label Credit Card and other non-bank credit or debit cards, including, without limitation, credit or debit cards issued by or through American Express Travel Related Services Company, Inc.

 

1.51  “Credit Card Processor” shall mean any servicing or processing agent or any factor or financial intermediary who facilitates, services, processes or manages the credit authorization, billing transfer and/or payment procedures with respect to any sales transactions of Obligors involving credit card or debit card
purchases by customers using credit cards or debit cards issued by any Credit Card Issuer.  FSC shall be deemed a Credit Card Processor in respect of the Fashion Bug Card, the Co-Branded Card, the Catherines Card and the Lane Bryant Card.

 

1.52  “Credit Card Receivables” shall mean collectively, (a) all present and future rights of any Obligor to payment from any Credit Card Issuer, Credit Card Processor or other third party arising from sales of goods or rendition of services to customers who have purchased such

 

  

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goods or services using a credit or debit card, and (b) all present and future rights of any Obligor to payment from any Credit Card Issuer, Credit Card Processor or other third party in connection with the sale or transfer of Credit Card Receivables arising pursuant to the sale of goods or rendition of services to customers who have purchased
such goods or services using a credit card or a debit card, including, but not limited to, all amounts at any time due or to become due from any Credit Card Issuer or Credit Card Processor under the Credit Card Agreements or otherwise.

 

1.53  “Credit Facility” shall mean the Loans and Letters of Credit provided to or for the benefit of Borrowers hereunder.

 

1.54  “Crosstown” shall mean Crosstown Traders, Inc., a Delaware corporation and its successors and assigns.

 

1.55  “CS Securitization Undertaking” means (a) any extension of credit by CS Delaware, Parent or any other Obligor to a Financing Subsidiary, (b) any capital contribution or other investment by CS Delaware or Parent in a Financing Subsidiary, (c) any agreement by CS Delaware or Parent to guarantee or otherwise become
liable for the obligations of a Financing Subsidiary (which agreement does not provide that CS Delaware or Parent shall grant a Lien on any Collateral in support of any guarantee or support of any Financing Subsidiary), or (d) any covenant, representation, warranty or indemnity given by an Obligor pursuant to a Permitted Securitization Transaction that is customary in securitization transactions and does not constitute recourse for credit losses.

 

1.56  “Default” shall mean an act, condition or event which with notice or passage of time or both would constitute an Event of Default.

 

1.57  “Defaulting Lender” shall mean (a) any Lender that has failed to fund any portion of the Revolving Loans, participations in Letter of Credit Obligations or participations in Swing Line Loans required to be funded by it hereunder within one (1) Business Day of the date required to be funded by it hereunder, or has
otherwise failed to pay over to Agent or any other Lender any other amount required to be paid by it hereunder within one (1) Business Day of the date when due, (b) any Lender that has notified Agent, any Lender, Issuing Bank, or any Obligor in writing that it will not or does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it will not or does not intend to comply with its funding obligations under this Agreement or under similar
agreements in which it has agreed to make commercial loans or provide other similar financial accommodations, or (c) any Lender that becomes or is insolvent or has a parent company that has become or is insolvent or becomes the subject of an Insolvency Proceeding, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such Insolvency Proceeding and has not obtained all required orders, approvals or consents of any court or other Governmental Authority to continue
to fulfill its obligations hereunder, in form and substance satisfactory to Agent.

 

1.58  “Deposit Account Control Agreement” shall mean an agreement in writing, in form and substance reasonably satisfactory to Agent, by and among Agent, an Obligor, with a deposit account at any bank and the bank at which such deposit account is at any time maintained which provides that such bank will comply with instructions
originated by Agent directing disposition

 

  

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of the funds in the deposit account without further consent by such Obligor and has such other terms and conditions as Agent may reasonably require in accordance with the terms of this Agreement.

 

1.59  “Deteriorating Lender” means any Lender as to which Agent, any Issuing Bank or Swing Line Lender has notice or knowledge that either (a) in the prior ninety (90) days, such Lender has defaulted in fulfilling its obligations under one or more other syndicated credit facilities, or (b) such Lender is reasonably likely
to be or become a Defaulting Lender.

 

1.60  “EBITDA” shall mean, as to any Person, with respect to any period, an amount equal to: (a) the Consolidated Net Income of such Person and its Subsidiaries for such period, plus (b) depreciation, amortization and other non-cash charges (including, but not limited to, imputed interest and deferred compensation) of
such Person and its Subsidiaries for such period (to the extent deducted in the computation of Consolidated Net Income of such Person for such period), all in accordance with GAAP, plus (c) Interest Expense of such Person and its Subsidiaries for such period (to the extent deducted in the computation of Consolidated Net Income of such Person for such period), plus (d) charges of such Person and its Subsidiaries for Federal, State, local and foreign income taxes for such period (to the extent deducted in the computation
of Consolidated Net Income for such Person for such period).

 

1.61  “Eligible Credit Card Receivables” shall mean the Credit Card Receivables of an Obligor which satisfy each of the criteria set forth below applicable thereto.  Credit Card Receivables shall be Eligible Credit Card Receivables if:

 

(a) such Credit Card Receivables arise from the actual and bona fide sale and delivery of goods by such Obligor in the ordinary course of the business of such Obligor which transactions are completed in accordance with the terms and provisions
contained in any agreements binding on such Obligor or the other party or parties related thereto, provided, that, (i) such Credit Card Receivables do not arise from sales on consign­ment, guaranteed sale, sale and return, sale on approval, or other terms under which payment by the account debtor may be conditional or contingent (other than pursuant to a right of return given to
customers in the ordinary course of business consistent with the practices of such Obligor as of the date of such sale) and (ii) such Credit Card Receivables shall be net of any credit for returned Inventory;

 

(b) such Credit Card Receivables are not past due (beyond any stated applicable grace period, if any, therefor) pursuant to the terms set forth in the Credit Card Agreements with the Credit Card Issuer or Credit Card Processor of the
credit card or debit card used in the purchase which give rise to such Credit Card Receivables;

 

(c) such Credit Card Receivables are not unpaid more than five (5) Business Days after the date of the sale of Inventory giving rise to such Credit Card Receivables;

 

(d) all procedures required by the Credit Card Issuer or the Credit Card Processor of the credit card or debit card used in the purchase which gave rise to such Credit Card Receivables shall have been followed in all material respects
by such Obligor and all documents required for the authorization and approval by such Credit Card Issuer or Credit Card

 

  

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Processor shall have been obtained in connection with the sale giving rise to such Credit Card Receivables;

 

(e) any required authorization and approval by such Credit Card Issuer or Credit Card Processor shall have been obtained for the sale giving rise to such Credit Card Receivables;

 

(f) such Obligor shall have submitted all sales slips, drafts, charges and other reports and other materials required by the Credit Card Issuer or Credit Card Processor obligated in respect of such Credit Card Receivables in order for
such Obligor to be entitled to payment in respect thereof;

 

(g) such Credit Card Receivables comply with the applicable terms and conditions contained in Section 7.2 of this Agreement;

 

(h) the Credit Card Issuer or Credit Card Processor with respect to such Credit Card Receivables has not asserted a counterclaim, defense or dispute and does not have any right of setoff against such Credit Card Receivables (other than
setoffs or fees and chargebacks consistent with the practices of such Credit Card Issuer or Credit Card Processor with such Obligor as of the date hereof or as such practices may change as a result of changes to the policies of such Credit Card Issuer or Credit Card Processor applicable to its similarly situated customers generally and unrelated to the circumstance of such Obligor), but the portion of the Credit Card Receivables owing by such Credit Card Issuer or Credit Card Processor in excess of the amount
owing by such Obligor to such Credit Card Issuer or Credit Card Processor in connection with such counterclaim, defense or dispute or pursuant to such fees and chargebacks may be deemed Eligible Credit Card Receivables;

 

(i) the Credit Card Issuer or Credit Card Processor with respect to such Credit Card Receivables has not setoff against amounts otherwise payable by such Credit Card Issuer or Credit Card Processor to such Obligor for the purpose of establishing
a reserve or collateral for obligations of such Obligor to such Credit Card Issuer or Credit Card Processor (other than any rights of setoff for fees and chargebacks consistent with the practices of such Credit Card Issuer or Credit Card Processor with such Obligor as of the date hereof or as such practices may hereafter change as a result of changes to the policies of such Credit Card Issuer or Credit Card Processor applicable to its customers generally and unrelated to the circumstances of such Obligor), but
the portion of the Credit Card Receivables in excess of such setoff may be deemed Eligible Credit Card Receivables;

 

(j) there are no facts, events or occurrences which would impair in any material respect the validity, enforceability or collectability of such Credit Card Receivables or reduce the amount payable or delay payment thereunder (other than
for setoffs for fees and chargebacks consistent with the practices of such Credit Card Issuer or Credit Card Processor with such Obligor as of the date hereof or as such practices may hereafter change as a result of changes to the policies of such Credit Card Issuer or Credit Card Processor applicable to its customers generally and unrelated to the circumstances of such Obligor);

 

  

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(k) such Credit Card Receivables are subject to the first priority, valid and perfected security interest and lien of Agent and any goods giving rise thereto are not, and were not at the time of the sale thereof, subject to any Liens,
other than in favor of Agent and Permitted Liens (if applicable);

 

(l) Agent shall have received, in form and substance satisfactory to Agent in good faith, a Credit Card Acknowledgment duly authorized, executed and delivered by the Credit Card Issuer (except in the case of American Express) or Credit
Card Processor for the credit card or debit card used in the sale which gave rise to such Credit Card Receivable, such Credit Card Acknowledgment shall be in full force and effect and the Credit Card Issuer or Credit Card Processor party thereto shall be in compliance in all material respects with the terms thereof;

 

(m) there are no proceedings or actions which are pending or to the best of such Obligor’s knowledge threatened, against the Credit Card Issuers or Credit Card Processors with respect to such Credit Card Receivables which would
reasonably be expected to result in any material adverse change in the continued collectability of the Credit Card Receivables with respect to any such Credit Card Issuers or Credit Card Processors;

 

(n) such Credit Card Receivables are owed by Credit Card Issuers or Credit Card Processors deemed creditworthy at all times by Agent in its reasonable good faith judgment;

 

(o) no event of default has occurred and is continuing under the Credit Card Agreement of such Obligor with the Credit Card Issuer or Credit Card Processor who has issued the credit card or debit card or handles payments under the credit
card or debit card used in the sale which gave rise to such Credit Card Receivables which default gives such Credit Card Issuer or Credit Card Processor the right to cease or suspend payments to such Obligor and no event of default shall have occurred and be continuing which gives such Credit Card Issuer or Credit Card Processor the right to setoff against amounts otherwise payable to such Obligor or the right to establish reserves or establish or demand collateral and such Credit Card Agreements are otherwise
in full force and effect and constitute the legal, valid, binding and enforceable obligations of the parties thereto (other than for then current fees, chargebacks and reserves consistent with the current practices of such Credit Card Issuer or Credit Card Processor as of the date hereof or as such practices may hereafter change as a result of changes to the policies of such Credit Card Issuer or Credit Card Processor applicable to its customers generally and unrelated to the circumstances of such Obligor);

 

(p) the terms of the sale giving rise to such Credit Card Receivables and all practices of such Obligor with respect to such Credit Card Receivables comply in all material respects with applicable federal, state and local laws and regulations;

 

(q) the Credit Card Issuer or Credit Card Processor has not sent any notice of its intention to cease or suspend payments to such Obligor in respect of such Credit Card Receivables or to establish reserves or cash collateral for obligations
of such Obligor to such Credit Card Issuer or Credit Card Processor (other than for then current fees and chargebacks consistent with the current practices of such Credit Card Issuer or Credit Card Processor as of the

 

  

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date hereof or as such practices may hereafter change as a result of changes to the policies of such Credit Card Issuer or Credit Card Processor applicable to its customers generally and unrelated to the circumstances of such Obligor); and

 

(r) such Credit Card Receivable does not arise from a customer’s use of a Private Label Credit Card or any co-branded credit card.

 

General criteria for Eligible Credit Card Receivables may be established and revised from time to time by Agent in good faith based on an event, condition or other circumstance arising after the date hereof which adversely affects or could reasonably be expected to adversely affect the collectability of the Credit Card Receivables in the reasonable
good faith determination of Agent.  Agent shall not establish or revise criteria for Eligible Credit Card Receivables unless Agent shall have provided Administrative Borrower five (5) Business Days prior written notice (such notice not to be required after the occurrence of an Event of Default) and an explanation of the nature of such new or revised criteria.  Any Credit Card Receivables which are not Eligible Credit Card Receivables shall nevertheless be part of the Collateral.

 

1.62  “Eligible Installment Sales Receivables” shall mean, as to any of the Figi Companies, Installment Sales Receivables of such Obligor which satisfy each of the criteria applicable thereto pursuant to this definition (provided, that, to the extent an Account debtor may use a credit card or debit card to pay any installment
in respect of an Installment Sales Receivable, the amount of the Installment Sales Receivable shall be deemed reduced by the amount of such payment).  Installment Sales Receivables shall be Eligible Installment Sales Receivables if:

 

(a) such Installment Sales Receivables arise from the actual and bona fide sale and delivery of goods by such Obligor to a customer in the ordinary course of the business of such Obligor;

 

(b) the transaction and terms of sale giving rise to such Installment Sales Receivables does not violate any applicable laws or regulations, the documentation relating thereto is legally sufficient under such laws and regulations and
all practices of such Obligor with respect to such Installment Sales Receivables comply in all material respects with applicable Federal, State and local laws and regulations;

 

(c) such Installment Sales Receivables do not arise from sales on consignment, guaranteed sale, sale and return, sale on approval, or other terms under which payment by the Account debtor may be conditional or contingent (other than pursuant
to the right of return given to customers in the ordinary course of business consistent with the practices of such Obligor as of the date of such sale);

 

(d) such Installment Sales Receivables do not consist of bill and hold invoices;

 

(e) the Account debtor with respect to such Installment Sales Receivables has not returned the Inventory;

 

  

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(f) such Installment Sales Receivables are subject to the first priority, valid and perfected security interest of Agent;

 

(g) all procedures for evaluating the creditworthiness of the Account debtor in respect thereof, established and used by such Obligor, have been diligently and properly completed as to such Account debtor obligated in respect of such
Installment Sales Receivables, and the Account debtor with respect to the Installment Sales Receivables is eligible for credit in the amount thereof pursuant to the criteria established and used by such Obligor as of the date of such sale;

 

(h) the terms of payment of such Installment Sales Receivables require payments of no more than three (3) consecutive monthly installments;

 

(i) no payment with respect to such Installment Sales Receivable is unpaid  more than ninety (90) days past the original invoice date thereof (except as permitted in (k) below) as reflected in the statements sent by such Obligor
to the Account debtor with respect thereto;

 

(j) no default or event of default under the terms of the sale giving rise to such Installment Sales Receivables has occurred and is continuing, other than a payment default to the extent described in clauses (i) or (k) of this definition;

 

(k) such Installment Sales Receivables do not arise from sales made pursuant to any deferred payment programs pursuant to which the initial payment in respect thereof is not due within thirty (30) days of the shipment of the Inventory
the sale of which gave rise to such Installment Sales Receivable, except, that, Installment Sales Receivable of such Obligor arising under the holiday extended pay program from goods shipped in November and December which otherwise satisfy the criteria of Eligible Installment Sales Receivables shall be Eligible Installment Sales Receivables through April 30th of the immediately succeeding calendar year; and

 

(l) such Installment Sales Receivables have not been and are not required or intended to be sold or otherwise transferred pursuant to a Permitted Securitization Transaction.

 

Notwithstanding the foregoing, Installment Sales Receivables shall not be or be deemed to be Eligible Installment Sales Receivables until Agent shall have conducted a field examination with respect to such assets and the results of such field examination and other due diligence shall be reasonably satisfactory to Agent and Bank of America,
N.A., in its capacity as Syndication Agent, and then only to the extent the criteria for Eligible Installment Sales Receivables set forth herein are satisfied with respect thereto.  General criteria for Eligible Installment Sales Receivables may be established and revised from time to time by Agent, in consultation with Bank of America, in its capacity as Syndication Agent, in good faith based on an event, condition or other circumstance arising after the date hereof which adversely affects or could
reasonably be expected to adversely affect the collectability of the Installment Sales Receivables in the reasonable good faith determination of Agent.  Agent shall not establish or revise criteria for Eligible Installment Sales Receivables unless Agent shall have provided Administrative Borrower five (5) Business Days prior written notice (such notice not to be required after the

 

  

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occurrence of an Event of Default) and an explanation of the nature of such new or revised criteria.  Any Installment Sales Receivables which are not Eligible Installment Sales Receivables shall nevertheless be part of the Collateral.

 

1.63  “Eligible In-Transit Inventory” shall mean Inventory owned by Obligors that otherwise satisfies the criteria for Eligible Inventory set forth herein but is located outside of the United States of America and which is in transit to a location for which Agent shall have received a Collateral Access Agreement from
the applicable lessor, owner, or operator of such location executed and delivered by such lessor, owner or operator, as the case may be; provided, that,

 

(a) Agent has a first priority perfected security interest in and lien upon such Inventory, and all documents of title, if any, with respect thereto,

 

(b) such Inventory either (i) is the subject of a bill of lading (A) issued by the carrier respecting such Inventory, and (B) which bill of lading has been delivered to the Freight Forwarder handling the shipping of such Inventory, in
all cases, subject to a Collateral Access Agreement duly authorized, executed and delivered by such Freight Forwarder, or (ii) is the subject of a forwarder’s cargo receipt (A) which has been signed or otherwise authenticated by a Freight Forwarder as Obligor’s agent, and (B) is in the possession of such Freight Forwarder handling the shipping of such Inventory, in all cases, subject to a Collateral Access Agreement duly authorized, executed and delivered by such Freight Forwarder,

 

(c) such Obligor has title to such Inventory, and Agent shall have received such evidence thereof as it may from time to time require,

 

(d) Agent shall have received a Collateral Access Agreement, duly authorized, executed and delivered by the Freight Forwarder or customs broker, as the case may be, handling the shipping of such Inventory, such Collateral Access Agreement
shall be in full force and effect and such Freight Forwarder shall be in compliance in all material respects with the terms thereof,

 

(e) such Inventory is insured against types of loss, damage, hazards, and risks, and in amounts, satisfactory to Agent in its discretion, and Agent shall have received a copy of the certificate of marine cargo insurance in connection
therewith in which Agent has been named as an additional insured and loss payee in a manner acceptable to Agent,

 

(f) upon Agent’s request, Agent shall have received a copy of the invoice, packing slip and manifest with respect thereto,

 

(g) such Inventory is not subject to a Letter of Credit, and

 

(h) such Inventory shall not have been in transit for more than sixty (60) days;

 

provided, that, Agent may, upon notice to Administrative Borrower, exclude any particular Inventory from the definition of “Eligible In-Transit Inventory” in the event that the Agent determines that such Inventory is subject to any Person’s right or claim which is (or is capable of

 

  

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being) senior to, or pari passu with, the Lien of the Agent (such as, without limitation, a right of stoppage in transit), as applicable, or may otherwise adversely impact the ability of the Agent, to realize upon such Inventory.

 

1.64  “Eligible Inventory” shall mean Inventory of each Obligor consisting of finished goods held for resale in the ordinary course of the business of such Obligor, and food of the Figi Companies, in each case which satisfy the criteria set forth below.  In general, Eligible Inventory shall not include (a)
packaging and shipping materials and raw materials; (b) supplies used or consumed in such Obligor’s business; (c) Inventory at any distribution center leased by any Obligor unless Agent shall have received a Collateral Access Agreement from the lessor of such location executed and delivered by such lessor; (d) Inventory subject to a Lien in favor of any person other than Agent  except those permitted in this Agreement that are subject to an intercreditor agreement in form and substance satisfactory
to Agent between the holder of such security interest or lien and Agent; (e) bill and hold goods; (f) slow moving and obsolete Inventory; provided, that, slow moving Inventory shall not include the immediately prior season’s Inventory to the extent it is included in the most recent appraisal of Inventory received by Agent, in accordance with the terms of this Agreement; (g) Inventory which is not subject to the first priority, valid and perfected security interest of Agent; (h) damaged and/or defective
Inventory; (i) Inventory purchased or sold on consignment; (j) Inventory not located at: (i) a premises set forth on Omnibus Schedule 2 hereto, (ii) a Retail Store location, (iii) a premises owned by an Obligor, or (iv) a premises for which Agent shall have received a Collateral Access Agreement from the lessor or owner of such location executed and delivered by such lessor or owner unless Obligors are not required in accordance with the definition of Collateral Access Agreement to obtain a Collateral Access
Agreement for such location or such requirement has been waived by Agent in its reasonable discretion; (k) Inventory in transit to any Obligor (except for (i) Eligible In-Transit Inventory (provided, that, the amount of Eligible In-Transit Inventory included in the calculation of the Eligible Inventory component of the Borrowing Base shall not exceed $25,000,000 in the aggregate at any time), and Eligible L/C Inventory and (ii) Inventory in transit (A) to a warehouse location for which Agent shall have received
a Collateral Access Agreement from the lessor, owner or operator of such location executed and delivered by such lessor, owner or operator, which Inventory is located in the United States and has cleared United States customs or (B) to any Obligor from a warehouse location listed on Omnibus Schedule 2 hereto or from a warehouse for which Agent shall have received a Collateral Access Agreement from the lessor, owner or operator of such location executed and delivered by such lessor, owner or operator); (l) Inventory
held for return to vendors; (m) Inventory returned by customers and not held for resale; (n) lay away Inventory; (o) Inventory consisting of samples; (p) highly perishable Inventory; and (q) Inventory located outside of the United States except to the extent such Inventory is Eligible In-Transit Inventory or Eligible L/C Inventory and as may otherwise be agreed to by Agent and Administrative Borrower.  Notwithstanding the foregoing, the Inventory of the Figi Companies shall not be or be deemed to be
Eligible Inventory until Agent shall have (1) received an appraisal thereof in form and containing assumptions and appraisal methods reasonably satisfactory to Agent by an appraiser reasonably acceptable to Agent, on which Agent and Lenders are expressly permitted to rely and (2) conducted a field examination with respect to such assets and the results of such field examination and other due diligence shall be reasonably satisfactory to Agent, and then only to the extent the criteria for Eligible Inventory set
forth herein are satisfied with respect thereto.  General criteria for Eligible Inventory may be

 

  

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established and revised from time to time by Agent in good faith based on an event, condition or other circumstance arising after the date hereof which adversely affects or could reasonably be expected to adversely affect the value of the Inventory in the reasonable good faith determination of Agent.  Agent shall not establish or
revise criteria for Eligible Inventory unless Agent shall have provided Administrative Borrower five (5) Business Days prior written notice (such notice not to be required after the occurrence of an Event of Default) and an explanation of the nature of such new or revised criteria.  Any Inventory which is not Eligible Inventory shall nevertheless be part of the Collateral.

 

1.65           “Eligible L/C Inventory” shall mean Eligible Inventory that otherwise satisfies the criteria for Eligible In-Transit Inventory and which has been purchased with and is subject to a Letter of Credit.

 

1.66  “Eligible Transferee” shall mean (a) any Lender; (b) the parent company of any Lender and/or any Affiliate of such Lender which is at least fifty (50%) percent owned by such Lender or its parent company; (c) any person (whether a corporation, partnership, trust or otherwise) that is engaged in the business of making,
purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Lender or with respect to any Lender that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor, and in each case is approved by Agent; and (d) for the
purposes of Section 2.4 only, any Person (other than a natural Person) approved by Agent and Administrative Borrower (which approval shall not be unreasonably withheld or delayed); provided, that, (i) no Obligor or any Affiliate of any Obligor shall qualify as an Eligible Transferee; and (ii) no Person to whom any Indebtedness which is in any way subordinated by agreement in right of payment to any other Indebtedness of any Obligor shall qualify as an Eligible Transferee, except as Agent may otherwise agree.

 

1.67  “Engagement Letters” shall mean, collectively, the engagement letter and the engagement fee letter, each dated June 1, 2009, by and among Parent, Agent, WFS and BAS, setting forth, among other things, certain fees payable by Borrowers to Agent for the benefit of itself, WFS, BAS, certain Affiliates of WFS and BAS,
and Lenders, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

 

1.68  “Environmental Laws” shall mean all foreign, Federal, State and local laws (including common law), legislation, rules, codes, licenses, permits (including any conditions imposed therein), authorizations, judicial or administrative decisions, injunctions or agreements between any Obligor and any Governmental Authority,
(a) relating to pollution and the protection or restoration of the environment (including air, water vapor, surface water, ground water, drinking water, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or to human health or safety, (b) relating to the exposure to, or the use, storage, recycling, treatment, generation, manufacture, processing, distribution, transportation, handling, labeling, production, release or disposal, or threatened release, of Hazardous
Materials, or (c) relating to all laws with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials.  The term “Environmental Laws” includes (i) the Federal Comprehensive Environmental Response, 

 

 

 

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Compensation and Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal
Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, (ii) applicable state counterparts to such laws, and (iii) any common law or equitable doctrine that may impose liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Hazardous Materials.

 

1.69  “Equipment” shall have the meaning given to such term in the UCC and also shall include, without limitation, all of each Obligor’s now owned and hereafter acquired equipment, wherever located, including machinery, data processing and computer equipment and computer hardware and software, whether owned or
licensed, and including embedded software, vehicles, tools, furniture, fixtures, all attachments, accessions and property now or hereafter affixed thereto or used in connection therewith (other than Inventory), and substitutions and replacements thereof, wherever located.

 

1.70  “ERISA” shall mean the United States Employee Retirement Income Security Act of 1974, as amended, together with all rules, regulations and interpretations thereunder or related thereto.

 

1.71  “ERISA Affiliate” shall mean any Person required to be aggregated with any Borrower or any of its Subsidiaries under Sections 414(b), 414(c), 414(m) or 414(o) of the Code.

 

1.72  “ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a Plan which presents a material risk of termination by the Pension Benefit Guaranty Corporation of any such Plan that is a single employer plan where such
termination could result in any liability to the Pension Benefit Guaranty Corporation; (b) the adoption of any amendment to a Plan that would require the provision of security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (d) the filing pursuant to Section 412 of the Code or Section 303(d) of ERISA of an application
for a waiver of the minimum funding standard with respect to any Plan; (e) the occurrence of a “prohibited transaction” as defined in Section 4975(c) of the Code or in Section 406 of ERISA with respect to which any Borrower or any of its Subsidiaries would be liable; (f) a complete or partial withdrawal by any Borrower or any ERISA Affiliate from a Multiemployer Plan or a cessation of operations which is treated as such a withdrawal or notification that a Multiemployer Plan is in reorganization; (g)
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 Pension Benefit Guaranty Corporation to terminate a Plan or Multiemployer Plan; (h) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan; (i) the imposition of any liability under
Title IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due but not delinquent under Section 4007 of ERISA, upon any Borrower or any ERISA Affiliate; and (j) any other event or condition

 

  

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with respect to a Plan or Multiemployer Plan or any Plan subject to Title IV of ERISA maintained, or contributed to, by any ERISA Affiliate that could reasonably be expected to result in liability of any Obligor.

 

1.73  “Eurodollar Rate Loans” shall mean any Loans or portion thereof on which interest is payable based on the Adjusted Eurodollar Rate in accordance with the terms hereof.

 

1.74  “Event of Default” shall mean the occurrence or existence of any event or condition described in Section 10.1 hereof.

 

1.75  “Excess Availability” shall mean the amount, as determined by Agent, calculated at any date, equal to: (a) the lesser of (i) the Borrowing Base and (ii) the Maximum Credit (in each case under (i) or (ii) after giving effect to any Reserves other than any Reserves in respect of Letter of Credit Obligations), minus
(b) the sum of (without duplication): (i) the amount of all then outstanding and unpaid Obligations (but not including for this purpose Obligations of such Borrower arising pursuant to any guarantees in favor of Agent and Lenders of the Obligations of the other Borrowers or any outstanding Letter of Credit Obligations), plus (ii) the amount of all Reserves then established in respect of Letter of Credit Obligations, plus (iii) the aggregate amount of all then outstanding and unpaid trade payables and other obligations
of Obligors which are outstanding more than sixty (60) days past due as of such date (other than trade payables or other obligations being contested or disputed by such Obligor in good faith), plus (iv) the amount of checks issued by Obligors to pay trade payables and other obligations which are more than sixty (60) days past due as of such date (other than trade payables or other obligations being contested or disputed by such Obligor in good faith), but not yet sent.

 

1.76  “Exchange Act” shall mean the Securities Exchange Act of 1934, together with all rules, regulations and interpretations thereunder or related thereto.

 

1.77  “Excluded Property” shall have the meaning set forth in Section 5.2 hereof.

 

1.78  “Excluded Subsidiaries” shall mean each of the Financing Subsidiaries, the Inactive Subsidiaries, Real Property Holding Companies, Charming J.V. Inc., CSI Charities, Inc., the Foreign Subsidiaries, White Marsh Distribution, LLC, Kafco Development Co., Inc., Festus #2733 Development Co., Inc., Macomb #2619 Development
Co., Inc., Rolla #2685 Development Co., Inc., Sikeston #2736 Development Co., Inc., Yucca #2524 Development Co., Inc., FB Distro Distribution Center, LLC, Winks Lane, Inc. and FB Distro, Inc., as named in Omnibus Schedule 1 hereto, subpart 7, and any other Subsidiary formed or acquired pursuant to Sections 9.12 or 9.14 hereof and designated in writing by Administrative Borrower to Agent at or prior to formation or acquisition as an Excluded Subsidiary.

 

1.79  “Existing Letters of Credit” shall mean, collectively, the Existing Letters of Credit issued for the account of Borrowers and Additional L/C Debtors prior to the date hereof and listed on Schedule 1.79 hereto.

 

1.80  “Fashion Bug Card” shall mean the private label credit card or cards issued by the Financing Subsidiaries (or any subsequent Credit Card Issuer replacing the Financing Subsidiaries with respect to such private label credit card or cards as to which there has been

 

  

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compliance with Section 9.23 hereof) to customers or prospective customers of the Retail Store Subsidiaries operating under the name of “Fashion Bug”.

 

1.81           “Federal Funds Rate” shall mean, for any period, a fluctuating interest rate per annum equal, for each day during such period, to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by Agent from three (3) Federal funds brokers of recognized standing selected by it.

1.82  “Figi’s” shall mean Figi’s Inc., a Wisconsin corporation, and its successors and assigns.

 

1.83  “Figi Companies” shall mean collectively, Figi’s and its Subsidiaries and their respective successors and assigns.

 

1.84  “Financing Agreements” shall mean, collectively, this Agreement, the Existing Financing Agreements (other than the Existing Loan Agreement and the Second Amended and Restated Guarantee, dated July 28, 2005, executed by the Guarantors parties thereto which have been amended and restated in their entirety in accordance
with Section 14.4 hereof), and all notes, guarantees, security agreements, deposit account control agreements, investment property control agreements, intercreditor agreements, and all other agreements, documents and instruments now or at any time hereafter executed and/or delivered by any Obligor in connection with this Agreement; provided, that, in no event shall the term Financing
Agreements be deemed to include any Hedge Agreement.

 

1.85  “Financing Subsidiaries” shall mean, individually and collectively, (a) FSC, Originator, Charming Shoppes Receivables Corp. (formerly known as Fashion SPC, Inc.), Charming Shoppes Seller, Inc., Charming Shoppes Street, Inc., Spirit of America, Inc., Fashion Service Fulfillment Corp., Catalog Seller LLC, Catalog
Receivables LLC, and Fashion Service Protection Corp., and (b) any other direct or indirect Subsidiary of any of them or Parent, whether now existing or organized after the date hereof, engaged in originating, financing, funding or servicing Securitization Program Assets, including without limitation, a Special Purpose Vehicle, provided, that, the term “Financing Subsidiary” shall not include any Obligor.

 

1.86  “Fixed Charge Coverage Ratio” shall mean, as to any Person and its Subsidiaries for any date of determination, the ratio of: (a) EBITDA of such Person and its Subsidiaries, on a consolidated basis, for the immediately preceding twelve (12) consecutive fiscal months as of the end of the most recent month for which
Agent has received financial statements pursuant to Section 9.6 hereof, minus, the amount of Capital Expenditures of such Person and its Subsidiaries, on a consolidated basis, during such period (offset by landlord construction allowances which are to be paid by landlords within a reasonable time after incurrence of such Capital Expenditures, such time period not to exceed six (6) months after the incurrence of such Capital Expenditures) to the
extent not financed by Indebtedness permitted hereunder for such

 

  

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purpose, to (b) Fixed Charges of such Person and its Subsidiaries, on a consolidated basis, for such period.

 

1.87  “Fixed Charges” shall mean, as to any Person and its Subsidiaries (on a consolidated basis), with respect to any period, the sum of, without duplication, (a) all cash Interest Expense during such period, plus (b) all regularly scheduled principal payments in respect of Indebtedness for borrowed money and Indebtedness
with respect to Capital Leases, in any case, to the extent paid in cash during such period excluding any payments due upon maturity or prepayment of any such Indebtedness in the event such Indebtedness is refinanced, plus (c) all income taxes paid in cash during such period.

 

1.88  “Foreign Subsidiary” shall mean any direct or indirect subsidiary of Parent organized in a jurisdiction other than the United States of America, a state thereof, the District of Columbia, or Puerto Rico, whether now existing or organized after the date hereof.

 

1.89  “Freight Forwarders” shall mean the persons as may be selected by Administrative Borrower who are reasonably acceptable to Agent to receive and arrange for the shipping of Inventory to the United States of America; each sometimes being referred to herein individually as a “Freight Forwarder”.

 

1.90  “FSC” shall mean Fashion Service Corp., a Delaware corporation and its successors and assigns.

 

1.91  “GAAP” shall mean generally accepted accounting principles in the United States of America as in effect from time to time as set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial
Accounting Standards Board which are applicable to the circumstances as of the date of determination consistently applied, provided, that, in the event of any change in GAAP after the date hereof that affects the covenant set forth in Section 9.21 hereof, Administrative Borrower may, by notice to Agent, or Agent may, and at the request of Required Lenders shall, by notice to Administrative
Borrower, require that such covenant be calculated in accordance with GAAP as in effect, and as applied by Parent and its Subsidiaries, immediately before the applicable change in GAAP became effective, until either the notice from the applicable party is withdrawn or such covenant is amended in a manner satisfactory to Administrative Borrower, Agent and the Required Lenders.  Administrative Borrower shall deliver to Agent at the same time as the delivery of any financial statements given in accordance
with the provisions of Section 9.6 hereof (a) a description in reasonable detail of any material change in the application of accounting principles employed in the preparation of such financial statements from those applied in the most recently preceding monthly, quarterly or annual financial statements and (b) a reasonable estimate of the effect on the financial statements on account of such changes in application.

 

1.92  “Governmental Authority” shall mean any nation or government, any state, province, or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

 

  

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1.93  “Guarantor” shall mean any guarantor, endorser, acceptor, surety or other person liable on or with respect to the Obligations or who is the owner of any property which is security for the Obligations, including without limitation, those certain Subsidiaries of Parent listed on Schedule 1.93 hereto and any Subsidiary
of Parent that executes a Guarantor Joinder Agreement after the date hereof, provided, that, the term “Guarantor” shall not include any Borrowers, Additional L/C Debtors or Excluded Subsidiaries.

 

1.94  “Guarantor Joinder Agreement” shall mean a Guarantor Joinder Agreement substantially in the form of Exhibit D attached hereto.

 

1.95  “Hazardous Materials” shall mean any hazardous, toxic or dangerous substances, materials and wastes, including hydrocarbons (including naturally occurring or man made petroleum and hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, biological substances, polychlorinated
biphenyls, pesticides, herbicides and any other kind and/or type of pollutants or contaminants (including materials which include hazardous constituents), sewage, sludge, industrial slag, solvents and/or any other similar substances, materials, or wastes and including any other substances, materials or wastes that are or become regulated under any Environmental Law (including any that are or become classified as hazardous or toxic under any Environmental Law).

 

1.96  “Hedge Agreement” shall mean an agreement between any Obligor and any counterparty that is a swap agreement as such term is defined in 11 U.S.C. Section 101, and including any rate swap agreement, basis swap, forward rate agreement, commodity swap, interest rate option, forward foreign exchange agreement, spot
foreign exchange agreement, rate cap agreement rate, floor agreement, rate collar agreement, currency swap agreement, cross-currency rate swap agreement, currency option, any other similar agreement (including any option to enter into any of the foregoing or a master agreement for any the foregoing together with all supplements thereto) for the purpose of protecting against or managing exposure to fluctuations in interest or exchange rates, currency valuations or commodity prices; sometimes being collectively
referred to herein as “Hedge Agreements”.

 

1.97  “Immaterial Insolvency Event” shall mean Involuntary Proceeding(s) or Voluntary Proceeding(s) with respect to any Obligor (other than Parent or Administrative Borrower) so long as the fair market value of the assets of such Obligor, when aggregated with the fair market value of the assets of any other Obligor that
is or was the subject of an Immaterial Insolvency Event does not exceed $20,000,000.

 

1.98  “Inactive Subsidiaries” shall mean, individually and collectively, (a) the Subsidiaries of Parent that do not operate a Retail Store, and (b) the Subsidiaries of Parent which have no material assets or properties and do not engage in any business or commercial activity.

 

1.99  “Indebtedness” shall mean, with respect to any Person, any liability, whether or not contingent, (a) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof) or evidenced by bonds, notes, debentures or similar instruments;
(b) to pay the deferred purchase price of property or services of any such Person, including, without limitation, all obligations under earn-out or similar agreements (other than trade payables, accrued liabilities, tax payables, non-compete and

 

  

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restructuring expenses, and other similar items, in each case arising in the ordinary course of business); (c) all obligations as lessee under leases which have been, or should be, in accordance with GAAP recorded as Capital Leases; (d) any contractual obligation, contingent or otherwise, of such Person to pay or be liable for the payment
of any indebtedness described in this definition of another Person, including, without limitation, any such indebtedness, directly or indirectly guaranteed, or any agreement to purchase, repurchase, or otherwise acquire such indebtedness, obligation or liability or any security therefor, or to provide funds for the payment or discharge thereof, or to maintain solvency, assets, level of income, or other financial condition; (e) all obligations with respect to mandatorily redeemable stock and redemption or repurchase
obligations under any Capital Stock or other equity securities issued by such Person; (f) all reimbursement obligations and other liabilities of such Person with respect to surety bonds (whether bid, performance or otherwise), letters of credit, banker’s acceptances or similar documents or instruments issued for such Person’s account; (g) all indebtedness of such Person in respect of indebtedness of another Person for borrowed money or indebtedness of another Person otherwise described in this definition
which is secured by any consensual Lien, on any asset of such Person, whether or not such obligations, liabilities or indebtedness are assumed by or are a personal liability of such Person, all as of such time, provided, that, for the purposes hereof, to the extent such Indebtedness referred to in this clause (g) is non-recourse to such Person, the amount of such Indebtedness shall not be deemed to exceed the lesser of (i) the principal amount of such Indebtedness or (ii) the value of the asset securing such
Indebtedness; (h) all obligations, liabilities and indebtedness of such Person (marked to market) arising under swap agreements, cap agreements and collar agreements and other agreements or arrangements designed to protect such person against fluctuations in interest rates or currency or commodity values; (i) all obligations owed by such Person under License Agreements with respect to non-refundable, advance or minimum guarantee royalty payments; (j) indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer to the extent such Person is liable therefor as a result of such Person’s ownership interest in such entity, except to the extent that the terms of such indebtedness expressly provide that such Person is not liable therefor; (k) the principal and interest portions of all rental obligations of such Person under any synthetic lease or similar off-balance sheet financing where such transaction is considered to be borrowed money for tax purposes but is classified
as an operating lease in accordance with GAAP; and (l) CS Securitization Undertakings.

 

1.100  “Insolvency Proceeding” shall mean, as to any Person, any of the following: (a) any case or proceeding with respect to such Person under the Bankruptcy Code or any other Federal or State bankruptcy, insolvency, reorganization or other law affecting creditors’ rights or any other or similar proceedings seeking
any stay, reorganization, arrangement, composition or readjustment of the obligations and indebtedness of such Person, (b) any proceeding seeking the appointment of any trustee, receiver, liquidator, custodian or other insolvency official with similar powers with respect to such Person or a material portion of its assets, (c) any proceedings for liquidation, dissolution or other winding up of the business of such Person, or (d) any assignment for the benefit of creditors or any marshaling of assets of such Person.

 

1.101  “Installment Sales Receivables” shall mean any Accounts of the Figi Companies arising pursuant to the sale of non- apparel Inventory by such Obligor to an Account debtor requiring payments of the purchase price in installments over a period of time.

 

  

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1.102  “Intellectual Property” shall mean, as to each Obligor, such Obligor’s now owned and hereafter arising or acquired patents, patent rights, patent applications, copyrights, works which are the subject matter of copyrights, copyright applications, copyright registrations, trademarks, servicemarks, trade names,
trade styles, trademark and service mark applications, and licenses and rights to use any of the foregoing and all applications, registrations and recordings relating to any of the foregoing as may be filed in the United States Copyright Office, the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof, any political subdivision thereof or in any other country or jurisdiction, together with all rights and privileges arising under applicable law with
respect to any Obligor’s use of any of the foregoing; all extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing; all rights to sue for past, present and future infringement of any of the foregoing; inventions, trade secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys, reports, manuals, and operating standards; goodwill (including any goodwill associated with any trademark or servicemark, or the license of any trademark or
servicemark); customer and other lists in whatever form maintained; trade secret rights, copyright rights, rights in works of authorship, domain names and domain name registration; software and contract rights relating to computer software programs, in whatever form created or maintained.

 

1.103  “Interest Expense” shall mean, for any period, as to any Person and its Subsidiaries, total interest expense, whether paid or accrued (including the interest component of Capital Leases for such period), all of the foregoing as determined in accordance with GAAP.

 

1.104  “Interest Period” shall mean for any Eurodollar Rate Loan, a period of approximately one (1), two (2) or three (3) months duration (or, if available to all Lenders, six (6) months duration) as Administrative Borrower on behalf of any Borrower may elect, the exact duration to be determined in accordance with
the customary practice in the applicable Eurodollar Rate market; provided, that, Administrative Borrower on behalf of such Borrower may not elect an Interest Period which will end after the last day of the then-current term of this Agreement.

 

1.105  “Interest Rate” shall mean:

 

(a) subject to clause (b) of this definition below:

 

(i) as to Base Rate Loans, a rate equal to the Applicable Margin on a per annum basis in excess of the Base Rate,

 

(ii) as to Eurodollar Rate Loans, a rate equal to the Applicable Margin on a per annum basis in excess of the Adjusted Eurodollar Rate (in each case, based on the London Interbank Offered Rate applicable for the Interest Period selected
by Administrative Borrower as in effect two (2) Business Days after the date of receipt by Agent of the request of Administrative Borrower for such Eurodollar Rate Loans in accordance with the terms hereof;

 

(iii) as to Swing Line Loans, a rate equal to the Applicable Margin for Eurodollar Rate Loans on a per annum basis in excess of the Index Rate; and

 

  

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(b) notwithstanding anything to the contrary contained in clause (a) of this definition, the Applicable Margin otherwise used to calculate the Interest Rate for Base Rate Loans, Eurodollar Rate Loans, and Swing Line Loans, shall be the
highest percentage set forth in the definition of the term Applicable Margin for each category of Revolving Loans (without regard to the amount of Monthly Average Liquidity) plus two (2%) percent per annum, at Agent’s option, or at the direction of the Required Lenders, after notice to Administrative Borrower, (i) for the period from and after the date of the occurrence of an Event of Default for so long as such Event of Default is continuing, and (ii) on Revolving Loans to Borrowers at any time outstanding
in excess of the Borrowing Base (whether or not such excess(es) arise or are made with or without Agent’s or any Lender’s knowledge or consent and whether made before or after an Event of Default) but only to the extent of such excess.

 

1.106  “Inventory” shall have the meaning given to such term in the UCC and also include, without limitation, all of each Obligor’s now owned and hereafter existing or acquired goods, wherever located, which (a) are held by any Obligor for sale or lease or to be furnished under a contract of service; (b) are furnished
by Obligor under a contract of service; or (c) consist of raw materials, work in process, finished goods or materials used or consumed in the business of any Obligor.

 

1.107  “Investment Property Control Agreement” shall mean an agreement in writing, either in substantially the form attached hereto as Exhibit C or in such other form as is reasonably acceptable to Agent, by and among Agent, any Obligor and any securities intermediary, commodity intermediary or other person who has custody,
control or possession of any investment property of such Obligor including such terms and conditions as Agent may reasonably require, provided, that, no such agreement shall be required with respect to any securities intermediary, commodity intermediary or other person who has custody, control or possession of any investment property used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Obligor’s salaried employees or property held in trust for the benefit
of an employee or any unaffiliated third party.

 

1.108  “Involuntary Proceeding” shall have the meaning set forth in Section 10.1(g) hereof.

 

1.109  “Issuing Banks” shall mean (a) Wachovia and its Affiliates, (b) Wells Fargo Bank, National Association, (c) Bank of America, N.A., (d) any other Lender that is approved by Agent that shall issue a Letter of Credit and has agreed in a manner satisfactory to Agent to be subject to the terms hereof as an Issuing
Bank, and (e) any successor Issuing Bank, as the same may be appointed by Agent pursuant to Section 12.15 hereof; each sometimes being referred to herein individually as an “Issuing Bank”.

 

1.110  “Lane Bryant Card” shall mean the private label credit card or cards issued by a Credit Card Issuer or the Financing Subsidiaries (or any subsequent Credit Card Issuer replacing the Financing Subsidiaries with respect to such private label credit card or cards) to customers or prospective customers of Lane Bryant
or any Retail Store Subsidiary thereof.

 

1.111  “Lenders” shall mean the financial institutions and other Persons who are signatories hereto as Lenders and other Persons made a party to this Agreement as a Lender in

 

  

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accordance with Section 13.7 hereof, and their respective successors and assigns; each sometimes being referred to herein individually as a “Lender”.

 

1.112  “Letter of Credit Documents” shall mean, with respect to any Letter of Credit, such Letter of Credit, any amendments thereto, any documents delivered in connection therewith, any application therefor, and any agreements, instruments, guarantees or other documents (whether general in application or applicable only
to such Letter of Credit) governing or providing for (a) the rights and obligations of the parties concerned or at risk or (b) any collateral security for such obligations.

 

1.113  “Letter of Credit Limit” shall mean $100,000,000.

 

1.114  “Letter of Credit Obligations” shall mean, at any time, the sum of (a) the aggregate undrawn amount of all Letters of Credit outstanding at such time, plus (b) the aggregate amount of all drawings under Letters of Credit for which an Issuing Bank has not at such time been reimbursed, plus (c) without duplication,
the aggregate amount of all payments made by each Lender to an Issuing Bank with respect to such Lender’s participation in Letters of Credit as provided in Section 2.2 for which Borrowers have not at such time reimbursed the Lenders, whether by way of a Revolving Loan or otherwise.

 

1.115  “Letters of Credit” shall mean all (a) letters of credit (whether documentary or stand-by and whether for the purchase of Inventory, Equipment or otherwise) and banker’s acceptances issued with respect to drafts presented under letters of credit (whether for the purchase of Inventory, Equipment or otherwise),
in each case issued by an Issuing Bank for the account of any Obligor or any Additional L/C Debtor pursuant to this Agreement and the Trade Financing Agreements and all amendments, renewals, extensions or replacements thereof and including, but not limited to, the Existing Letters of Credit and the Additional L/C Accommodations, and (b) any letter of credit which is issued by Parent or a Subsidiary of Parent, which letter of credit has been confirmed by an Issuing Bank.  The term “banker’s
acceptance” as used herein shall refer to a time draft that is an order issued by the beneficiary of a letter of credit as the drawer of the time draft instructing the issuer of the letter of credit as the drawee to pay the amount specified in the time draft that has been accepted by a bank

 

1.116  “License Agreements” shall have the meaning set forth in Section 8.11 hereof.

 

1.117  “Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance (including, but not limited to, easements, rights of way and the like), lien (statutory or other), security agreement or transfer intended as security, including without limitation,
any conditional sale or other title retention agreement, the interest of a lessor under a Capital Lease or any financing lease having substantially the same economic effect as any of the foregoing.

 

1.118  “Liquidity” shall mean, on any date of determination, the amount equal to the sum of (a) Excess Availability, plus (b) Liquidity Cash.

 

1.119  “Liquidity Cash” shall mean unrestricted cash and Cash Equivalents of Obligors which, in each case (a) are subject to the valid, enforceable and first priority perfected security

 

  

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interest of Agent in a deposit account or an investment account and subject to a Deposit Account Control Agreement or an Investment Property Control Agreement, as the case may be, in form and substance satisfactory to Agent, (b) are free and clear of any Liens (other than the first priority security interest and lien in favor of Agent and
liens in favor of the depository bank or securities intermediary where the deposit account or investment account is maintained for its customary fees and charges), (c) are available to Obligors without restriction or condition (other than those imposed by Agent), and (d) are not (i) Qualified Cash(except that on any date of determination of the amount of Liquidity Cash, to the extent the Borrowing Base (prior to giving effect to any Reserves) exceeds the Maximum Credit (prior to giving effect to any Reserves)
(any such excess shall be referred to as “Surplus”) then Qualified Cash not in excess of the Surplus shall be deemed “Liquidity Cash”) or (ii) funds held at Retail Store Subsidiaries or in deposit accounts used by Retail Store Subsidiaries.

 

1.120  “Loans” shall mean, collectively, the Revolving Loans and the Swing Line Loans.

 

1.121  “London Interbank Offered Rate” shall mean, with respect to any Eurodollar Rate Loan for the Interest Period applicable thereto, the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations
comparable to those currently provided on such page of such service, as determined by Agent from time to time for purposes of providing quotations of interest rates applicable to eurodollar deposits in dollars in the London interbank market) at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided, that, if more than one rate is specified on such page for such comparable period, the applicable rate shall
be the arithmetic mean of all such rates.  In the event that such rate is not available at such time for any reason, then the term “London Interbank Offered Rate” shall mean, with respect to any Eurodollar Rate Loan for the Interest Period applicable thereto, the rate of interest per annum at which dollar deposits of $5,000,000 and for a term comparable to such Interest Period are offered by the principal London office of Agent in immediately available funds in the London interbank market
at approximately 11:00 a.m. London time two (2) Business Days prior to the commencement of such Interest Period.

 

1.122  “Material Adverse Effect” shall mean a material adverse effect on (a) the financial condition, business, performance or operations of Obligors, taken as a whole, (b) the Collateral or the value thereof, taken as a whole, or (c) the ability of  Obligors, taken as a whole, to repay the Obligations.

 

1.123  “Material Contract” shall mean (a) any contract or other agreement (other than the Financing Agreements and purchase orders for merchandise), written or oral, of any Obligor  involving monetary liability of or to any Person in an amount in excess of $20,000,000 in any fiscal year and (b) any other contract
or other agreement (other than the Financing Agreements), whether written or oral, to which any Obligor is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto would have a Material Adverse Effect.

 

1.124  “Maximum Credit” shall mean $225,000,000; provided, that, the Maximum Credit may be increased from time to time in accordance with the provisions of Section 2.4 hereof.

 

  

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1.125  “Minimum Frequency” shall mean with respect to the field examinations to be conducted by Agent as provided herein (other than field examinations to be conducted by Agent in connection with a Permitted Acquisition) and the Inventory reports and appraisals to be delivered by Borrowers to Agent as required by Section
7.3(d) hereof: (a) at all times that there are no Revolving Loans outstanding and the outstanding amount of Letter of Credit Obligations is less than $25,000,000, at least one (1) time during each twelve (12) consecutive month period, and (b) at all other times, at least two (2) times during each twelve (12) consecutive month period.

 

1.126  “Monthly Average Excess Availability” shall mean, at any time, the daily average of the amount of Excess Availability for the immediately preceding fiscal month as set forth in the report referred to in Section 9.6(a)(ii) hereof.

 

1.127  “Monthly Average Liquidity” shall mean, at any time, the daily average of the amount of Liquidity for the immediately preceding fiscal month as set forth in the report referred to in Section 9.6(a)(ii) hereof.

 

1.128  “Multiemployer Plan” shall mean a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA which is or was at any time during the current plan year or the immediately preceding six (6) plan years contributed to by any Borrower or any ERISA Affiliate.

 

1.129  “Net Amount of Eligible Credit Card Receivables” shall mean, the gross amount of the Eligible Credit Card Receivables of Obligors after taking into account returns, discounts, claims, credits and allowances of any nature at any time issued, owing, granted, outstanding, available or claimed with respect thereto,
less sales, excise or similar taxes included in the amount thereof.

 

1.130  “Net Amount of Eligible Installment Sales Receivables” shall mean, the gross amount of the Eligible Installment Sales Receivables after taking into account returns, discounts, claims, credits and allowances of any nature at any time issued, owing, granted, outstanding, available or claimed with respect thereto,
less sales, excise or similar taxes included in the amount thereof.

 

1.131  “Net Recovery Cost Percentage” shall mean the fraction, expressed as a percentage, (a) the numerator of which is the amount equal to the recovery on the aggregate amount of the Inventory at such time on a “going out of business sale” basis as set forth in the most recent acceptable appraisal of Inventory
received by Agent in accordance with Section 7.3 hereof, net of operating expenses, liquidation expenses and commissions, and (b) the denominator of which is the original cost of the aggregate amount of the Inventory subject to such appraisal.

 

1.132  “Obligations” shall mean, collectively (a) any and all Loans, Letter of Credit Obligations and all other obligations, liabilities and indebtedness of every kind, nature and description owing by Obligors or Additional L/C Debtors to Agent or any Lender or Issuing Bank, including principal, interest, charges, fees,
costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under this Agreement and the other Financing Agreements or on account of any Letter of Credit and all other Letter of

 

  

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Credit Obligations, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of this Agreement or after the commencement of any case with respect to any or all of Obligors or Additional L/C Debtors under the Bankruptcy Code or any similar statute (including, without limitation, the
payment of interest and other amounts which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured, and (b) for purposes only of Section 5.1 hereof and subject to the priority in right of payment set forth in Section 6.4 hereof, all obligations, liabilities
and indebtedness of every kind, nature and description owing by Obligors to Agent and Bank Product Providers arising under or pursuant to any Bank Products, whether now existing or hereafter arising, provided, that, (i) as to any such obligations, liabilities and indebtedness arising under or pursuant to a Bank Group Hedge Agreement, the same shall only be included within the Obligations
if, upon Agent’s request, Agent shall have entered into an agreement, in form and substance satisfactory to Agent, with the Bank Product Provider that is a counterparty to such Bank Group Hedge Agreement, as acknowledged and agreed to by Obligors, providing for the delivery to Agent by such counterparty of information with respect to the amount of such obligations and providing for the other rights of Agent and such Bank Product Provider in connection with such arrangements, (ii) as to any such obligations,
liabilities and indebtedness arising under or pursuant to a Bank Product (other than a Bank Group Hedge Agreement if Agent has requested the agreement referred to in clause (i) above), the same shall only be included within the Obligations if the Bank Product Provider with respect thereto shall have delivered written notice to Agent that (A) such Bank Product Provider has entered into a transaction to provide Bank Products to an Obligor and (B) the obligations arising pursuant to such Bank Products provided to
Obligors constitute Obligations entitled to the benefits of the security interest of Agent granted hereunder, and Agent shall have accepted such notice in writing (provided, that, no such notice or acceptance shall be required as to such obligations, liabilities and indebtedness arising under or pursuant to a Bank Product provided by or owing to Agent or any of its Affiliates), and (iii) in no event shall any Bank Product Provider acting in such capacity to whom such obligations, liabilities or indebtedness are
owing be deemed a Lender for purposes hereof to the extent of and as to such obligations, liabilities or indebtedness except that each reference to the term “Lender” in Sections 12.1, 12.2, 12.3(b), 12.6, 12.7, 12.9, 12.12 and 13.6 hereof shall be deemed to include such Bank Product Provider and in no event shall the approval of any such person in its capacity as Bank Product Provider be required in connection with the release or termination of any security interest or lien of Agent.

 

1.133  “Obligors” shall mean, collectively, Borrowers and Guarantors; each sometimes being referred to herein individually as an “Obligor”.

 

1.134  “OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.

 

1.135  “Originator” shall mean Spirit of America National Bank and its successors and assigns.

 

1.136  “Originator Accounts” shall mean revolving credit card accounts maintained by the Originator, including accounts that have been written off as uncollectible.

 

  

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1.137  “Other Taxes” shall mean any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any of the other Financing Agreements.

 

1.138  “Over Advance” shall have the meaning set forth in Section 12.8 hereof.

 

1.139  “Participant” shall mean any financial institution that acquires and holds a participation in the interest of any Lender in any of the Revolving Loans and Letters of Credit in conformity with the provisions of Section 13.7 of this Agreement governing participations.

 

1.140  “Permits” shall have the meaning set forth in Section 8.7(c) hereof.

 

1.141  “Permitted Acquisitions” shall have the meaning set forth in Section 9.12 hereof.

 

1.142  “Permitted Liens” shall mean those Liens permitted to be incurred by Obligors in accordance with Section 9.9 hereof.

 

1.143  “Permitted Securitization Transaction” means (a) a transaction in which (i) Receivables, Accounts or other financial assets originated or acquired by any Obligor or Originator are described as being transferred or required to be transferred to one or more Financing Subsidiaries in a manner that is intended to
legally isolate the transferred assets from such Obligor or Originator (such that the transferred assets would not be included in the estate of such Obligor or Originator in any Insolvency Proceeding) and (ii) asset backed certificates or other securities evidencing an interest in, or otherwise backed by, the transferred assets are sold to investors, or (b) a transaction or series of transactions (whether on-balance sheet or off-balance sheet, in the form of a sale, a loan or other transaction) entered into by
any Obligor pursuant to which such Obligor may (directly or indirectly) sell, convey or otherwise transfer to a Financing Subsidiary, or may grant a security interest in, any Securitization Program Assets (whether now existing or arising in the future).

 

1.144  “Person” or “person” shall mean any individual, sole proprietorship, partnership, corporation (including any corporation which elects subchapter S status under the Code), limited liability company, limited liability partnership, business trust, unincorporated association, joint stock corporation, trust,
joint venture or other entity or any government or any agency or instrumentality or political subdivision thereof.

 

1.145  “Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) subject to Title IV of ERISA which any Borrower sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, other than a Multiemployer Plan.

 

1.146  “Prime Rate” shall mean the rate of interest announced, from time to time, within Wells Fargo Bank, National Association, a national banking association, at its principal office in San Francisco or its successors, as its “prime rate”, whether or not such announced rate is the best rate available at
such bank.

 

  

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1.147  “Private Label Credit Cards” shall mean any of the following: (a) the Fashion Bug Card, (b) the Co-Branded Card, (c) the Catherines Card, (d) the Lane Bryant Card, and (e) any other private label credit card issued by Originator, any Financing Subsidiary, or any other Obligor to customers or prospective customers
of any Obligors, in respect of which Parent or any Subsidiary of Parent is either the Credit Card Issuer or Credit Card Processor.

 

1.148  “Proceeds” shall mean all proceeds as defined in the UCC or other applicable law, and all other profits, rentals, or receipts, in whatever form, arising from the collection, sale, lease, or other disposition of, or realization upon, the Collateral, or a specified portion thereof, including, without limitation,
any insurance proceeds with respect thereto.

 

1.149  “Pro Rata Share” shall mean as to any Lender, the fraction (expressed as a percentage) the numerator of which is such Lender’s Commitment and the denominator of which is the aggregate amount of all of the Commitments of Lenders, as adjusted from time to time in accordance with the provisions of  Sections
2.4 and 13.7 hereof; provided, that, if the Commitments have been terminated, the numerator shall be the unpaid amount of such Lender’s Loans and its interest in the Letters of Credit and the denominator shall be the aggregate amount of all unpaid Loans and Letters of Credit.

 

1.150  “Provision for Taxes” shall mean an amount equal to all taxes imposed on or measured by net income, whether Federal, State, Provincial, county or local, and whether foreign or domestic, that are paid or payable by any Person in respect of any period in accordance with GAAP.

 

1.151  “Qualified Cash” shall mean, as of any date of determination,

 

(a) at all times that Revolving Loans are outstanding, cash and Cash Equivalents (having a maturity date or reset period of ninety (90) days or less from the date of determination) of Obligors which are, in each case (i) subject to the valid, enforceable and first priority perfected security interest of Agent in a deposit account or an investment
account at Wells Fargo or any of its Affiliates and subject to a Deposit Account Control Agreement or an Investment Property Control Agreement, as the case may be, in form and substance satisfactory to Agent (which agreement shall not permit withdrawal of such cash and Cash Equivalents by the applicable Obligors unless: (A) Administrative Borrower shall have delivered to Agent an updated Borrowing Base Certificate after giving effect to such withdrawal, (B) Excess Availability shall be at least $40,000,000
at the time of such withdrawal and after giving effect thereto, and (C) as of the making of such withdrawal and after giving effect thereto, no Event of Default shall exist or shall have occurred and be continuing), (ii) free and clear of any Liens (other than the first priority security interest and lien in favor of Agent), and (iii) available to Obligors without restriction or condition (other than those imposed by Agent), and

 

(b) at all times that no Revolving Loans are outstanding, in addition to the cash and Cash Equivalents described in clause (a) of this definition, up to $50,000,000 of cash and Cash Equivalents (having a maturity date or reset period of one (1) year or less from the date of determination) of Obligors which are, in each case (i) subject to
the valid, enforceable and first priority perfected security interest of Agent in a deposit account or an investment account at Wells Fargo or any of its Affiliates and subject to a Deposit Account Control Agreement or an

 

  

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Investment Property Control Agreement, as the case may be, in form and substance satisfactory to Agent (which agreement shall not contain as to such cash and Cash Equivalents described in this clause (b) any restrictions on withdrawal by the applicable Obligors unless, as of the making of any withdrawal and after giving effect thereto, an
Event of Default shall exist or shall have occurred and be continuing), (ii) free and clear of any Liens (other than the first priority security interest and lien in favor of Agent), and (iii) available to Obligors without restriction or condition (other than those imposed by Agent).  In no event shall Qualified Cash be deemed to include funds held at Retail Store Subsidiaries, funds in deposit accounts used by Retail Store Subsidiaries, or funds in deposit accounts used in the cash management system
of Obligors.

 

1.152  “Real Property” shall mean all now owned and hereafter acquired real property of Obligors, including leasehold interests, together with all buildings, structures, and other improvements located thereon and all licenses, easements and appurtenances relating thereto, wherever located.

 

1.153  “Real Property Holding Companies” shall mean, individually and collectively, any direct or indirect Subsidiary of Parent, whether now existing or organized after the date hereof, which is engaged in owning and/or leasing Real Property, provided, that, the term “Real Property Holding Company” shall
not include any Obligor.

 

1.154  “Receivables” shall mean all of the following now owned or hereafter arising or acquired property of each Obligor:  (a) all Accounts; (b) all Credit Card Receivables and all Installment Sales Receivables; (c) all amounts at any time payable to any Obligor in respect of the sale or other disposition by
any Obligor of any Account, other Receivable or other obligation for the payment of money; (d) all interest, fees, late charges, penalties, collection fees and other amounts due or to become due or otherwise payable in connection with any Account, Installment Sales Receivable or any Credit Card Receivables; (e) all letters of credit, indemnities, guarantees, security or other deposits and proceeds thereof issued payable to any Obligor or otherwise in favor of or delivered to any Obligor in connection with any
Account; (f) all payment intangibles of any Obligor and other contract rights, chattel paper, instruments, notes and other forms of obligations owing to any Obligor, whether from the sale and lease of goods or other property, licensing of any property (including Intellectual Property and other general intangibles), rendition of services or from loans or advances by such Obligor to or for the benefit of any third person (including loans or advances to any Affiliates or Subsidiaries of such Obligor) or otherwise
associated with any Accounts, Inventory, other Receivables or general intangibles (including, without limitation, choses in action, causes of action, tax refunds, tax refund claims, any funds which may become payable to any Borrower or Guarantor in connection with the termination of any Plan or other employee benefit plan and any other amounts payable to any Borrower or Guarantor from any Plan or other employee benefit plan, rights and claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, casualty or any similar types of insurance and any proceeds thereof and proceeds of insurance covering the lives of employees on which any Borrower or Guarantor is a beneficiary, bills of lading, warehouse receipts and other documents of title or shipping documents); (g) all monies, securities and other investment property, credit balances, deposits, deposit accounts and other property and the proceeds thereof, now or hereafter held or received or held by, or in transit
to, Agent, any Lender or any of their Affiliates or participants or held or received by any other

 

  

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bank, other financial institution or other person, whether for safekeeping, pledge, custody, transmission, collection or otherwise; (h) all deposits (general or special) and balances at any bank or other financial institution or other person; (i) all right, title and interest in, to and in respect of the foregoing, including, without limitation,
all goods described in invoices, documents, contracts or instruments with respect to, or otherwise representing or evidencing, any of same, including, without limitation, all returned, reclaimed or repossessed Inventory; (j) all right, title and interest, and all enforcement and other rights, remedies, and security and liens, in, to and in respect of any of the foregoing, including, without limitation, rights of stoppage in transit, replevin, repossession, sequestration and reclamation and other rights and remedies
of an unpaid vendor, lienor or secured party, guaranties, or other contracts of suretyship with respect thereto, or deposits or other security for the obligation of any account debtor; and (k) all credit and other insurance with respect to any Receivables or Inventory.

 

1.155  “Records” shall mean all of any Obligor’s present and future books of account of every kind or nature, invoices, ledger cards, bills of lading and other shipping evidence, statements, correspondence, memoranda, credit files and other data relating to the Collateral or any account debtor, together with the
tapes, disks, diskettes and other data and software storage media (including any rights of such Obligor with respect to the foregoing maintained with or by any other person).

 

1.156  “Register” shall have the meaning set forth in Section 13.7 hereof.

 

1.157  “Required Frequency” shall mean the frequency set forth below of the field examinations to be conducted by Agent as provided herein (other than field examinations to be conducted by Agent in connection with a Permitted Acquisition) and the Inventory reports and appraisals to be delivered by Borrowers to Agent
as required by Section 7.3(d) hereof which shall be at the sole cost and expense of Borrowers:

 

	  	
(A)
	
(B)
	
(C)

	  	
 

 

Excess Availability equal to or greater than 50% of the Maximum Credit
	
 

 

Excess Availability less than 50% of the Maximum Credit but equal to or greater than 25% of the Maximum Credit
	
Excess Availability less than 25% of the Maximum Credit or, notwithstanding columns (A) and (B) of this table, the amount of all outstanding and unpaid Obligations (including Revolving Loans and Letter of Credit Obligations) is equal to or greater than $100,000,000

	
Field examinations
	
the Minimum Frequency
	
up to 3 times (at Agent’s discretion) during any consecutive 12 month period
	
up to 4 times (at Agent’s discretion) during any consecutive 12 month period

	
Inventory reports and appraisals
	
the Minimum Frequency
	
up to 3 times (at Agent’s discretion) during any consecutive 12 month period
	
up to 4 times (at Agent’s discretion) during any consecutive 12 month period

  

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1.158  “Required Lenders” shall mean, at any time, those Lenders whose Pro Rata Shares aggregate more than fifty (50%) percent of the aggregate of the Commitments of all Lenders, or if the Commitments shall have been terminated, Lenders to whom more than fifty (50%) percent of the then aggregate amount of all unpaid
Loans and Letter of Credit Obligations are owed.

 

1.159  “Reserves” shall mean as of any date of determination, such amounts as Agent may from time to time establish and revise in good faith, exercising its commercially reasonable business judgment, reducing the amount of Loans and Letters of Credit which would otherwise be available to any Borrower under the lending
formula(s) provided for herein: (a) to reflect events, conditions, contingencies or risks which, as reasonably determined by Agent in good faith, adversely affect, or would have a reasonable likelihood of adversely affecting, either (i) the Collateral or its value, (ii) the assets of Obligors, taken as a whole or (iii) the security interests and other rights of Agent in the Collateral (including the enforceability, perfection and priority thereof) or (b) to reflect Agent’s reasonable and good faith belief
that any collateral report or financial information furnished by or on behalf of any Obligor to Agent is incomplete, inaccurate or misleading in any material respect or (c) to reflect outstanding Letters of Credit as provided in Section 2.2 hereof or (d) in respect of any state of facts which Agent determines in good faith constitutes a Default or an Event of Default.  Without limiting any other rights or remedies of Agent under this Agreement or any of the other Financing Agreements with respect to
the establishment of Reserves in respect of the events, conditions, contingencies or risks set forth in clauses (a) through (d) of the immediately preceding sentence, Agent may establish and revise Reserves to reflect any of the following: (i) an increase in inventory shrinkage over historical levels (but such Reserve shall only be established to the extent that such Inventory shrinkage was not deducted in determining the Value of such Inventory); (ii) an increase in reserves in respect of markdowns over historical
levels to the extent not reflected in the most recent Borrowing Base Certificate delivered to Agent or the most recent appraisal delivered to Agent in accordance with the terms of this Agreement; (iii) cost variances, to the extent such cost variances result in the value of Inventory as set forth in the most recent Borrowing Base Certificate exceeding the Value of Inventory; (iv) the aggregate amount of deposits, if any, received by any Obligor from its retail customers in respect of unfilled orders for merchandise
but only to the extent such Inventory is included in the calculation of the Borrowing Base without deduction for deposits received; (v) amounts past due or to become due (provided, that, so long as no Event of Default has occurred and is continuing, the amount of such Reserve in respect of amounts to become due will not exceed the amount which is to become due over any consecutive three (3) month period) in respect of sales, use and/or withholding taxes to the extent that the dollar amount of Eligible Inventory,
Eligible Credit Card Receivables or Eligible Installment Sales Receivables included in the Borrowing Base has not already been reduced to reflect such amounts; (vi) any past due rental payments, service charges or other amounts to become due to lessors of real property to the extent Inventory or Records needed to monitor or otherwise deal with the Collateral are located in or on such property, other than for any location where either: (A) Agent has received a Collateral Access Agreement executed and delivered
in accordance with the definition thereof or (B) the delivery of a Collateral Access Agreement is not required or was waived by Agent, other than in the case of retail store locations, provided, that, the Reserves established pursuant to this clause (vi) shall not exceed the greater of (1) the rental payments, service charges and other amounts past due or (2) the rental payments, service
charges and other amounts payable for the next three (3) months, to the lessors of such locations located in those States where any right of

 

  

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the lessor to Collateral may have priority over the Lien of Agent (Borrowers acknowledge that Agent is not establishing a Reserve in respect of retail stores on the date hereof and that Agent retains the right to establish such Reserves in its good faith judgment except, that, in the event that the aggregate amount of Revolving Loans and Letter
of Credit Obligations at any time exceeds the amount equal to fifty (50%) percent of the Maximum Credit, Agent shall establish such a Reserve); (vii) amounts owing by Obligors to Credit Card Issuers or Credit Card Processors in connection with the Credit Card Agreements to the extent not already deducted in the determination of Eligible Credit Card Receivables; (viii) increase in the number of days of the turnover of Inventory or a deterioration in its nature, quality or mix (but only to the extent not addressed
by the lending formulas in a manner reasonably satisfactory to Agent); (ix) variances between the perpetual inventory records of Borrowers and the results of the test counts of Inventory conducted by Agent with respect thereto in excess of the percentage acceptable to Agent, (x) to reflect the amount of duty, freight, and taxes arising in connection with imported goods other than as already reserved for pursuant to this definition, (xi) to reflect the amount of any Lien in accordance with Section 9.9(b) hereof,
(xii) to reflect the obligations, liabilities or indebtedness of Obligors in respect of gift cards issued to or for the benefit of customers of Obligors, (xiii) to reflect that a judgment described in Section 9.9(j) hereof has been entered against an Obligor (for which Administrative Borrower has not either (A) delivered a writing to Agent that the applicable insurer has assumed responsibility for such judgment or (B) certified in writing to Agent that such judgment is covered by insurance) which would result
in a Lien in respect of the Collateral that would have priority over the Lien of the Agent in such Collateral, provided, that, such Reserve shall in no event exceed the lesser of (1) the amount any Obligor would be required to pay to satisfy such judgment (net of any insurance applicable thereto) or  (2) the value of any Collateral subject to the Lien of such judgment, (xiv) to reflect that dilution with respect to the Credit Card Receivables (based on the ratio of the aggregate amount of non-cash reductions
in Credit Card Receivables for any period to the aggregate dollar amount of the sales of Obligors giving rise to Credit Card Receivables for such period) as calculated by Agent for any period is or is reasonably anticipated to be greater than five (5%) percent, (xv) obligations, liabilities or indebtedness (contingent or otherwise) of Obligors to Agent or any Bank Product Provider arising under or in connection with any Bank Products (other than cash management or related services) as such Bank Product Provider
may require in connection therewith to the extent that such obligations, liabilities or indebtedness constitute Obligations as such term is defined herein and receive the benefit of the security interest of Agent in any Collateral, and (xvi) reserves in respect of Eligible In-Transit Inventory, including freight, taxes, duty and other amounts which Agent estimates must be paid in connection with such Inventory upon arrival and for delivery to one of an Obligor’s locations for Eligible Inventory within the
United States of America.  The amount of any Reserve established by Agent shall have a reasonable and direct relationship to the event, condition or other matter which is the basis for such Reserve as determined by Agent in good faith and Agent may, at its option, deduct such Reserve from the Maximum Credit, at any time that such limit is less than the amount of the Borrowing Base.  Agent shall not establish or increase Reserves for any event or condition already factored into the calculation
of the relevant Net Recovery Cost Percentage, Net Amount of Eligible Credit Card Receivables or Net Amount of Eligible Installment Sales Receivables or for Inventory or Receivables that have been deemed ineligible by Agent.  Agent shall not establish Reserves (excluding reserves for Letters of Credit as provided in Section 2.2 hereof and Reserves in effect on the date hereof) or increase the amount of such Reserves after the date

 

  

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hereof and Agent shall have prior to the establishment or increase of such Reserve explained to Administrative Borrower the nature and amount of the Reserve.  Agent may increase a Reserve and shall reduce or eliminate a Reserve if the event or condition giving rise to such Reserve shall warrant, as Agent may reasonably and in good
faith determine.

 

1.160           “Restricted Payment” shall mean (a) any dividend or other distribution, direct or indirect, on account of any shares of any class of Capital Stock of  Parent or any other Obligor, as the case may be, now or hereafter outstanding, except a dividend
payable solely in shares of Capital Stock of Parent or such other Obligor, as the case may be; (b) any redemption, retirement, purchase or other acquisition, direct or indirect, of any shares of any class of Capital Stock of Parent or any other Obligor, as the case may be, now or hereafter outstanding, or of any warrants, rights or options to acquire any such shares or interests, except to the extent that the consideration therefor consists solely of shares of Capital Stock of Parent or such other Obligor; or
(c) any sinking fund, other prepayment or installment payment on account of any Capital Stock of Parent or any other Obligor.

 

1.161  “Retail Sales Price” shall mean the current ticketed sales price in the Retail Stores, net of markdowns from the original retail sales price with respect thereto, for the types, categories and styles of Inventory included in the Eligible Inventory of Obligors.

 

1.162  “Retail Stores” shall mean the retail stores which are now or hereafter operated by Obligors and which sell Inventory.

 

1.163  “Retail Store Subsidiary” shall mean an Obligor which now or hereafter owns a Retail Store or which is now existing or hereafter organized to operate a Retail Store in the future but shall not include any Inactive Subsidiaries.

 

1.164  “Revolving Loans” shall mean the loans now or hereafter made by or on behalf of any Lender or by Agent for the ratable account of any Lender on a revolving basis pursuant to the Credit Facility (involving advances, repayments and readvances) as set forth in Section 2.1(a)(i) hereof.

 

1.165  “Sanctioned Entity” shall mean (a) an agency of the government of, (b) an organization directly or indirectly controlled by, or (c) a person resident in, a country that is subject to a sanctions program identified on the list maintained and published by OFAC and available at http://www.treas.gov/offices/enforcement/ofac/programs,
or as otherwise published from time to time as such program may be applicable to such agency, organization or person.

 

1.166  “Sanctioned Person” shall mean a person named on the list of Specially Designated Nationals or Blocked Persons maintained by OFAC available at http://www.treas.gov/offices/enforcement/ofac/sdn/index.html, or as otherwise published from time to time.

 

1.167  “Secured Parties” shall mean, collectively, (a) Agent, (b) Lenders, (c) Issuing Banks and (d) any Bank Product Providers (only to the extent of the Obligations owing to such Bank Product Provider); sometimes referred to herein individually as a “Secured Party”.

 

  

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1.168  “Securitization Documents” means (a) a receivables purchase agreement, pooling and servicing agreement, credit agreement, agreements to acquire undivided interests or other agreement to transfer, or create a security interest in, Securitization Program Assets, in each case as amended, modified, supplemented or
restated and in effect from time to time entered into by any Obligor or any Financing Subsidiary, and (b) each other instrument, agreement and other document entered into by any Obligor or any Financing Subsidiary relating to the transactions contemplated by the agreements referred to in clause (a) above, and (c) each CS Securitization Undertaking made by CS Delaware or Parent, in each case as amended, modified, supplemented or restated and in effect from time to time.

 

1.169  “Securitization Program Assets” means (a) all Securitized Receivables, (b) all Securitization Related Assets, and (c) all collections (including recoveries) and other proceeds of the assets described in the foregoing clauses.

 

1.170  “Securitized Receivables” means all Receivables (including rights to payment) described in any Securitization Documents as being transferred or required to be transferred by any Obligor or Originator to any Financing Subsidiary, but such Receivables shall not include Installment Sales Receivables.

 

1.171  “Securitization Related Assets” means (a) any rights, remedies, powers and privileges with respect to the Securitized Receivables (including rights in respect of Liens securing such Securitized Receivables and other credit support in respect of such Securitized Receivables), (b) all funds received from or on behalf
of the obligors thereon, or applied to amounts owed by such obligors (including without limitation insurance payments and proceeds of sale or other disposition of Securitized Receivables), (c) all contracts, books and records that relate to the Securitized Receivables, (d) any proceeds of such Securitized Receivables and any lockboxes or accounts in which such proceeds are deposited, (e) any spread accounts of the Financing Subsidiaries or Special Purpose Vehicles or any other similar account (or deposits therein)
established in connection with a Permitted Securitization Transaction, (f) any warranty, indemnity, dilution and other intercompany claim arising out of Securitization Documents, and (g) other assets of Originators which are transferred or in respect of which Liens are customarily granted in connection with asset securitization transactions involving accounts receivable; provided, that, the Securitization Related Assets shall not include any returned, repossessed or foreclosed goods and/or merchandise the sale
of which by any Obligor gave rise to a Securitized Receivable that constitutes a Securitization Related Asset.

 

1.172  “Special Agent Advances” shall have the meaning set forth in Section 12.11 hereof.

 

1.173  “Special Purpose Vehicle” shall mean a trust, partnership or other special purpose Person established by an Excluded Subsidiary or Parent in a manner that intended to legally isolate the assets of such Person from the Parent and its Subsidiaries as a consolidated group, to implement a Permitted Securitization
Transaction.

 

1.174  “Subsidiary” or “subsidiary” shall mean, with respect to any Person, any corporation, limited liability company, limited liability partnership or other limited or general partnership, trust, association or other business entity of which an aggregate of at least a majority

 

  

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of the outstanding Capital Stock or other interests entitled to vote in the election of the board of directors of such corporation (irrespective of whether, at the time, Capital Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency), managers, trustees or
other controlling persons, or an equivalent controlling interest therein, of such Person is, at the time, directly or indirectly, owned by such Person and/or one or more subsidiaries of such Person.

 

1.175  “Supermajority Lenders” shall mean, at any time, those Lenders whose Pro Rata Shares aggregate more than sixty-six and two-thirds (662⁄3%) percent of the aggregate of the Commitments of all Lenders, or if the Commitments shall have been terminated, Lenders to whom more than sixty-six and two-thirds (662⁄3%)
percent of the aggregate amount of all unpaid Loans and Letter of Credit Obligations are owed.

 

1.176  “Swing Line Lender” shall mean Wells Fargo Retail Finance, LLC, in its capacity as lender of Swing Line Loans.

 

1.177  “Swing Line Loan Limit” shall mean $30,000,000.

 

1.178  “Swing Line Loans” shall have the meaning set forth in Section 2.1(a)(ii) hereof.

 

1.179  “Taxes” shall mean any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of any Lender, such taxes (including income taxes, franchise taxes or capital taxes) as are imposed on or measured by such Lender’
s net or gross income or capital by any jurisdiction (or any political subdivision thereof).

 

1.180  “Termination Date” shall have the meaning set forth in Section 13.1 hereof.

 

1.181  “Trade Financing Agreements” shall mean, individually and collectively the following (as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced), (a) the Trade Financing Agreement [Security Agreement,] dated as of August 16, 2001, by and among the Additional
L/C Debtors (other than CS Insurance Limited) and Agent; (b) the Letter of Credit Reimbursement Agreement, dated as of August 16, 2001, by and between CS Insurance Ltd. and Agent; and (c) all other agreements, documents and instruments executed in connection with the foregoing.

 

1.182  “UCC” shall mean the Uniform Commercial Code as in effect in the State of New York, and any successor statute, together with any regulations thereunder, in each case as in effect from time to time (except that terms used herein which are defined in the Uniform Commercial Code as in effect in the State of New York
on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute).  References to sections of the UCC shall be construed to also refer to any successor sections.

 

1.183  “US Subsidiary” means a Subsidiary which is a corporation now existing or hereafter organized under the laws of the United States of America or of any state of the United States of America, the District of Columbia or Puerto Rico, except that such term shall not include the Excluded Subsidiaries.

 

  

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1.184  “Value” shall mean the lower of (a) cost or (b) market value, provided, that, for purposes of the calculation of the Borrowing Base, the Value of the Inventory shall not include: (i) the portion of the Value of Inventory equal to the profit earned by any Affiliate on the sale thereof to an Obligor or (ii) write
ups or write downs in value with respect to currency exchange rates.  Notwithstanding anything to the contrary contained herein, the cost of the Inventory shall be determined in the same manner and consistent with the most recent appraisal of the Inventory conducted in accordance with Section 7.2 hereof and received by Agent prior to the date of determination.

 

1.185  “Voluntary Proceeding” shall have the meaning set forth in Section 10.1(h) hereof.

 

1.186  “Voting Stock” shall mean with respect to any Person, (a) one (1) or more classes of Capital Stock of such Person having general voting powers to elect at least a majority of the board of directors, managers or trustees of such Person, irrespective of whether at the time Capital Stock of any other class or classes
have or might have voting power by reason of the happening of any contingency, and (b) any Capital Stock of such Person convertible or exchangeable without restriction at the option of the holder thereof into Capital Stock of such Person described in clause (a) of this definition.

 

1.187  “Wachovia” shall mean Wachovia Bank, National Association, a national banking association, in its individual capacity, and its successors and assigns.

 

1.188  “Wells Fargo” shall mean Wells Fargo Retail Finance, LLC, a Delaware limited liability company, in its individual capacity, and its successors and assigns.

 

1.189  “WFS” shall mean Wells Fargo Securities, LLC, formerly known as Wachovia Capital Markets LLC, and its Affiliates, successors and assigns.

 

SECTION 2. CREDIT FACILITIES

 

2.1 Loans.

 

(a) Subject to and upon the terms and conditions contained herein,

 

(i) each Lender severally (and not jointly) agrees to fund its Pro Rata Share of Revolving Loans to Borrowers from time to time in amounts requested by Borrowers up to the amount outstanding at any time equal to the lesser of: (A) the
Borrowing Base at such time or (B) the Maximum Credit.

 

(ii) Swing Line Lender agrees that it will make loans (“Swing Line Loans”) to the Administrative Borrower for the account of the applicable Borrower equal to the principal amount of the Swing Line Loan requested by any Borrower
(or Administrative Borrower on behalf of a Borrower) to be made on such day, provided, that, the aggregate principal amount of the Revolving Loans, Swing Line Loans and Letter of Credit Obligations outstanding with respect to all Borrowers at any one time shall not exceed the lesser of (A) the Borrowing Base at such time or (B) the Maximum Credit and the aggregate principal amount
of

 

  

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the Swing Line Loans outstanding to all Borrowers at any one time shall not exceed the Swing Line Loan Limit.

 

(b) On the terms and subject to the conditions hereof, each Borrower may from time to time borrow, prepay and reborrow Revolving Loans and Swing Line Loans.  No Lender shall be required to make any Revolving Loan, if, after
giving effect thereto the aggregate outstanding principal amount of all Revolving Loans of such Lender, together with such Lender’s Pro Rata Share of the aggregate amount of all Swing Line Loans and Letter of Credit Obligations, would exceed such Lender’s Commitment.  Swing Line Lender shall not be required to make Swing Line Loans: (i) if, after giving effect thereto, either (A) the aggregate outstanding principal amount of all Swing Line Loans would exceed the then existing Swing Line
Loan Limit or (B) the aggregate outstanding principal amount of all Revolving Loans, together with the aggregate amount of all Swing Line Loans and Letter of Credit Obligations, would exceed the lesser of (1) the Borrowing Base or (2) the Maximum Credit and (ii) at any time when any Lender is at such time a Defaulting Lender or a Deteriorating Lender, unless Swing Line Lender has entered into satisfactory arrangements with Borrowers and/or such Lender with respect to such Defaulting Lender or Deteriorating Lender,
as the case may be.  Each Swing Line Loan shall be subject to all of the terms and conditions applicable to other Base Rate Loans funded by the Lenders, except that all payments thereon shall be payable to the Swing Line Lender solely for its own account.  All Revolving Loans and Swing Line Loans shall be subject to the settlement among Lenders provided for in Section 6.10 hereof.

 

(c) Upon the making of a Swing Line Loan or a Special Agent Advance (whether before or after the occurrence of a Default or Event of Default) or any Loan by Agent as provided in Section 6.10 hereof, without further action by any party
hereto, each Lender shall be deemed to have irrevocably and unconditionally purchased and received from the Swing Line Lender or Agent, without recourse or warranty, an undivided interest and participation to the extent of such Lender’s Pro Rata Share in such Swing Line Loan, Special Agent Advance or other Loan.  To the extent that there is no settlement in accordance with Section 6.10 below, the Swing Line Lender or Agent, as the case may be, may at any time, require the Lenders to fund their
participations.  From and after the date, if any, on which any Lender is required to fund its participation in any Swing Line Loan, Special Agent Advance or other Loan, Agent shall promptly distribute to such Lender, such Lender’s Pro Rata Share of all payments of principal and interest received by Agent in respect of such Swing Line Loan or Special Agent Advance

 

(d) Except in Agent’s discretion, with the consent of all Lenders, or as otherwise provided herein, the aggregate amount of the Loans and the Letter of Credit Obligations outstanding at any time shall not exceed the lesser of the
Borrowing Base or the Maximum Credit.

 

(e) In the event that the aggregate amount of the Loans and the Letter of Credit Obligations outstanding at any time exceeds the lesser of the Borrowing Base or the Maximum Credit, such event shall not limit, waive or otherwise affect
any rights of Agent or Lenders in such circumstances or on any future occasions and Borrowers shall, upon demand by Agent, which may be made at any time or from time to time, immediately repay to Agent the entire amount of any such excess(es) for which payment is demanded.

 

  

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2.2 Letters of Credit.

 

(a) Subject to and upon the terms and conditions contained herein and in the Letter of Credit Documents, at the request of a Borrower (or Administrative Borrower on behalf of any Obligor or Additional L/C Debtor), Agent agrees to cause
an Issuing Bank to issue, and each such Issuing Bank agrees to issue, for the account of such Obligor or Additional L/C Debtor one or more Letters of Credit, for the ratable risk of each Lender according to its Pro Rata Share, containing terms and conditions reasonably acceptable to Agent and such Issuing Bank.

 

(b) The Borrower (or Administrative Borrower on behalf of such Borrower) or Additional L/C Debtor requesting such Letter of Credit shall give Agent and the applicable Issuing Bank two (2) Business Days’ prior written notice of such
Borrower’s or Additional LC Debtor’s request for the issuance of a Letter of Credit.  Such notice shall be irrevocable and shall specify the original face amount of the Letter of Credit requested, the effective date (which date shall be a Business Day and in no event shall be a date less than ten (10) days prior to the end of the then current term of this Agreement) of issuance of such requested Letter of Credit, whether such Letter of Credit may be drawn in a single or in partial draws,
the date on which such requested Letter of Credit is to expire (which date shall be a Business Day and shall not be more than one year from the date of issuance), the purpose for which such Letter of Credit is to be issued, and the beneficiary of the requested Letter of Credit.  The Borrower or Additional L/C Debtor requesting the Letter of Credit (or Administrative Borrower on behalf of such Borrower) shall attach to such notice the proposed terms of the Letter of Credit.  The renewal or
extension of any Letter of Credit shall, for purposes hereof be treated in all respects the same as the issuance of a new Letter of Credit hereunder.  Any Issuing Bank (other than Wachovia) shall notify Agent in writing on each Business Day of all Letters of Credit issued on the prior Business Day by such Issuing Bank unless otherwise agreed to by Agent and such Issuing Bank.

 

(c) In addition to being subject to the satisfaction of the applicable conditions precedent contained in Section 4 hereof and the other terms and conditions contained herein, no Letter of Credit shall be available unless each of the following
conditions precedent have been satisfied in a manner reasonably satisfactory to Agent: (i) the Borrower (or Administrative Borrower on behalf of such Borrower) or Additional L/C Debtor requesting such Letter of Credit shall have delivered to the applicable Issuing Bank at such times and in such manner as such Issuing Bank may require, an application, in form and substance reasonably satisfactory to such Issuing Bank and Agent, for the issuance of the Letter of Credit and such other Letter of Credit Documents
as may be required pursuant to the terms thereof, and the form and terms of the proposed Letter of Credit shall be reasonably satisfactory to Agent and such Issuing Bank, (ii) as of the date of issuance, no order of any court, arbitrator or other Governmental Authority shall by its terms enjoin or restrain money center banks generally from issuing letters of credit of the type and in the amount of the proposed Letter of Credit, and no law, rule or regulation applicable to money center banks generally and no request
or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over money center banks generally shall prohibit the issuance of letters of credit generally or request that such Issuing Bank refrain from the issuance of letters of credit generally or the issuance of the proposed Letter of Credit, (iii) after giving effect to the issuance of such Letter of Credit, the Letter of Credit Obligations shall not exceed the Letter of Credit Limit, (iv) Excess Availability, prior
to giving effect to any

 

  

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Reserves with respect to such Letter of Credit, on the date of the proposed issuance of any Letter of Credit, shall be equal to or greater than: (A) if the proposed Letter of Credit is for the purpose of purchasing Eligible L/C Inventory, the sum of (1) one hundred (100%) percent of the Value of such Eligible Inventory, plus (2) freight, taxes,
duty and other amounts which Agent estimates must be paid in connection with such Inventory upon arrival and for delivery to one of any Obligor’s locations for Eligible Inventory within the United States of America and (B) if the proposed Letter of Credit is for any other purpose and the conditions contained in the definition of Eligible L/C Inventory are not satisfied, an amount equal to one hundred (100%) percent of the Letter of Credit Obligations with respect thereto, and (v) no Lender is at such time
a Defaulting Lender or Deteriorating Lender, unless the applicable Issuing Bank has entered into satisfactory arrangements with Borrowers and/or such Lender with respect to such Defaulting Lender or Deteriorating Lender, as the case may be.  Effective on the issuance of each Letter of Credit, a Reserve shall be established in the applicable amount set forth in Section 2.2(c)(iv)(A) or Section 2.2(c)(iv)(B) above.

 

(d) Except in Agent’s discretion, with the consent of all Lenders, the amount of all outstanding Letter of Credit Obligations shall not at any time exceed the Letter of Credit Limit.

 

(e) Each Borrower shall reimburse the applicable Issuing Bank immediately for any draw under any Letter of Credit issued by such Issuing Bank for the account of such Borrower by such Issuing Bank and pay each Issuing Bank the amount of
all other charges and fees payable to such Issuing Bank in connection with any Letter of Credit issued for the account of such Borrower immediately, irrespective of any claim, setoff, defense or other right which such Borrower may have at any time against any Issuing Bank or any other Person.  Each drawing under any Letter of Credit or other amount payable in connection therewith when due shall constitute a request by the Borrower for whose account such Letter of Credit was issued to Agent for a Swing
Line Loan in the amount of such drawing or other amount then due, and shall be made by Agent on behalf of Lenders as a Swing Line Loan (or Special Agent Advance, as the case may be) provided, however, that in the event the amount of such drawing or other amount then due exceeds the amount available to be drawn as Swing Line Loans, such request shall be deemed to be a request for a Revolving Loan which is a Base Rate Loan. The date of such Swing Line Loan or Base Rate Loan, as the case may be, shall be the date
of the drawing or as to other amounts, the due date therefor.  Any payments made by or on behalf of Agent or any Lender to an Issuing Bank and/or related parties in connection with any Letter of Credit shall constitute additional Swing Line Loans or Revolving Loans to such Borrower pursuant to this Section 2 (or Special Agent Advances as the case may be).

 

(f) Borrowers shall indemnify and hold Agent and Lenders harmless from and against any and all losses, claims, damages, liabilities, costs and expenses which Agent or any Lender may suffer or incur in connection with any Letter of Credit
and any documents, drafts or acceptances relating thereto, including any losses, claims, damages, liabilities, costs and expenses due to any action taken by an Issuing Bank or correspondent with respect to any Letter of Credit, except for such losses, claims, damages, liabilities, costs or expenses that are a direct result of the gross negligence or willful misconduct of Agent  as determined pursuant to a final non-appealable order of a court of competent jurisdiction.  Borrowers assume all
risks with

 

  

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respect to the acts or omissions of the drawer under or beneficiary of any Letter of Credit and, for such purposes only, the drawer or beneficiary shall be deemed Borrower’s agent.  Borrowers assume all risks for, and agrees to pay, all foreign, Federal, State and local taxes, duties and levies relating to any goods subject
to any Letter of Credit or any documents, drafts or acceptances thereunder.  Borrowers hereby release and hold Agent and Lenders harmless from and against any acts, waivers, errors, delays or omissions, whether caused by Borrowers, by any issuer or correspondent or otherwise with respect to or relating to any Letter of Credit, except for the gross negligence or willful misconduct of Agent as determined pursuant to a final, non-appealable order of a court of competent jurisdiction.  The provisions
of this Section 2.2(f) shall survive the payment of Obligations and the termination of this Agreement.

 

(g) In connection with Inventory purchased pursuant to any Letter of Credit, Borrowers shall, upon the occurrence and during the continuance of an Event of Default, at Agent’s request, instruct all suppliers, carriers, forwarders,
customs brokers, warehouses or others receiving or holding cash, checks, Inventory, documents or instruments in which Agent holds a security interest to deliver them to Agent and/or subject to Agent’s order, and if they shall come into Borrower’s possession, to deliver them, upon Agent’s request, to Agent in their original form.  Borrowers shall also, upon the occurrence and during the continuance of an Event of Default, at Agent’s request, designate the applicable Issuing Bank
as the consignee on all bills of lading and other negotiable and non-negotiable documents.

 

(h) Borrowers hereby irrevocably authorize and direct each Issuing Bank to name such Borrower as the account party therein and to deliver to Agent all instruments, documents and other writings and property received by such Issuing Bank
pursuant to the Letter of Credit and to accept and rely upon Agent’s instructions and agreements with respect to all matters arising in connection with the Letter of Credit or the Letter of Credit Documents with respect thereto.  Nothing contained herein shall be deemed or construed to grant any Obligor any right or authority to pledge the credit of Agent or any Lender in any manner.  Agent and Lenders shall have no liability of any kind with respect to any Letter of Credit provided
by an issuer other than Agent or any Lender, as specifically set forth in this Agreement unless Agent has duly executed and delivered to such issuer the application or a guarantee or indemnification in writing with respect to such Letter of Credit.  Borrowers shall be bound by any reasonable interpretation made in good faith by Agent, or an Issuing Bank under or in connection with any Letter of Credit or any documents, drafts or acceptances thereunder, notwithstanding that such interpretation may be
inconsistent with any instructions of Borrowers, any Additional L/C Debtor or Administrative Borrower.  Agent shall have the sole and exclusive right and authority to, and Borrowers, any Additional L/C Debtor or Administrative Borrower shall not: (i) at any time an Event of Default has occurred and is continuing, (A) approve or resolve any questions of non-compliance of documents, (B) give any instructions as to acceptance or rejection of any documents or goods or (C) execute any and all applications
for steamship or airway guaranties, indemnities or delivery orders, and (ii) at all times, (A) grant any extensions of the maturity of, time of payment for, or time of presentation of, any drafts, acceptances, or documents, and (B) agree to any amendments, renewals, extensions, modifications, changes or cancellations of any of the terms or conditions of any of the applications, Letters of Credit, or documents, drafts or acceptances thereunder or any letters of credit included in the Collateral except (unless
an Event of Default or a condition or event which, with notice or the passage of time or both, would constitute an Event of Default has

 

  

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occurred and is continuing), Borrowers and Additional L/C Debtors may waive discrepancies in the presentation of documents required for payment under any Letters of Credit other than for the required presentation or delivery of a bill of lading or cargo receipt or other transport document with respect to Eligible Inventory thereunder.  Agent
may take such actions either in its own name or in the name of any Borrower, any Additional L/C Debtor or Administrative Borrower.

 

(i) Any rights, remedies, duties or obligations granted or undertaken by Borrowers to any issuer or correspondent in any application for any Letter of Credit Accommodation, or any other agreement in favor of any issuer or correspondent
relating to any Letter of Credit, shall be deemed to have been granted or undertaken by Borrowers and Additional L/C Debtors to Agent for the ratable benefit of Lenders.  Any duties or obligations undertaken by Agent to any issuer or correspondent in any application for any Letter of Credit, or any other agreement by Agent in favor of any issuer or correspondent relating to any Letter of Credit, shall be deemed to have been undertaken by Borrowers to Agent for the ratable benefit of Lenders and to apply
in all respects to Borrowers.

 

(j) Immediately upon the issuance or amendment of any Letter of Credit, each Lender shall be deemed to have irrevocably and unconditionally purchased and received, without recourse or warranty, an undivided interest and participation
to the extent of such Lender’s Pro Rata Share of the liability with respect to such Letter of Credit and the obligations of Borrowers with respect thereto (including all Letter of Credit Obligations with respect thereto).  Each Lender shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety, and be obligated to pay to such Issuing Bank therefor and discharge when due, its Pro Rata Share of all of such obligations arising under such Letter of Credit.  Without
limiting the scope and nature of each Lender’s participation in any Letter of Credit, to the extent that an Issuing Bank has not been reimbursed or otherwise paid as required hereunder or under any such Letter of Credit, each such Lender shall pay to such Issuing Bank its Pro Rata Share of such unreimbursed drawing or other amounts then due to such Issuing Bank in connection therewith.

 

(k) The obligations of Borrowers to pay each Letter of Credit Obligations and the obligations of Lenders to make payments to Agent for the account of an Issuing Bank with respect to Letters of Credit shall be absolute, unconditional and
irrevocable and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances, whatsoever, notwithstanding the occurrence or continuance of any Default, Event of Default, the failure to satisfy any other condition set forth in Section 4 or any other event or circumstance.  If such amount is not made available by a Lender when due, Agent shall be entitled to recover such amount on demand from such Lender with interest thereon, for each day from the date such
amount was due until the date such amount is paid to Agent at the interest rate then payable by any Borrower in respect of Loans that are Base Rate Loans.  Any such reimbursement shall not relieve or otherwise impair the obligation of Borrowers to reimburse an Issuing Bank under any Letter of Credit or make any other payment in connection therewith.

 

(l) The Borrower (or Administrative Borrower on behalf of such Borrower) with respect to any banker’s acceptance may, at its option, provide Agent, for itself and the benefit of the applicable Issuing Bank and Lenders, with cash
collateral in an amount equal to one hundred (100%) percent of the face amount of the banker’s acceptance so requested, provided, that, (i) such cash collateral shall be held in one or more investment accounts (the

 

  

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“Banker’s Acceptance Cash Collateral Accounts”) maintained at such securities intermediary reasonably acceptable to Agent, and (ii) Agent shall have received, in form and substance reasonably satisfactory to Agent, an Investment Property Control Agreement among Agent, the applicable Obligor and such securities intermediary
with respect to the Banker’s Acceptance Cash Collateral Accounts, duly executed and delivered by such Obligor and such securities intermediary.  Borrowers and Guarantors hereby pledge and grant to Agent, for itself and the benefit of the applicable Issuing Bank and Lenders, a security interest in all cash and Cash Equivalents held in the Banker’s Acceptance Cash Collateral Accounts from time to time and all proceeds thereof as security for the payment of all Obligations including without
limitation all Letter of Credit Obligations in respect of banker’s acceptances, whether or not then due.  So long as no Cash Dominion Event has occurred and is continuing: (A) any funds in the Banker’s Acceptance Cash Collateral Accounts shall be applied to the Letter of Credit Obligations in respect of banker’s acceptances then due and owing as such banker’s acceptances come due, unless otherwise directed by Administrative Borrower, and (B) any funds in the Banker’s
Acceptance Cash Collateral Accounts shall be paid to Administrative Borrower or any other Person at Administrative Borrower’s request.

 

2.3 Joint and Several Liability.

 

Borrowers shall be liable for all amounts due to Agent, Issuing Banks and Lenders under this Agreement, regardless of which Borrower actually receives the Loans, Letters of Credit or other extensions of credit hereunder or the amount of such Loans received or the manner in which Agent accounts for such Loans, Letters of Credit or other extensions
of credit on its books and records.  The Obligations with respect to Loans and Letters of Credit or other extensions of credit made to a Borrower, and the Obligations arising as a result of the joint and several liability of a Borrower hereunder, with respect to Loans and Letters of Credit or other extensions of credit made to the other Borrowers hereunder, shall be separate and distinct obligations, but all such Obligations shall be primary obligations of all Borrowers.  The Obligations arising
as a result of the joint and several liability of a Borrower hereunder with respect to Loans, Letters of Credit or other extensions of credit made to the other Borrowers hereunder shall, to the fullest extent permitted by law, be unconditional irrespective of (a) the validity or enforceability, avoidance or subordination of the Obligations of the other Borrowers or of any promissory note or other document evidencing all or any part of the Obligations of the other Borrowers, (b) the absence of any attempt to collect
the Obligations from the other Borrowers, any Guarantor or any other security therefor, or the absence of any other action to enforce the same, (c) the waiver, consent, extension, forbearance or granting of any indulgence by Agent with respect to any provisions of any instrument evidencing the Obligations of the other Borrowers, or any part thereof, or any other agreement now or hereafter executed by the other Borrowers and Guarantors and delivered to Agent, (d) the failure by Agent to take any steps to perfect
and maintain its security interest in, or to preserve its rights and maintain its security or collateral for the Obligations of the other Borrowers and Guarantors, (e) the election of Agent in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code, (f) the disallowance of all or any portion of the claim(s) of Agent for the repayment of the Obligations of the other Borrowers and Guarantors under Section 502 of the Bankruptcy Code, or (g) any other circumstances
which might constitute a legal or equitable discharge or defense of any Obligor, other than the willful misconduct or gross negligence of Agent, any Issuing Bank or

 

  

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Lenders as determined pursuant to a final, non-appealable order of a court of competent jurisdiction.  With respect to the Obligations arising as a result of the joint and several liability of a Borrower hereunder with respect to Loans, Letters of Credit or other extensions of credit made to the other Borrowers hereunder, each Borrower
and Guarantor waives, until the Obligations shall have been paid in full in immediately available funds and this Agreement shall have been terminated, any right to enforce any right of subrogation or any remedy which Agent now has or may hereafter have against Borrowers and Guarantors, any endorser or any guarantor of all or any part of the Obligations, and any benefit of, and any right to participate in, any security or collateral given to Agent.  Upon any Event of Default and for so long as the same
is continuing, Agent may proceed directly and at once, without notice, against any Borrower or Guarantor to collect and recover the full amount, or any portion of the Obligations, without first proceeding against the other Borrowers or any other Person, or against any security or collateral for the Obligations.  Each Borrower and Guarantor consents and agrees that Agent and Lenders shall be under no obligation to marshal any assets in favor of Borrower(s) or Guarantors against or in payment of any or
all of the Obligations.

 

2.4 Increase in the Maximum Credit.

 

(a) Administrative Borrower may, at any time, deliver a written request to Agent to increase the Maximum Credit.  Any such written request shall specify the amount of the increase in the Maximum Credit that Borrowers are requesting, provided, that,
(i) in no event shall the aggregate amount of any such increase in the Maximum Credit cause the Maximum Credit to exceed $300,000,000, (ii) such request shall be for an increase of not less than $25,000,000, (iii) any such request shall be irrevocable, and (iv) in no event shall more than one such written request be delivered to Agent in any calendar quarter.

 

(b) Upon the receipt by Agent of any such written request, Agent shall notify each of the Lenders of such request and each Lender shall have the option (but not the obligation) to increase the amount of its Commitment by an amount up
to its Pro Rata Share of the amount of the increase in the Maximum Credit requested by Administrative Borrower as set forth in the notice from Agent to such Lender.  Each Lender shall notify Agent within fifteen (15) days after the receipt of such notice from Agent whether it is willing to so increase its Commitment, and if so, the amount of such increase; provided, that,
the minimum increase in the Commitments of each such Lender providing the additional Commitments shall equal or exceed $2,000,000.  If the aggregate amount of the increases in the Commitments received from the Lenders equals the amount of the increase in the Maximum Credit requested by Administrative Borrower, such increase shall be effective on the date five (5) Business Days after each of the conditions set forth in Section 2.4(c) have been satisfied or such earlier date after such conditions have
been satisfied as Agent may agree.  If the aggregate amount of the increases in the Commitments received from the Lenders is less than the amount of the increase in the Maximum Credit requested by Administrative Borrower, Agent may seek additional increases from Lenders or Commitments from such Eligible Transferees as it may determine, after consultation with Administrative Borrower.  In the event Lenders (or Lenders and any such Eligible Transferees, as the case may be) have committed in
writing to provide increases in their Commitments or new Commitments in an aggregate amount in excess of the increase in the Maximum Credit requested by Borrowers or permitted hereunder, Agent shall then have the right

 

  

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to allocate such commitments, first to Lenders and then to Eligible Transferees, in such amounts and manner as Agent may determine, after consultation with Administrative Borrower.

 

(c) The Maximum Credit shall be increased by the amount of the increase in Commitments from Lenders or new Commitments from Eligible Transferees, in each case selected in accordance with Section 2.4(b) above, five (5) Business Days after
each of the conditions set forth in this Section 2.4(c) have been satisfied or waived by Agent or such earlier date as Administrative Borrower may request (such earlier date being referred to herein as the “Early Increase Date”):

 

(i) Agent shall have received from each Lender or Eligible Transferee that is providing an additional Commitment as part of the increase in the Maximum Credit, an Assignment and Acceptance duly executed by such Lender or Eligible Transferee
and Administrative Borrower;

 

(ii) the conditions precedent to the making of Loans set forth in Section 4.2 shall be satisfied as of the date of the increase in the Maximum Credit, both before and after giving effect to such increase;

 

(iii) Agent shall have received an opinion of counsel to Borrowers in form and substance reasonably satisfactory to Agent and Lenders addressing such matters as Agent may reasonably request (including an opinion as to no conflicts with
other Indebtedness);

 

(iv) such increase in the Maximum Credit on the date of the effectiveness thereof shall not violate in any material respect any applicable law, regulation or order or decree of any court or other Governmental Authority and shall not
be enjoined, temporarily, preliminarily or permanently;

 

(v) there shall have been paid to each Lender and Eligible Transferee providing an additional Commitment in connection with such increase in the Maximum Credit all fees and expenses, due and payable to such Person on or before the effectiveness
of such increase; and

 

(vi) there shall have been paid to Agent, for the account of the Agent and Lenders (in accordance with any agreement among them) all fees and expenses (including reasonable fees and expenses of counsel to Agent) due and payable pursuant
to any of the Financing Agreements on or before the effectiveness of such increase.

 

Notwithstanding anything to the contrary contained herein, the increase in Commitments in accordance with the foregoing shall not exceed the increase in the Maximum Credit requested by Administrative Borrower without the consent of Administrative Borrower.

 

(d) In the event that Administrative Borrower requests that the Maximum Credit is increased on an Early Increase Date, and the aggregate amount of the increases in the Commitments received from the Lenders and new Commitments from Eligible
Transferees, as the case may be, as of the Early Increase Date (based upon the satisfaction of the conditions set forth above) does not equal the amount of the increase in the Maximum Credit requested by

 

  

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Administrative Borrower, the Maximum Credit may thereafter be increased again on the date that is sixty (60) days after the date of the original request by Administrative Borrower for such increase based on any additional increase in Commitments or new Commitments received by Agent (i) after the Early Increase Date but (ii) prior to the date
that is sixty (60) days after the date of such original request by Administrative Borrower for any such increase.

 

(e) As of the effective date of any such increase in the Maximum Credit, (i) each reference to the term Maximum Credit herein and in any of the other Financing Agreements shall be deemed amended to mean the amount of the Maximum Credit
specified in the most recent written notice from Agent to Administrative Borrower of the increase in the Maximum Credit, and (ii) each reference to a threshold for Excess Availability set forth herein (other than in the definitions of “Applicable L/C Fee Rate” and “Applicable Margin”) shall be automatically increased such that the ratio of the Excess Availability to the Maximum Credit as so increased remains the same as prior to such increase.

 

SECTION 3. INTEREST AND FEES

 

3.1 Interest.

 

(a) Borrowers shall pay to Agent, for the benefit of Lenders, interest on the outstanding principal amount of the Loans at the Interest Rate.  All interest accruing hereunder on and after the date of any Event of Default which
is continuing or the termination hereof shall be payable on demand.

 

(b) Administrative Borrower may from time to time request Revolving Loans as Eurodollar Rate Loans or may request that Revolving Loans which are Base Rate Loans be converted to Eurodollar Rate Loans or that any existing Eurodollar Rate
Loans continue for an additional Interest Period.  Such request from Administrative Borrower shall specify the amount of the Eurodollar Rate Loans or the amount of the Base Rate Loans to be converted to Eurodollar Rate Loans or the amount of the Eurodollar Rate Loans to be continued (subject to the limits set forth below) and the Interest Period to be applicable to such Eurodollar Rate Loans (and if it does not specify such Interest Period shall be deemed to be a one (1) month period).  Subject
to the terms and conditions contained herein, three (3) Business Days after receipt by Agent of such a request from Administrative Borrower, which may be telephonic (and followed by a confirmation in writing if requested by Agent), such Eurodollar Rate Loans shall be made or such Base Rate Loans shall be converted to Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the case may be, provided, that,
(i) no Event of Default shall exist or shall have occurred and be continuing, (ii) Administrative Borrower shall not have sent any notice of termination of this Agreement, (iii) Administrative Borrower shall have complied with such customary procedures as are established by Agent and specified by Agent to Administrative Borrower from time to time for requests by Borrowers for Eurodollar Rate Loans, (iv) no more than ten (10) Interest Periods may be in effect at any one time, (v) Agent shall have determined that
the Interest Period or Adjusted Eurodollar Rate is available to Agent and all Lenders and can be readily determined as of the date of the request for such Eurodollar Rate Loan by Administrative Borrower, and (vi) the aggregate amount of the Eurodollar Rate Loans must be in an amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof.  Any request by Administrative Borrower for Eurodollar Rate Loans or to convert Base Rate Loans to

 

  

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Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall be irrevocable.  Notwithstanding anything to the contrary contained herein, Agent and Lenders shall not be required to purchase United States Dollar deposits in the London interbank market or other applicable Eurodollar Rate market to fund any Eurodollar
Rate Loans, but the provisions hereof shall be deemed to apply as if Agent and Lenders had purchased such deposits to fund the Eurodollar Rate Loans.

 

(c) Any Eurodollar Rate Loans shall automatically convert to Base Rate Loans upon the last day of the applicable Interest Period, unless Agent has received a request to continue such Eurodollar Rate Loan at least three (3) Business Days
prior to such last day in accordance with the terms hereof and Borrowers are entitled to such Eurodollar Rate Loan under the terms hereof.  Any Eurodollar Rate Loans shall, at Agent’s option, upon notice by Agent to Administrative Borrower, be subsequently converted to Base Rate Loans in the event that this Agreement shall terminate.  Borrowers shall pay to Agent, for the benefit of Lenders, promptly (but in any event within five (5) Business Days) following Agent’s written demand
therefor (or Agent may, at its option, charge any loan account of any Borrower) any amounts required to compensate Agent, any Lender or any Participant for any loss (including loss of anticipated profits), cost or expense incurred by such person, as a result of the conversion of Eurodollar Rate Loans to Base Rate Loans pursuant to any of the foregoing excluding any conversion or termination on the last day of the applicable Interest Period.  In the event any Person seeks compensation hereunder prior
to Borrowers being obligated to pay such amount or Agent charges any loan account of any Borrower, a certificate of Agent or any Lender setting forth the basis for the determination of such amount necessary to compensate Agent or such Lender as aforesaid shall be delivered to Borrowers, which certificate shall be conclusive, absent manifest error.

 

(d) Interest shall be payable by Borrowers to Agent, for the account of Lenders, monthly in arrears not later than the first day of each calendar month and shall be calculated on the basis of a three hundred sixty (360) day year and actual
days elapsed, other than for Base Rate Loans and Swing Line Loans which shall be calculated on the basis of three hundred sixty-five (365) or three hundred sixty-six (366) day year, as applicable, and actual days elapsed.  The interest rate on non-contingent Obligations (other than Eurodollar Rate Loans) shall increase or decrease by an amount equal to each increase or decrease in the Base Rate or Index Rate, as applicable, effective on the date any change in such Base Rate or Index Rate, as applicable,
is announced.  In no event shall charges constituting interest payable by Borrowers to Agent and Lenders exceed the maximum amount or the rate permitted under any applicable law or regulation, and if any such part or provision of this Agreement is in contravention of any such law or regulation, such part or provision shall be deemed amended to conform thereto.

 

3.2 Fees.

 

(a) Borrowers shall pay to Agent, for the account of Lenders, monthly an unused line fee at a rate equal to three-quarters (.75%) percent per annum calculated upon the amount by which the Maximum Credit (then in effect), less the unfunded
Commitment of any Defaulting Lender, exceeds the average daily principal balance of the outstanding Loans and Letters of Credit (other than banker’s acceptances to the extent that cash collateral has been deposited in the Banker’s Acceptance Cash Collateral Accounts in accordance with

 

  

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Section 2.2(l) hereof) during the immediately preceding month (or part thereof) while this Agreement is in effect and for so long thereafter as any of the Obligations are outstanding, which fee shall be payable on the first day of each month in arrears and calculated based on a three hundred sixty (360) day year and actual days elapsed.

 

(b) In the case of (i) standby Letters of Credit, Borrowers shall pay to Agent, for the benefit of Lenders, monthly a fee at a rate equal to the Applicable L/C Fee Rate per annum applicable to standby Letters of Credit, (ii) documentary
Letters of Credit, Borrowers shall pay to Agent, for the benefit of Lenders, monthly a fee at a rate equal to the Applicable L/C Fee Rate per annum applicable to documentary Letters of Credit, and (iii) banker’s acceptances, (to the extent that cash collateral has not been provided in accordance with Section 2.2(l) hereof), Borrowers shall pay to Agent, for the benefit of Lenders, monthly a fee at a rate equal to the Applicable L/C Fee Rate per annum applicable to banker’s acceptances, in each
case on the average daily maximum amount available to be drawn thereunder for the immediately preceding month (or part thereof), payable in arrears as of the first day of each succeeding month, computed for each day from the date of issuance to the date of expiration; except, that, Borrowers shall pay, at Agent’s option, without notice, such fees at a rate two (2%) percent greater than the highest Applicable L/C Fee Rate on such average daily maximum amount for (i) the period from and after the date
of termination hereof until Lenders have received full and final payment of all Obligations (notwithstanding entry of a judgment against any Obligor) and (ii) the period from and after the date of the occurrence of an Event of Default for so long as such Event of Default is continuing.  Such letter of credit fees and banker’s acceptance fees shall be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed, and the obligation of Borrowers to pay such fee shall survive
the termination of this Agreement.   In addition to the letter of credit fees provided above, Borrowers shall pay to each applicable Issuing Bank for its own account (without sharing with Lenders) the letter of credit fronting and negotiation fees agreed to by Borrowers and such Issuing Bank from time to time and the customary charges from time to time of such Issuing Bank with respect to the issuance, amendment, transfer, administration, cancellation and conversion of, and drawings under, such
Letters of Credit.  In the event that Borrowers have posted cash collateral with respect to any Letters of Credit pursuant to Section 6.10(h) hereof in an amount equal to the Pro Rata Share of the Defaulting Lender (calculated as in effect immediately prior to such Lender becoming a Defaulting Lender) in respect thereof, the letter of credit fees referred to in this Section 3.2(b) shall be calculated at the Applicable L/C Fee Rate on the average daily maximum amount available to be drawn under such
letters of credit, less the amount of cash collateral posted by Borrowers with respect thereto, until the release of such cash collateral.

 

(c) Borrowers shall pay to Agent, for the benefit of itself, WFS, BAS and the Lenders, the other fees and amounts set forth in the Engagement Letters in the amounts and at the times specified therein.  To the extent payment
in full of the applicable fee is received by Agent from Borrowers on or about the date hereof, Agent shall pay to each Lender its share of such fees in accordance with the terms of the arrangements of Agent with such Lender.

 

3.3 Changes in Laws and Increased Costs of Loans.

 

(a) If, after the date hereof, either (i) any change in, or in the interpretation of, any law or regulation is introduced, including, without limitation, with respect to reserve

 

  

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requirements, applicable to any Lender or any banking or financial institution from whom any Lender borrows funds or obtains credit (a “Funding Bank”), or (ii) a Funding Bank or any Lender complies with any future guideline or request from any central bank or other Governmental Authority or (iii) a Funding Bank, any Lender or Issuing
Bank determines that the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof has or would have the effect described below, or a Funding Bank, any Lender or Issuing Bank complies with any request or directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, and in the case of any event set forth in this clause (iii), such adoption, change or compliance has or would have the direct or indirect effect of reducing the rate of return on any Lender’s or Issuing Bank’s capital as a consequence of its obligations hereunder to a level below that which such Lender or Issuing Bank could have achieved but for such adoption, change or compliance (taking into consideration the Funding Bank’s or Lender’s
or Issuing Bank’s policies with respect to capital adequacy) by an amount deemed by such Lender or Issuing Bank to be material, and the result of any of the foregoing events described in clauses (i), (ii) or (iii) is or results in an increase in the cost to any Lender or Issuing Bank of funding or maintaining the Loans, the Letters of Credit or its Commitment, then Borrowers shall from time to time pay to Agent promptly (but in any event within five (5) Business Days) following Agent’s written demand
therefor such additional amounts sufficient to indemnify such Lender or Issuing Bank, as the case may be, against such increased cost on an after-tax basis (after taking into account applicable deductions and credits in respect of the amount indemnified).  A certificate as to the amount of such increased cost and the basis for such determination shall be submitted to Administrative Borrower by Agent or the applicable Lender and shall be conclusive, absent manifest error.

 

(b) If prior to the first day of any Interest Period, (i) Agent shall have determined reasonably and in good faith (such determination to be conclusive and binding upon Borrowers) that, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the Adjusted Eurodollar Rate for such Interest Period, (ii) Agent has received notice from the Required Lenders that the Adjusted Eurodollar Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to Lenders of making or maintaining Eurodollar Rate Loans during such Interest Period, or (iii) Dollar deposits in the principal amounts of the Eurodollar Rate Loans to which such Interest Period
is to be applicable are not generally available in the London interbank market, Agent shall give telecopy or telephonic notice thereof to Administrative Borrower as soon as practicable thereafter, and will also give prompt written notice to Administrative Borrower when such conditions no longer exist.  If such notice is given (A) any Eurodollar Rate Loans requested to be made on the first day of such Interest Period shall be made as Base Rate Loans, (B) any Loans that were to have been converted on
the first day of such Interest Period to or continued as Eurodollar Rate Loans shall be converted to or continued as Base Rate Loans and (C) each outstanding Eurodollar Rate Loan shall be converted, on the last day of the then-current Interest Period thereof, to Base Rate Loans.  Until such notice has been withdrawn by Agent, no further Eurodollar Rate Loans shall be made or continued as such, nor shall any Borrower (or Administrative Borrower on behalf of any Borrower) have the right to convert Base
Rate Loans to Eurodollar Rate Loans.

 

  

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(c) Notwithstanding any other provision herein, if the adoption of or any change in any law, treaty, rule or regulation or final, non-appealable determination of an arbitrator or a court or other Governmental Authority or in the interpretation
or application thereof occurring after the date hereof shall make it unlawful for Agent or any Lender to make or maintain Eurodollar Rate Loans as contemplated by this Agreement, (i) Agent or such Lender shall promptly give written notice of such circumstances to Administrative Borrower (which notice shall be withdrawn promptly whenever such circumstances no longer exist), (ii) the commitment of such Lender hereunder to make Eurodollar Rate Loans, continue Eurodollar Rate Loans as such and convert Base Rate Loans
to Eurodollar Rate Loans shall forthwith be canceled and, until such time as it shall no longer be unlawful for such Lender to make or maintain Eurodollar Rate Loans, such Lender shall then have a commitment only to make a Base Rate Loan when a Eurodollar Rate Loan is requested and (iii) such Lender’s Loans then outstanding as Eurodollar Rate Loans, if any, shall be converted automatically to Base Rate Loans on the respective last days of the then current Interest Periods with respect to such Loans or within
such earlier period as required by law.  If any such conversion of a Eurodollar Rate Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, Borrowers shall pay to such Lender such amounts, if any, as may be required pursuant to Section 3.3(d) below.

 

(d) Borrowers shall indemnify Agent and each Lender and to hold Agent and each Lender harmless from any loss or expense which Agent or such Lender may sustain or incur as a consequence of (i) default by any Borrower in making a borrowing
of, conversion into or extension of Eurodollar Rate Loans after such Borrower (or Administrative Borrower on behalf of such Borrower) has given a notice requesting the same in accordance with the provisions of this Agreement, (ii) default by any Borrower in making any prepayment of a Eurodollar Rate Loan after such Borrower has given a notice thereof in accordance with the provisions of this Agreement, and (iii) the making of a prepayment of Eurodollar Rate Loans on a day which is not the last day of an Interest
Period with respect thereto.  With respect to Eurodollar Rate Loans, such indemnification may include an amount equal to the excess, if any, of (A) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, converted or extended, for the period from the date of such prepayment or of such failure to borrow, convert or extend to the last day of the applicable Interest Period (or, in the case of a failure to borrow, convert or extend, the Interest Period that would have
commenced on the date of such failure) in each case at the applicable rate of interest for such Eurodollar Rate Loans provided for herein over (B) the amount of interest (as determined by such Agent or such Lender) which would have accrued to Agent or such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank Eurodollar market.   Such amounts shall be payable promptly (but in any event within five (5) Business Days) following Agent’s
written demand therefor.  This covenant shall survive the termination of this Agreement and the payment of the Obligations.

 

(e) Failure or delay on the part of any Lender or Issuing Bank to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender’s or Issuing Bank’s right to demand such
compensation, provided that no Borrower shall be required to compensate a Lender or Issuing Bank pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than six months prior to

 

  

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the date that such Lender or Issuing Bank, as the case may be, notifies the Administrative Borrower of the change 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 giving rise to such increased costs or reductions is retroactive,
then the six month period referred to above shall be extended to include the period of retroactive effect thereof).

 

3.4 Mitigation Obligations; Replacement of Lenders.

 

(a) If any Lender requests compensation under Section 3.3, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder
to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.3 in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

 

(b) If any Lender requests compensation under Section 3.3 or 6.5, or if any Lender is a Defaulting Lender or a Deteriorating Lender, or if a Lender (other than Agent) fails to consent to an amendment requiring its consent under Section
11.3(a) after such amendment has been approved by the Required Lenders, then the Administrative Borrower may, at its sole expense and effort, upon notice to such Lender and the Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 13.7), all of its interests, rights and obligations under this Agreement and the related Financing Agreements to an assignee that shall assume such obligations (which assignee
may be another Lender, if a Lender accepts such assignment), provided, that,

 

(i) the Borrowers shall have paid to the Agent the assignment fee specified in Section 13.7,

 

(ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in Letters of Credit, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and
under the other Loan Documents (including any amounts under Section 3.3(d) or 6.5) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts), and

 

(iii) in the case of any such assignment resulting from a claim for compensation under Section 3.3 or 6.5, such assignment will result in a reduction in such compensation or payments thereafter.

 

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to require such assignment and delegation cease to apply.

 

  

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SECTION 4. CONDITIONS PRECEDENT

 

4.1 Conditions Precedent to Initial Loans and Letters of Credit.

 

Each of the following is a condition precedent to Agent and Lenders making the initial Loans and each Issuing Bank providing the initial Letters of Credit hereunder:

 

(a) Agent shall have received all financial information, projections, budgets, business plans, cash flows and such other information as Agent and Syndication Agent shall have requested prior to the date hereof, including (i) projected
quarterly consolidated balance sheets, income statements, statements of cash flows and availability of Obligors for the period through the fiscal year ending on or about January 31, 2011, (ii) projected annual consolidated balance sheets, income statements, statements of cash flows and availability of Obligors through the fiscal year ending on or about January 31, 2012, in each case as to the projections described in clauses (i) and (ii), with the results and assumptions set forth in all of such projections
in form and substance satisfactory to Agent and Syndication Agent, and an opening pro forma balance sheet for Obligors in form and substance satisfactory to Agent and Syndication Agent, and (iii) any updates or modifications to the projected financial statements of Obligors received by Agent prior to the date hereof, in each case in form and substance satisfactory to Agent and Syndication Agent;

 

(b) Agent shall have completed a field review of the Records and such other information with respect to the Collateral as Agent or Syndication Agent may require to determine the amount of Loans available to Borrowers (including, without
limitation, current agings of receivables, current perpetual inventory records and/or roll-forwards of Accounts and Inventory through the date hereof and test counts of the Inventory in a manner satisfactory to Agent and Syndication Agent, together with such supporting documentation as may be necessary or appropriate, and other documents and information that will enable Agent to accurately identify and verify the Collateral), the results of which in each case shall be satisfactory to Agent and Syndication Agent;

 

(c) Agent shall have received, at the expense of Borrowers, a written report or appraisal as to the Inventory of Obligors in form, scope and methodology reasonably acceptable to Agent and Syndication Agent and by an appraiser reasonably
acceptable to Agent, addressed to Agent and upon which Agent and Lenders are expressly permitted to rely;

 

(d) all requisite corporate action and proceedings in connection with this Agreement and the other Financing Agreements shall be satisfactory in form and substance to Agent, and Lenders shall have received all information and copies of
all documents, including records of requisite corporate, and other action and proceedings which Agent may have reasonably requested in connection therewith, such documents where requested by Agent or its counsel to be certified by appropriate corporate officers or Governmental Authority (and including a copy of the certificate of incorporation, formation or other organization document  of any of Borrowers certified by the Secretary of State (or equivalent Governmental Authority);

 

(e) no material adverse change shall have occurred in the assets, businesses or prospects of Obligors, taken as a whole, since the date of the commencement of Agent’s latest

 

  

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field examination and no change or event shall have occurred which would impair the ability of Obligors, taken as a whole, to perform their obligations hereunder or under any of the other Financing Agreements to which any of them is party or of Agent to enforce the Obligations or realize upon the Collateral.  Without limiting the
generality of the foregoing, no investigation, litigation or other proceedings shall be pending or threatened against any Obligor as of the closing which could have a Material Adverse Effect in the good faith determination of Agent and Lenders;

 

(f) Agent shall have received evidence, in form and substance satisfactory to Agent, that Agent has a valid perfected first priority security interest in all of the Collateral subject to Permitted Liens;

 

(g) Agent shall have received, in form and substance satisfactory to Agent, (i) a guarantee of payment by each Borrower of the Obligations owed by each of the Obligors and the Additional L/C Debtors, and (ii) a guarantee of payment by
all Guarantors of all Obligations;

 

(h) Agent and Lenders shall be satisfied that as of the date hereof, (i) Obligors taken as a whole, are solvent or will continue to be solvent after giving effect to the transactions contemplated hereby, (ii) Obligors, taken as a whole,
do not have unreasonably small capital after the consummation of the transactions contemplated hereby to continue to engage in its business, and (iii) Obligors, taken as a whole, have not incurred liabilities as a result of the transactions contemplated hereby that are beyond their ability to pay as such liabilities mature;

 

(i) the Excess Availability as determined by Agent, as of the date hereof, shall be not less than $150,000,000 after giving effect to the initial Loans made or to be made and Letters of Credit issued or to be issued in connection with
the  transactions hereunder;

 

(j) Agent shall have received and reviewed lien and judgment search results for the jurisdiction of organization of each Borrower and the jurisdiction of the chief executive office of each Borrower, which search results shall be in form
and substance satisfactory to Agent;

 

(k) to the extent not previously delivered to Agent, Agent shall have received originals of the shares of the stock certificates representing all of the issued and outstanding shares of the Capital Stock of each Obligor (other than Parent)
and owned by any Obligor, in each case together with stock powers duly executed in blank with respect thereto;

 

(l) Agent shall have received evidence of insurance and loss payee endorsements required hereunder and under the other Financing Agreements, in form and substance satisfactory to Agent, and certificates of insurance policies and/or endorsements
naming Agent as loss payee;

 

(m) Agent shall have received, in form and substance reasonably satisfactory to Agent, such opinion letters of counsel to Borrowers and Obligors with respect to the Financing Agreements and such other matters as Agent may reasonably request;
and

 

  

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(n) the other Financing Agreements and all instruments and documents hereunder and thereunder shall have been duly executed and delivered to Agent, in form and substance reasonably satisfactory to Agent.

 

4.2 Conditions Precedent to All Loans and Letters of Credit.

 

The obligation of Lenders to make the Loans, including the initial Loans, or of each Issuing Bank to issue any Letter of Credit, including the initial Letters of Credit, is subject to the further satisfaction of, or waiver of, immediately prior to or concurrently with the making of each such Loan or the issuance of such Letter of Credit of
each of the following conditions precedent:

 

(a) all representations and warranties contained herein and in the other Financing Agreements shall be true and correct with the same effect as though such representations and warranties had been made on and as of the date of the making
of each such Loan or providing each such Letter of Credit and after giving effect thereto, except (i) to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date) and (ii) with respect to any changes in the representations and warranties resulting from any actions, sales, mergers, acquisitions, dispositions or other transactions permitted by this Agreement or
consented to by the Required Lenders or all Lenders, as applicable; and

 

(b) no Default or Event of Default shall exist or have occurred and be continuing on and as of the date of the making of such Loan or providing each such Letter of Credit and immediately after giving effect thereto.

 

SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST

 

5.1 Grant of Security Interest.

 

To secure payment and performance of all Obligations, each Obligor hereby grants to Agent, for itself and the benefit of the Secured Parties, a continuing security interest in, a lien upon, and a right of set off against, and hereby assigns to Agent, for itself and the benefit of the Secured Parties, and hereby confirms, reaffirms and restates
the prior grant thereof to Agent, for itself and the Secured Parties, pursuant to the Existing Financing Agreements (as amended and restated hereby), as security, all of the following personal property and interests in personal property, of each Obligor, whether now owned or hereafter acquired or existing, and wherever located (collectively, the “Collateral”) including:

 

(a) all Accounts;

 

(b) all general intangibles, including, without limitation, all Intellectual Property;

 

(c) all goods including all Inventory, but excluding all Equipment;

 

(d) all chattel paper (including all tangible and electronic chattel paper);

 

(e) all instruments (including all promissory notes);

 

  

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(f) all documents;

 

(g) all deposit accounts;

 

(h) all letters of credit, banker’s acceptances and similar instruments and including all letter of credit rights;

 

(i) all supporting obligations and all present and future liens, security interests, rights, remedies, title and interest in, to and in respect of Receivables and other Collateral, including (i) rights and remedies under or relating to
guaranties, contracts of suretyship, letters of credit and credit and other insurance related to the Collateral, (ii) rights of stoppage in transit, replevin, repossession, reclamation and other rights and remedies of an unpaid vendor, lienor or secured party, (iii) goods (excluding Equipment) described in invoices, documents, contracts or instruments with respect to, or otherwise representing or evidencing, Receivables or other Collateral, including returned, repossessed and reclaimed goods consisting of Inventory,
and (iv) deposits by and property of account debtors or other persons securing the obligations of account debtors;

 

(j) all (i) investment property (including securities, whether certificated or uncertificated, securities accounts, security entitlements, commodity contracts or commodity accounts) and (ii) monies, credit balances, deposits and other
property of any Obligor now or hereafter held or received by or in transit to any Obligor or at any other depository or other institution from or for the account of any Obligor, whether for safekeeping, pledge, custody, transmission, collection or otherwise;

 

(k) all commercial tort claims;

 

(l) to the extent not otherwise described above, all Receivables other than any Securitized Receivables;

 

(m) all Records; and

 

(n) all products and proceeds of the foregoing, in any form, including insurance proceeds and all claims against third parties for loss or damage to or destruction of or other involuntary conversion of any kind or nature of any or all
of the other Collateral.

 

Notwithstanding the foregoing, Obligors do not hereby grant Agent any Lien or security interest in and to any of the Excluded Property.

 

5.2 Excluded Property.

 

The Collateral shall not and does not include (collectively, “Excluded Property”): (a) the Capital Stock of Excluded Subsidiaries (other than one hundred (100%) percent of the issued and outstanding Capital Stock of FSC), (b) any assets of the Excluded Subsidiaries, (c) Real Property or rentals from the use or occupancy of Real
Property, (d) any life insurance policies owned by Obligors on the lives of employees and former employees of Obligors, and life insurance policies subject to split dollar arrangements, (e) any Securitized Receivables and other Securitization Program Assets, (f) any Collateral transferred to an Excluded Subsidiary pursuant to this

 

  

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Agreement, and (g) Equipment including, without limitation, trade fixtures, motor vehicles and aircraft and any interest therein.  To the extent any Excluded Property was, is or becomes Collateral at any time hereunder or under any other Financing Agreements, the Agent hereby releases and confirms its release of its Lien on any such
Excluded Property.

 

5.3 Special Provisions Regarding Collateral.

 

Notwithstanding anything to the contrary contained in Section 5.1 above, the types or items of Collateral described in such Section shall not include any rights or interest in any contract, lease, permit, license, charter or license agreement covering property of such Obligor, as such, if under the terms of such contract, lease, permit, license,
charter or license agreement, or applicable law with respect thereto, the valid grant of a security interest or lien therein to Agent is prohibited as a matter of law or under the terms of such contract, lease, permit, license, charter or license agreement and such prohibition has not been or is not waived or the consent of the other party to such contract, lease, permit, license, charter or license agreement has not been or is not otherwise obtained; provided, that,
the foregoing exclusion shall in no way be construed (a) to apply if any such prohibition is unenforceable under Sections 9-406, 9-407, and 9-408 of the UCC or other applicable law or (b) so as to limit, impair or otherwise affect Agent’s unconditional continuing security interests in and liens upon any rights or interests of such Obligor in or to monies due or to become due under any such contract, lease, permit, license, charter or license agreement (including any Accounts).

 

5.4 Perfection of Security Interests.

 

(a) Each Obligor irrevocably and unconditionally authorizes Agent (or its agent) to file (for itself and the benefit of the Secured Parties) at any time and from time to time such financing statements with respect to the Collateral naming
Agent or its designee as the secured party and any Obligor as debtor, as Agent may require, and including any other information with respect to any Obligor or otherwise required by part 5 of Article 9 of the Uniform Commercial Code of such jurisdiction as Agent may determine, together with any amendment and continuations with respect thereto, which authorization shall apply to all financing statements filed on, prior to or after the date hereof.  Each Obligor hereby ratifies and approves all financing
statements naming Agent or its designee as secured party and any Obligor as debtor with respect to the Collateral (and any amendments with respect to such financing statements) filed by or on behalf of Agent prior to the date hereof and ratifies and confirms the authorization of Agent to file such financing statements (and amendments, if any).  Each Obligor hereby authorizes Agent to adopt on behalf of Obligors any symbol required for authenticating any electronic filing.  In no event shall
Obligors at any time file, or permit or cause to be filed, any correction statement or termination statement with respect to any financing statement (or amendment or continuation with respect thereto) naming Agent or its designee as secured party and any Obligor as debtor except with respect to termination statements, as permitted by Section 9-509(d)(2) of the UCC or releases of Excluded Property pursuant to Section 5.5(a) hereof.

 

(b) No Obligor has any chattel paper (whether tangible or electronic) or instruments as of the date hereof, except that which has been delivered to Agent on or prior to the date hereof.  In the event that any Obligor shall be
entitled to or shall receive any chattel paper or instrument in excess of $5,000,000 after the date hereof or any chattel paper or

 

  

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instrument after the occurrence and during the continuance of an Event of Default, such Obligor shall promptly notify Agent thereof in writing and, if requested by Agent, such Obligor shall deliver, or cause to be delivered to Agent, all such tangible chattel paper and instruments that such Obligor, accompanied by such instruments of transfer
or assignment duly executed in blank as Agent may from time to time specify, in each case except as Agent may otherwise agree, or at Agent’s option, each Obligor shall cause the original of any such instrument or chattel paper to be conspicuously marked in a form and manner acceptable to Agent with the following legend referring to chattel paper or instruments as applicable: “This [chattel paper][instrument] is subject to the security interest of Wells Fargo Retail Finance, LLC, as Agent and any sale,
transfer, assignment or encumbrance of this [chattel paper][instrument] violates the rights of such secured party.”

 

(c) In the event that any Obligor shall at any time hold or acquire an interest in any electronic chattel paper or any “transferable record” (as such term is defined in Section 201 of the Federal Electronic Signatures in Global
and National Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction), such Obligor shall promptly notify Agent thereof in writing.  Promptly upon Agent’s request, each Obligor shall take, or cause to be taken, such actions as Agent may reasonably request to give Agent control of such electronic chattel paper under the UCC and control of such transferable record under Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such jurisdiction.

 

(d) No Obligor has any deposit accounts as of the date hereof, except as set forth in Schedule 6.3 hereto and the Concentration Accounts.  No Obligor shall, directly or indirectly, after the date hereof open, establish or maintain
any deposit account other than Retail Store bank accounts and zero balance disbursement accounts unless on or before the opening of such deposit account, such Obligor shall deliver to Agent a Deposit Account Control Agreement with respect to such deposit account duly executed and delivered by such Obligor and the bank at which such deposit account is opened and maintained.  The terms of this subsection (d) shall not apply to deposit accounts designated by Obligors for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of any Obligor’s salaried employees, escrows of security deposits with respect to leases of Real Property or Concentration Accounts until the occurrence of an Event of Default as set forth in Section 6.3 hereof.

 

(e) No Obligor owns or holds, directly or indirectly, beneficially or as record owner or both, any investment property, as of the date hereof, or has any investment account, securities account, commodity account or other similar account
with any bank or other financial institution or other securities intermediary or commodity intermediary as of the date hereof, except for investment property designated by Obligors for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Obligor’s salaried employees or property held in trust for the benefit of an employee or any third party which is not an Affiliate, and the investment accounts, securities accounts, commodities accounts or other similar accounts
listed on Schedule 5.4(e) hereto and the investment property held therein.

 

(i) In the event that any Obligor shall be entitled to or shall at any time after the date hereof hold or acquire any certificated securities (other than Cash Equivalents

 

  

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except as required in clause (ii) below), which are not Excluded Property, such Obligor shall promptly endorse, assign and deliver the same to Agent, for the benefit of Secured Parties, accompanied by such instruments of transfer or assignment duly executed in blank as Agent may from time to time specify.  If any securities, which
are not Excluded Property, now or hereafter acquired by any Obligor are uncertificated and are issued to any Obligor or its nominee directly by the issuer thereof, such Obligor shall promptly notify Agent thereof and shall, as Agent may specify, cause the issuer to agree to comply with instructions from Agent as to such securities, without further consent of any Obligor or such nominees.

 

(ii) No Obligor shall, directly or indirectly, after the date hereof open, establish or maintain any investment account, securities account, commodity account or any other similar account (other than a deposit account) with any securities
intermediary with Qualified Cash unless the securities intermediary or commodity intermediary (as the case may be) where such account is opened or maintained shall be reasonably acceptable to Agent and such Obligor shall execute and deliver, and cause to be executed and delivered to Agent, an Investment Property Control Agreement with respect thereto duly executed and delivered by any Obligor and such securities intermediary or commodity intermediary, provided, that, Agent
hereby agrees and Agent shall instruct the securities intermediary, commodity intermediary or other person who has custody, control or possession of any investment property (collectively, “Intermediary”) of any Obligor subject to an Investment Property Control Agreement to comply with entitlement orders issued or originated by such Obligor (to the extent such entitlement orders do not conflict with instructions issued by Agent to such Intermediary) concerning the investment property account until
such time as Agent delivers a written notice to such Intermediary which states such Obligor is no longer entitled to give any such orders in respect of such investment property account. Agent will only send such notices to the Intermediaries at any time after the occurrence and during the continuance of a Cash Dominion Event.  Notwithstanding anything to the contrary set forth herein, Obligors shall not be required to obtain Investment Property Control Agreements with respect to any investment accounts
in which Cash Equivalents in an amount less than $1,000,000 are held, unless Obligors desire to include such Cash Equivalents in the calculation of Qualified Cash or Liquidity Cash.

 

(f) No Obligor is the beneficiary or otherwise entitled to any right to payment under any letter of credit or banker’s acceptance as of the date hereof.  In the event that any Obligor shall be entitled to or shall receive
any right, whether as beneficiary thereof or otherwise after the date hereof, to payment under any letter of credit or banker’s acceptance in excess of $5,000,000 prior to the occurrence of an Event of Default and any right to payment under any letter of credit or banker’s acceptance after the occurrence and during the continuance of an Event of Default, such Obligor shall promptly notify Agent thereof in writing, and, at the request of Agent, such Obligor shall promptly, as Agent may specify, deliver,
or cause to be delivered to Agent, with respect to such letter of credit or banker’s acceptance, the written agreement of the issuer and any other nominated person obligated to make any payment in respect thereof (including any confirming or negotiating bank), in form and substance reasonably satisfactory to Agent, consenting to the assignment of the proceeds of the letter of credit to Agent by Obligors and agreeing to make all payments thereon directly to Agent or as Agent may otherwise direct.

 

  

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(g) No Obligor has any commercial tort claims, as of the date hereof, in excess of $5,000,000.  In the event that any Obligor shall, at any time after the date hereof, have any commercial tort claims in excess of $5,000,000
prior to the occurrence of an Event of Default, and any commercial tort claim after the occurrence and during the continuance of an Event of Default, such Obligor shall promptly notify Agent thereof in writing, which notice shall (i) set forth in reasonable detail the basis for and nature of such commercial tort claim and (ii) include the express grant by such Obligor to Agent of a security interest in such commercial tort claim (and the proceeds thereof).  In the event that such notice does not include
such grant of a security interest, the sending thereof by such Obligor to Agent shall be deemed to constitute such grant to Agent.  Upon the sending of such notice, any commercial tort claim described therein shall constitute part of the Collateral and shall be deemed included therein.  Without limiting the authorization of Agent provided in Section 5.4(a) hereof or otherwise arising by the execution by Obligors of this Agreement or any of the other Financing Agreements, Agent is hereby irrevocably
authorized from time to time and at any time to file such financing statements naming Agent or its designee as secured party and each Obligor as debtor, or any amendments to any financing statements, covering any such commercial tort claim as Collateral.  In addition, each Obligor shall promptly upon Agent’s request, execute and deliver, or cause to be executed and delivered, to Agent such other agreements, documents and instruments as Agent may reasonably require in connection with such commercial
tort claim.

 

(h) No Obligor has any goods constituting Collateral, documents of title or other Collateral in the custody, control or possession of a third party in the United States as of the date hereof, except as set forth on Omnibus Schedule 2
hereto and except for goods located in the United States in transit to a location of any Obligor permitted herein in the ordinary course of business of Obligors in the possession of the carrier transporting such goods.  In the event that any goods constituting Collateral, documents of title or other Collateral in the United States with a value in excess of $1,000,000 are at any time after the date hereof in the custody, control or possession of any Person (not an Obligor) which: (i) is not referred
to in the Omnibus Schedules hereto, (ii) has not executed a Collateral Access Agreement if and only if such third party is required to execute a Collateral Access Agreement pursuant to the Loan Agreement or (iii) is not a carrier, Obligors shall promptly notify Agent thereof in writing.  Promptly upon Agent’s request, each Obligor shall use commercially reasonable efforts to deliver to Agent a Collateral Access Agreement duly executed and delivered by such third party and such Obligor.  In
the event Obligor cannot obtain a Collateral Access Agreement as required under this Section from a third party, such Obligor shall remove any Collateral in such third party’s custody, control or possession within 30 days of request from Agent to do so.

 

(i) Obligors shall take any other actions reasonably requested by Agent from time to time to cause the attachment, perfection and first priority of, and the ability of Agent to enforce, the security interest of Agent in any and all of
the Collateral, including, without limitation, (i) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the UCC or other applicable law, to the extent, if any, that Obligor’s signature thereon is required therefor, (ii) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of Agent to enforce,
the security interest of each Lender in such Collateral, or (iii) obtaining the consent and approval of any

 

  

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Governmental Authority or third party, including, without limitation, any consent of any licensor, lessor or other person obligated on Collateral, and taking all actions required by any other law, as applicable in any relevant jurisdiction.

 

5.5 Authorization for UCC Release Documents.

 

(a) Agent hereby authorizes any Obligor to execute, if applicable, and file any release to or amendment of any UCC financing statement (in the form annexed hereto as Exhibit F) necessary to reflect the exclusion of the Excluded Property
from the Lien of the Agent at any time and from time to time.  Such Obligor shall promptly provide copies to Agent of any such releases or amendments filed in accordance herewith.

 

(b) Agent shall (and is hereby irrevocably authorized by Lenders to) upon the request of Administrative Borrower and at Borrowers’ expense, (i) upon (A) a liquidation of  an Obligor permitted under Section 9.7 or the sale
of an Obligor permitted under Section 9.8 hereof, release such Obligor from the Obligations, release the Capital Stock of such Obligor from the Lien of Agent hereunder and release any Collateral owned by such Obligor subject to the Lien of Agent hereunder, and (B) the sale or other disposition of any Collateral permitted under Section 9.8 hereof, release such Collateral from the Lien of Agent hereunder, and (ii) in connection with the transactions described in clause (i), deliver to Administrative Borrower
a UCC financing statement amendment (or other appropriate instrument, as the case may be) in form and substance reasonably satisfactory to Agent, as may be necessary to evidence the release of any Obligor (as the result of a transfer of the Capital Stock of such Obligor in accordance with and as permitted in accordance with Sections 9.7 and 9.8 hereof) or of the Lien in favor of Agent upon any Collateral to the extent such Collateral is sold, transferred or otherwise disposed of in accordance with Section 9.7(b)
or 9.8 hereof; provided, that, (A) Administrative Borrower certifies to Agent, Issuing Bank and Lenders in writing that such sale, disposition or other transaction is being consummated in accordance with the terms of this Agreement (and Agent, Issuing Bank and Lenders may rely conclusively upon such certificate without any further inquiry) and such release shall only be effective upon
the consummation of such transaction, sale or other disposition, (B) Agent shall not be required to execute any such document on terms which, in Agent’s opinion, would expose Agent to liability to any third Person or create any obligations or entail any consequence to Agent, Issuing Bank or Lenders other than the release of such Obligor or such Lien without recourse or warranty, and (C) such release shall not in any manner discharge, affect or impair the Obligations of any Person not released or any Lien
upon (or obligations of Obligors in respect of) the Collateral retained by Obligors.

 

SECTION 6. COLLECTION AND ADMINISTRATION

 

6.1 Borrowers’ Loan Accounts.

 

Agent shall maintain one or more loan account(s) on its books in which shall be recorded (a) all Loans, Letters of Credit and other Obligations, (b) all payments made by or on behalf of Borrowers and (c) all other appropriate debits and credits as provided in this Agreement, including, without limitation, fees, charges, costs, expenses and
interest.  All entries in the loan account(s) shall be made in accordance with Agent’s customary practices as in effect from time to time.

 

  

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6.2 Statements.

 

Agent shall render to Administrative Borrower each month a statement setting forth the balance in the Borrowers’ loan account(s) maintained by Agent for Borrowers pursuant to the provisions of this Agreement, including principal, interest, fees, costs and expenses.  Each such statement shall be subject to subsequent adjustment
by Agent but shall, absent errors or omissions, be considered correct and deemed accepted by Borrowers, Parent and Administrative Borrower and conclusively binding upon Borrowers, Parent and Administrative Borrower as an account stated except to the extent that Agent receives a written notice from Administrative Borrower of any specific exceptions of Borrowers thereto within thirty (30) days after the date such statement has been mailed by Agent.  Until such time as Agent shall have rendered to Administrative
Borrower a written statement as provided above, the balance in Borrowers’ loan account(s) shall be presumptive evidence of the amounts due and owing to Agent and Lenders by Borrower.

 

6.3 Collection of Accounts.

 

(a) Each Obligor shall establish and maintain, at its expense, deposit account arrangements and merchant payment arrangements with the banks set forth on Schedule 6.3 hereto and after prior written notice to Agent, subject to Section
5.4(d), such other banks as such Obligor may hereafter select.  As of the date hereof, the banks set forth on Schedule 6.3 hereto constitute all of the banks with whom Obligors have deposit account arrangements and merchant payment arrangements and identifies each of the deposit accounts at such banks to a Retail Store location of an Obligor or otherwise describes the nature of the use of such deposit account by such Obligor.

 

(b) Each Obligor shall establish and maintain, at its expense, deposit accounts with such banks (the “Blocked Accounts”) into which each Obligor shall promptly deposit, and direct, their respective account debtors, Credit
Card Issuers (other than Originator) and Credit Card Processors to directly remit to such Blocked Accounts payments on its Accounts, Credit Card Receivables and all other payments constituting proceeds of Inventory, other Collateral or other property which is security for the Obligations in the identical form in which such payments are made, whether by cash, check or other manner. The banks at which the Blocked Accounts are established shall enter into a Deposit Account Control Agreement reasonably satisfactory
to Agent prior to any funds being transferred into such Blocked Account.  Subject to the terms and conditions contained herein, Agent shall instruct the depository banks at which the Blocked Accounts are maintained to transfer the funds on deposit in the Blocked Accounts to such operating bank account of each Obligor as such Obligor (or Administrative Borrower on behalf of such Obligor) may specify in writing to Agent until such time as Agent shall notify the depository bank otherwise.  Agent
will only instruct the depository banks at which the Blocked Accounts are maintained to transfer all funds received or deposited into the Blocked Accounts to the Agent Payment Account at any time upon and after the occurrence of a Cash Dominion Event.  Each Obligor agrees that at all times that Agent shall have notified any depository bank to transfer funds from the Blocked Accounts, all payments made to such Blocked Accounts or other funds received and collected by Agent, shall be treated as payments
to Agent in respect of the Obligations and therefore shall constitute the property of Agent to the extent of the then outstanding Obligations.

 

  

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(c) Notwithstanding anything to the contrary set forth in Section 6.3(b), Obligors may direct each of the Retail Store Subsidiaries to first deposit all collections from customers of their Retail Stores, all proceeds from sales of Inventory
in every form, including, without limitation, cash, checks, credit card sales drafts, credit card sales or charge slips or receipts and other forms of daily store receipts, into a depository account maintained by them with a local bank, used solely for such purpose and identified to each Retail Store as set forth on Schedule 6.3 hereto (together with any other deposit accounts at any time established or used by any Obligor for receiving such store receipts from any Retail Store, collectively, the “Store
Bank Accounts” and each individually, a “Store Bank Account”); provided, that, (i) all such funds deposited into the Store Bank Accounts shall be sent by wire transfer or by transfer using the automated clearinghouse network no less frequently than twice a week (or more frequently after the occurrence and during the continuance of an Event of Default upon Agent’s
request), except nominal amounts which are required to be maintained (A) in such Store Bank Accounts under the terms of such Obligor’s arrangements with the bank at which such Store Bank Accounts are maintained or (B) for such Obligor’s operations, including, without limitation, amounts to cover returned or dishonored checks or returned goods, and which nominal amounts shall not exceed $10,000 as to any individual Retail Store at any time, to one of the Concentration Accounts and (ii) on each Business
Day CS Delaware shall remit or cause the applicable depository bank to remit all collected funds in such Concentration Accounts to the Blocked Accounts, except for Excluded Property.  No Obligors shall open or use any concentration or cash management accounts at any bank or other financial institution, other than the Concentration Accounts and Store Bank Accounts, except in compliance with this Section 6.3.  No later than five (5) days after the occurrence of an Event of Default, each Obligor
which maintains a Concentration Account shall, upon Agent’s request, obtain a Deposit Control Agreement, in form and substance reasonably satisfactory to Agent, from each depository bank with respect to such Concentration Account.

 

(d) For purposes of calculating the amount of the Loans available to Borrowers, such payments will be applied (conditional upon final collection) to the Obligations on the Business Day of receipt by Agent of immediately available funds
in the Agent Payment Account provided such payments and notice thereof are received in accordance with Agent’s usual and customary practices as in effect from time to time and within sufficient time to credit such Borrower’s loan account on such day, and if not, then on the next Business Day; provided, that, upon the occurrence and during the continuance of a Cash Dominion
Event (other than a Cash Dominion Event arising from the occurrence of an Event of Default), for purposes of calculating the amount of the Loans available to Borrowers such payments will be applied (conditional upon final collection) to the Obligations on the Business Day of receipt by Agent in the Agent Payment Account, if such payments are received in the Agent Payment Account by 3:00 p.m. New York City time and Agent has received notice thereof from the Administrative Borrower and the bank at which such Agent  Payment
Account is maintained to credit Borrowers’ loan account on such day, and if not, then on the next Business Day.  For purposes of calculating interest on the Obligations, such payments or other funds received and collected by Agent on account of the Obligations will be applied (conditional upon final collection) to the Obligations on the Business Day of receipt of immediately available funds by Agent in the Agent Payment Account if received prior to 2:00 p.m. and one (1) Business Day following
the date of

 

  

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receipt of immediately available funds by Agent in the Agent Payment Account if received after such time.

 

(e) Each Obligor and all of their directors, employees, agents, Subsidiaries (other than Financing Subsidiaries) and other Affiliates shall, acting as trustee for Agent, receive, as the property of Agent, any monies, checks, notes, drafts
or any other payment relating to and/or proceeds of Receivables constituting Collateral or other Collateral which come into their possession or under their control and immediately upon receipt thereof, shall deposit or cause the same to be deposited in the accounts of Obligors in accordance with the provisions of this Section 6.3, or remit the same or cause the same to be remitted, in kind, to Agent; provided, that,
if at any time the Excess Availability shall be less than $10,000,000, Obligors shall promptly upon Agent’s request cause the portion thereof representing sales and/or use taxes payable in connection with such sales or otherwise to be deposited into a separate bank account or accounts established for such purpose until Excess Availability exceeds $10,000,000.  In no event during such period in which Excess Availability is less than $10,000,000 shall the same be commingled with Obligor’s
own funds.  Each Obligor agrees to reimburse Agent promptly (but in any event within two (2) Business Days) following Agent’s written demand for any amounts owed or paid to any bank at which a Blocked Account is established or any other bank or person involved in the transfer of funds to or from the Blocked Accounts arising out of the payments by Agent to or indemnification of such bank or person in connection with such Blocked Account or any amounts received therein or transferred therefrom.  The
obligation of Obligors to reimburse Agent for such amounts pursuant to this Section 6.3 shall survive the termination of this Agreement.

 

6.4 Payments.

 

(a) All Obligations shall be payable to the Agent Payment Account as provided in Section 6.3 hereof or such other place as Agent may designate from time to time.  Subject to the other terms and conditions contained herein, Agent
shall apply payments received or collected from any Obligor or for the account of any Obligor (including the monetary proceeds of collections or of realization upon any Collateral) as follows: first, to pay any fees, indemnities or expense reimbursements then due to Agent, each Issuing Bank and Lenders from any Obligor; second, to pay interest then due in respect of any Swing Line
Loans, third, to pay interest then due in respect of any Revolving Loans, Special Agent Advances, or Letter of Credit Obligations; fourth, to pay or prepay principal in respect of Special Agent Advances; fifth, to pay or prepay principal in respect of Swing Line Loans; sixth,
to pay or prepay principal in respect of the Revolving Loans and to pay any Obligations then due arising under or pursuant to any Bank Group Hedge Agreements of an Obligor with a Bank Product Provider (up to the amount of any then effective Reserve established in respect of such Obligations); seventh, to pay any other Obligations then due; eighth, at any time an Event of Default exists
or has occurred and is continuing, to pay or prepay any other Obligations whether or not then due, in such order and manner as Agent determines, and at any time an Event of Default exists or has occurred and is continuing, to provide cash collateral for any Letter of Credit Obligations or other contingent Obligations (but not including for this purpose any Obligations arising under or pursuant to any Bank Products); and ninth, at any time an Event
of Default exists or has occurred and is

 

  

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continuing, to pay or prepay any Obligations arising under or pursuant to any Bank Products (other than to the extent provided for above) on a pro rata basis.

 

(b) Notwithstanding anything to the contrary contained in this Agreement, unless so directed by Administrative Borrower, or unless an Event of Default shall have occurred and be continuing, Agent shall not apply any payments which it
receives to any Eurodollar Rate Loans, except (i) on the expiration date of the Interest Period applicable to any such Eurodollar Rate Loans or (ii) in the event that there are no outstanding Base Rate Loans, provided, that, in the event that there are no outstanding Base Rate Loans, no Event of Default has occurred and is continuing and no Cash Dominion Event has occurred and is continuing,
payments will not be applied to the Eurodollar Rate Loans and such payments shall be promptly remitted to Borrowers.   If a Cash Dominion Event has occurred, such amounts that are not applied to the Obligations pursuant to Section 6.4(a) hereof shall be held as cash collateral for the Obligations (the “Credit Balance Cash Collateral”).  Such Credit Balance Cash Collateral shall constitute part of the Collateral.  Such Credit Balance Cash Collateral shall be held
by Agent in an account designated by Agent for such purposes in its books and records and may be commingled with Agent’s own funds. Borrowers shall receive a credit on a monthly basis to its loan account maintained by Agent on the funds so held by Agent at a rate equal to three and one half (31⁄2%) percent per annum less than the Prime Rate (adjusted effective on the first day of the month after any change in such Prime Rate is announced based on the Prime Rate in effect on the last day of the month
in which any such change occurs) as calculated by Agent.

 

(c) At Agent’s option, all principal, interest, fees, costs, expenses and other charges provided for in this Agreement or the other Financing Agreements may be charged directly to the loan account(s) of any Borrower maintained by
Agent.  Obligors shall make all payments to Agent and Lenders on the Obligations free and clear of, and without deduction or withholding for or on account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts, fees, deductions, withholding, restrictions or conditions of any kind.  If after receipt of any payment of, or proceeds of Collateral applied to the payment of, any of the Obligations, Agent, Issuing Bank or any Lender is required to surrender or return such payment or
proceeds to any Person for any reason, then the Obligations intended to be satisfied by such payment or proceeds shall be reinstated and continue and this Agreement shall continue in full force and effect as if such payment or proceeds had not been received by Agent or such Lender.  Obligors shall be liable to pay to Agent, and do hereby indemnify and hold Agent and Lenders harmless for the amount of any payments or proceeds surrendered or returned.  This Section 6.4(c) shall remain effective
notwithstanding any contrary action which may be taken by Agent or any Lender in reliance upon such payment or proceeds.  This Section 6.4 shall survive the payment of the Obligations and the termination of this Agreement.

 

6.5 Taxes.

 

(a) Any and all payments by or on account of any of the Obligations shall be made free and clear of and without deduction or withholding for or on account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts, fees, deductions,
charges, withholdings, liabilities, restrictions or conditions of any kind, excluding (i) in the case of each Lender, Issuing Bank and Agent (A) taxes measured by its net income, and franchise taxes imposed on it, by the jurisdiction (or any political subdivision thereof) under the laws of which such Lender, Issuing

 

  

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Bank or Agent (as the case may be) is organized and (B) any United States withholding taxes payable with respect to payments under the Financing Agreements under laws (including any statute, treaty or regulation) in effect on the date hereof (or, in the case of an Eligible Transferee, the date of the Assignment and Acceptance) applicable to
such Lender, Issuing Bank or Agent, as the case may be, but not excluding any United States withholding taxes payable as a result of any change in such laws occurring after the date hereof (or the date of such Assignment and Acceptance) and (ii) in the case of each Lender, Issuing Bank or Agent, taxes measured by its net income, and franchise taxes imposed on it as a result of a present or former connection between such Lender and the jurisdiction of the Governmental Authority imposing such tax or any taxing
authority thereof or therein (all such non-excluded taxes, levies, imposts, fees, deductions, charges, withholdings and liabilities being hereinafter referred to as “Taxes”).

 

(b) If any Taxes shall be required by law to be deducted from or in respect of any sum payable in respect of the Obligations to any Lender, Issuing Bank or Agent (i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional sums payable under this Section 6.5), such Lender, Issuing Bank or Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the relevant Obligor shall make such deductions, (iii) the relevant Obligor shall pay the full amount deducted to the relevant taxing authority or other authority in accordance with applicable law and (iv) the relevant Obligor shall deliver to
Agent evidence of such payment.

 

(c) In addition, each Obligor agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies of the United States or any political subdivision thereof or any applicable
foreign jurisdiction, and all liabilities with respect thereto, in each case arising from any payment made hereunder or under any of the other Financing Agreements or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any of the other Financing Agreements (collectively, “Other Taxes”).

 

(d) Each Obligor shall indemnify each Lender, Issuing Bank and Agent for the full amount of Taxes and Other Taxes (including any Taxes and Other Taxes imposed by any jurisdiction on amounts payable under this Section 6.5) paid by such
Lender, Issuing Bank or Agent (as the case may be) and any liability (including for penalties, interest and expenses) arising therefrom or with respect thereto.  This indemnification shall be made within thirty (30) days from the date such Lender, Issuing Bank or Agent (as the case may be) makes written demand therefor.  A certificate as to the amount of such payment or liability delivered to Administrative Borrower by a Lender, Issuing Bank (with a copy to Agent) or by Agent on its own behalf
or on behalf of a Lender or Issuing Bank, shall be conclusive absent manifest error.

 

(e) As soon as practicable after any payment of Taxes or Other Taxes by any Obligor, such Obligor shall furnish to Agent, at its address referred to herein, the original or a certified copy of a receipt evidencing payment thereof.

 

(f) Without prejudice to the survival of any other agreements of any Obligor hereunder or under any of the other Financing Agreements, the agreements and obligations of

 

  

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such Obligor contained in this Section 6.5 shall survive the termination of this Agreement and the payment in full of the Obligations.

 

(g) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the applicable Borrower is resident for tax purposes, or any treaty to which such jurisdiction is
a party, with respect to payments hereunder or under any of the other Financing Agreements shall deliver to Administrative Borrower (with a copy to Agent), at the time or times prescribed by applicable law or reasonably requested by Administrative Borrower or Agent (in such number of copies as is reasonably requested by the recipient), whichever of the following is applicable (but only if such Foreign Lender is legally entitled to do so):  (i) duly completed copies of Internal Revenue Service Form W-8BEN
claiming exemption from, or a reduction to, withholding tax under an income tax treaty, or any successor form, (ii) duly completed copies of Internal Revenue Service Form 8-8ECI claiming exemption from withholding because the income is effectively connection with a U.S. trade or business or any successor form, (iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Sections 871(h) or 881(c) of the Code, (A) a certificate of the Lender to the effect that such Lender
is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of a Borrower within the meaning of Section 881(c)(3)(B) of the Code or a “controlled foreign corporation” described and Section 881(c)(3)(C) of the Code and (B) duly completed copies of Internal Revenue Service Form W-8BEN claiming exemption from withholding under the portfolio interest exemption or any successor form or (iv) any other applicable form, certificate or document
prescribed by applicable law as a basis for claiming exemption from or a reduction in United States withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit a Borrower to determine the withholding or deduction required to be made.  Unless Administrative Borrower and Agent have received forms or other documents satisfactory to them indicating that payments hereunder or under any of the other Financing Agreements to or for a Foreign
Lender are not subject to United States withholding tax or are subject to such tax at a rate reduced by an applicable tax treaty, Borrowers or Agent shall withhold amounts required to be withheld by applicable requirements of law from such payments at the applicable statutory rate.

 

(h) Any Lender claiming any additional amounts payable pursuant to this Section 6.5 shall use its reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its applicable
lending office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts that would be payable or may thereafter accrue and would not, in the sole determination of such Lender, be otherwise disadvantageous to such Lender.

 

(i) Each Lender and Agent agrees that in the event that Obligors are required to pay additional amounts or to make indemnity payments pursuant to this Section 6.5 to such Lender or Agent, such Lender or Agent, as the case may be, will
use reasonable efforts to designate another lending office for any Loans, Letters of Credit or other Obligations.

 

6.6 Authorization to Make Loans.

 

  

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Agent and Lenders are authorized to make the Loans and provide the Letters of Credit based upon telephonic or other instructions received from anyone purporting to be an officer of any Borrower or Administrative Borrower or, at the discretion of Agent, if such Loans are necessary to satisfy any Obligations then due and payable.  All
requests for Loans or Letters of Credit hereunder shall specify the date on which the requested advance is to be made or Letters of Credit established (which day shall be a Business Day) and the amount of the requested Loan.  Requests received after 11:00 a.m. New York City time on any day shall be deemed to have been made as of the opening of business on the immediately following Business Day.  All Loans and Letters of Credit under this Agreement shall be conclusively presumed to have been
made to, and at the request of and for the benefit of, Borrowers when deposited to the credit of such Borrower or otherwise disbursed or established in accordance with the instructions of such Borrower or Administrative Borrower or in accordance with the terms and conditions of this Agreement.

 

6.7 Use of Proceeds.

 

All Loans made or Letters of Credit provided to or for the benefit of Borrowers pursuant to the provisions hereof shall be used by Borrowers only for costs, expenses and fees in connection with the preparation, negotiation, execution and delivery of this Agreement and the other Financing Agreements and for general operating, working capital
and other proper corporate purposes of Borrowers not otherwise prohibited by the terms hereof (including, without limitation, to finance Permitted Acquisitions, to redeem or repurchase Convertible 2007 Senior Notes, to repurchase Capital Stock of Parent or to make other Restricted Payments, in each case to the extent permitted herein).  None of the proceeds will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security or for the purposes of reducing or retiring
any Indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the Loans to be considered a “purpose credit” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, as amended, except, that, Borrowers may use proceeds of Loans to make acquisitions and to purchase shares of the Capital Stock of Parent so long as any such purchase (x) does not constitute or otherwise cause a violation of  Regulation
U and (y) is otherwise is in compliance with the terms and provisions hereof.

 

6.8 Pro Rata Treatment.

 

Except to the extent otherwise provided in this Agreement:  (a) the making and conversion of Revolving Loans shall be made among the Lenders based on their respective Pro Rata Shares as to the Revolving Loans and (b) each payment on account of any Obligations to or for the account of one or more of Lenders in respect of any Obligations
due on a particular day shall be allocated among the Lenders entitled to such payments based on their respective Pro Rata Shares and shall be distributed accordingly.

 

6.9 Sharing of Payment, Etc.

 

(a) Borrowers agree that, in addition to (and without limitation of) any right of setoff, banker’s lien or counterclaim Agent or any Lender may otherwise have, each Lender shall be entitled, at its option (but subject, as among
Agent and Lenders, to the provisions of Section 12.3(b) hereof), to offset balances held by it for the account of Borrowers at any of its

 

  

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offices, in dollars or in any other currency, against any principal of or interest on any Loans owed to such Lender or any other amount payable to such Lender hereunder, that is not paid when due (regardless of whether such balances are then due to Borrowers), in which case it shall promptly notify the Administrative Borrower and Agent thereof; provided, that,
such Lender’s failure to give such notice shall not affect the validity thereof.

 

(b) If any Lender (including Agent) shall obtain from any Obligor payment of any principal of or interest on any Loan owing to it or payment of any other amount under this Agreement or any of the other Financing Agreements through the
exercise of any right of setoff, banker’ s lien or counterclaim or similar right or otherwise (other than from Agent as provided herein), and, as a result of such payment, such Lender shall have received more than its Pro Rata Share of the principal of the Loans or more than its share of such other amounts then due hereunder or thereunder by Borrowers to such Lender than the percentage thereof received by any other Lender, it shall promptly pay to Agent, for the benefit of Lenders, the amount of such excess
and simultaneously purchase from such other Lenders a participation in the Loans or such other amounts, respectively, owing to such other Lenders (or such interest due thereon, as the case may be) in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all Lenders shall share the benefit of such excess payment (net of any expenses that may be incurred by such Lender in obtaining or preserving such excess payment) in accordance with their respective Pro Rata Shares
or as otherwise agreed by Lenders.  To such end all Lenders shall make appropriate adjustments among themselves (by the resale of participation sold or otherwise) if such payment is rescinded or must otherwise be restored.

 

(c) Borrowers agree that any Lender so purchasing such a participation (or direct interest) may exercise, in a manner consistent with this Section, all rights of setoff, banker’s lien, counterclaim or similar rights with respect
to such participation as fully as if such Lender were a direct holder of Loans or other amounts (as the case may be) owing to such Lender in the amount of such participation.

 

(d) Nothing contained herein shall require any Lender to exercise any such right or shall affect the right of any Lender to exercise, and retain the benefits of exercising, any such right with respect to any other Indebtedness or obligation
of Borrower.  If, under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this Section applies, such Lender shall, to the extent practicable, assign such rights to Agent for the benefit of Lenders and, in any event, exercise its rights in respect of such secured claim in a manner consistent with the rights of Lenders entitled under this Section to share in the benefits of any recovery on such secured claim.

 

6.10 Settlement Procedures.

 

(a) In order to administer the Credit Facility in an efficient manner and to minimize the transfer of funds between Agent and Lenders, Agent may, at its option, subject to the terms of this Section, make available, on behalf of Lenders,
including the Swing Line Lender, the full amount of the Revolving Loans or Swing Line Loans requested or charged to any Borrower’s loan account(s) or otherwise to be advanced by Lenders pursuant to the terms hereof, without requirement of prior notice to Lenders of the proposed Revolving Loans.

 

  

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(b) With respect to all Revolving Loans made by Agent on behalf of Lenders, the amount of each Lender’s Pro Rata Share of the outstanding Revolving Loans shall be computed weekly, and shall be adjusted upward or downward on the
basis of the amount of the outstanding Revolving Loans as of 5:00 p.m. New York City time on the Business Day immediately preceding the date of each settlement computation; provided, that, Agent retains the absolute right at any time or from time to time to make the above described adjustments at intervals more frequent than weekly, but in no event more than twice in any week.  With
respect to Swing Line Loans made by Swing Line Lender or Agent on behalf of Swing Line Lender, Swing Line Lender (or Agent on behalf of Swing Line Lender) shall settle on the Swing Line Loans on a weekly basis or such other more frequent basis as Agent may from time to time determine.  Agent (or Swing Line Lender as to Swing Line Loans) shall deliver to each of the Lenders after the end of each week, or at such lesser period or periods as Agent (or Swing Line Lender as to Swing Line Loans) shall determine,
a summary statement of the amount of outstanding Loans (whether Revolving Loans, Swing Line Loans or both, as applicable) for such period (such week or other period or periods being hereinafter referred to as a “Settlement Period”).  If the summary statement is sent by Agent (or Swing Line Lender in the case of Swing Line Loans) and received by a Lender prior to 12:00 p.m. New York City time, then such Lender shall make the settlement transfer described in this Section by no later than 3:00
p.m. New York City time on the same Business Day and if received by a Lender after 12:00 p.m. New York City time, then such Lender shall make the settlement transfer by not later than 3:00 p.m. New York City time on the next Business Day following the date of receipt.  If, as of the end of any Settlement Period, the amount of a Lender’s Pro Rata Share of the outstanding Loans is more than such Lender’s Pro Rata Share of the outstanding Loans as of the end of the previous Settlement
Period, then such Lender shall forthwith (but in no event later than the time set forth in the preceding sentence) transfer to Agent by wire transfer in immediately available funds the amount of the increase.  Alternatively, if the amount of a Lender’s Pro Rata Share of the outstanding Revolving Loans in any Settlement Period is less than the amount of such Lender’s Pro Rata Share of the outstanding Revolving Loans for the previous Settlement Period, Agent shall forthwith transfer to such
Lender by wire transfer in immediately available funds the amount of the decrease. Each Lender shall forthwith (but in no event later than the time set forth in the preceding sentence) transfer to Swing Line Lender (or upon its request to Agent) by wire transfer in immediately available funds the amount of such Lender’s Pro Rata Share of the outstanding Swing Line Loans as set forth in the summary statement provided to such Lender as provided above.  Amounts transferred to Swing Line Lender (or
Agent as the case may be) in respect to a settlement of Swing Line Loans shall be applied to the payment of the Swing Line Loans and shall constitute Revolving Loans of such Lenders.  The obligation of each of the Lenders to transfer such funds and effect such settlement shall be irrevocable and unconditional and without recourse to or warranty by Agent and may occur at any time an Event of Default exists or has occurred and is continuing and whether or not the conditions set forth in Section 4.2 are
satisfied (except if there is an Event of Default under Section 10.1(g) and 10.1(h), in which case the funds shall be in respect of each Lender’s participation).  Agent and each Lender agrees to mark its books and records at the end of each Settlement Period to show at all times the dollar amount of its Pro Rata Share of the outstanding Loans and Letters of Credit.  Each Lender shall only be entitled to receive interest on its Pro Rata Share of the Loans to the extent such Loans have
been funded by such Lender.  Because the Agent on behalf of Lenders may be advancing and/or may be repaid Loans prior to the time when Lenders will actually advance and/or be

 

  

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repaid such Loans, interest with respect to Loans shall be allocated by Agent in accordance with the amount of Loans actually advanced by and repaid to each Lender and the Agent and shall accrue from and including the date such Loans are so advanced to but excluding the date such Loans are either repaid by Borrowers or actually settled with
the applicable Lender as described in this Section.

 

(c) To the extent that Agent has made any such amounts available and the settlement described above shall not yet have occurred, upon repayment of any Loans by a Borrower, Agent may apply such amounts repaid directly to any amounts made
available by Agent pursuant to this Section.  In lieu of weekly or more frequent settlements, Agent may, at its option, at any time require each Lender to provide Agent with immediately available funds representing its Pro Rata Share of each Loan, prior to Agent’s disbursement of such Loan to a Borrower.  In such event, Agent shall notify each Lender promptly after Agent’s receipt of the request for the Loans from a Borrower (or Administrative Borrower on behalf of such Borrower)
or any deemed request hereunder and each Lender shall provide its Pro Rata Share of such requested Loan to the account specified by Agent in immediately available funds not later than 2:00 p.m. New York City time on the requested funding date, so that all such Loans shall be made by the Lenders simultaneously and proportionately to their Pro Rata Shares.  No Lender shall be responsible for any default by any other Lender in the other Lender’s obligation to make a Loan requested hereunder nor shall
the Commitment of any Lender be increased or decreased as a result of the default by any other Lender in the other Lender’s obligation to make a Loan hereunder.

 

(d) Upon the making of any Loan by Agent as provided herein, without further action by any party hereto, each Lender shall be deemed to have irrevocably and unconditionally purchased and received from Agent, without recourse or warranty,
an undivided interest and participation to the extent of such Lender’s Pro Rata Share in such Loan.  To the extent that there is no settlement in accordance with the terms hereof, Agent may at any time require the Lenders to fund their participations.  From and after the date, if any, on which any Lender has funded its participation in any such Loan, Agent shall promptly distribute to such Lender, such Lender’s Pro Rata Share of all payments of principal and interest received by
Agent in respect of such Loan.

 

(e) As to any Loan funded by Agent on behalf of a Lender (including Swing Line Lender) whether pursuant to Sections 6.10(a), 6.10(b) or 6.10(c) above, Agent may assume that each Lender will make available to Agent such Lender’s
Pro Rata Share of the Loan requested or otherwise made on such day in the case of Loans funded pursuant to Section 6.10(c) above or otherwise on the applicable settlement date.  If Agent makes amounts available to a Borrower and such corresponding amounts are not in fact made available to Agent by such Lender, Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon for each day from the date such payment was due until the date such amount
is paid to Agent at the Federal Funds Rate for each day during such period (as published by the Federal Reserve Bank of New York or at Agent’s option based on the arithmetic mean determined by Agent of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. New York City time on that day by each of the three leading brokers of Federal funds transactions in New York selected by Agent) and if such amounts are

 

  

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not paid within three (3) days of Agent’s demand, at the highest Interest Rate provided for in Section 3.1 hereof applicable to Base Rate Loans.  During the period in which such Lender has not paid such corresponding amount to Agent, notwithstanding anything to the contrary contained in this Agreement or any of the other Financing
Agreements, the amount so advanced by Agent to or for the benefit of any Borrower shall, for all purposes hereof, be a Loan made by Agent for its own account.

 

(f) Upon any failure by a Lender to pay Agent (or Swing Line Lender) pursuant to the settlement described in Section 6.10(b) above or to pay Agent pursuant to Section 6.10(c), 6.10(d) or Section 6.10(e), Agent shall promptly thereafter
notify Administrative Borrower of such failure and Borrowers shall pay such corresponding amount to Agent for its own account within five (5) Business Days of Administrative Borrower’s receipt of such notice.

 

(g) Agent shall not be obligated to transfer to a Defaulting Lender any payments received by Agent for the Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder (including
any principal, interest or fees).  For purposes of voting or consenting to matters with respect to this Agreement and the other Financing Agreements and determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to be zero (0).  So long as there is a Defaulting Lender, the maximum amount of the Loans and Letters of Credit shall not exceed the aggregate amount of the Commitments of the Lenders that
are not Defaulting Lenders plus the Pro Rata Share of the Defaulting Lender (determined immediately prior to its being a Defaulting Lender) of the Loans and Letters of Credit outstanding as of the date that the Defaulting Lender has become a Defaulting Lender.  At any time that there is a Defaulting Lender, payments received for application to the Obligations payable to Lenders in accordance with the terms of this Agreement shall be distributed to Lenders based on their Pro Rata Shares calculated after
giving effect to the reduction of the Defaulting Lender’s Commitment to zero as provided herein or at Agent’s option, Agent may instead receive and retain such amounts that would be otherwise attributable to the Pro Rata Share of a Defaulting Lender (which for such purpose shall be such Pro Rata Share as in effect immediately prior to its being a Defaulting Lender).  To the extent that Agent elects to receive and retain such amounts, Agent may hold such amounts (which shall not accrue interest)
and, in its reasonable discretion, relend such amounts to a Borrower. To the extent that Agent exercises its option to relend such amounts, such amounts shall be treated as Revolving Loans for the account of Agent in addition to the Revolving Loans that are made by the Lenders other than a Defaulting Lender based on their respective Pro Rata Shares as calculated after giving effect to the reduction of such Defaulting Lender’s Commitment to zero (0) as provided herein but shall be repaid in the same order
of priority as the principal amount of the Loans on a pro rata basis for purposes of Section 6.4 hereof.  Agent shall determine whether any Revolving Loans requested shall be made from relending such amounts or from Revolving Loans from the Lenders (other than a Defaulting Lender) and any allocation of requested Revolving Loans between them.  The rights of a Defaulting Lender shall be limited as provided herein until such time as the Defaulting Lender has made all payments to Agent of
the amounts that it had failed to pay causing it to become a Defaulting Lender and such Lender is otherwise in compliance with the terms of this Agreement (including making any payments as it would have been required to make as a Lender during the period that it was a Defaulting Lender other than in respect of the principal amount of

 

  

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Revolving Loans, which payments as to the principal amount of Revolving Loans shall be made based on the outstanding balance thereof on the date of the cure by Defaulting Lender or at such other time thereafter as Agent may specify) or has otherwise provided evidence in form and substance satisfactory to Agent that such Defaulting Lender will
be able to fund its Pro Rata Share (as in effect immediately prior to its being a Defaulting Lender) in accordance with the terms hereof.  Upon the cure by Defaulting Lender of the event that is the basis for it to be a Defaulting Lender by making such payment or payments and such Lender otherwise being in compliance with the terms hereof, such Lender shall cease to be a Defaulting Lender and shall only be entitled to payment of interest accrued during the period that such Lender was a Defaulting Lender
to the extent previously received and retained by Agent from or for the account of Borrowers on the funds constituting Loans funded by such Lender prior to the date of it being a Defaulting Lender (and not previously paid to such Lender) and shall otherwise, on and after such cure, make Loans and settle in respect of the Loans and other Obligations in accordance with the terms hereof. The existence of a Defaulting Lender and the operation of this Section shall not be construed to increase or otherwise affect
the Commitment of any Lender, or relieve or excuse the performance by any Borrower or Guarantor of its duties and obligations hereunder (including, but not limited to, the obligation of such Borrower or Guarantor to make any payments hereunder, whether in respect of Loans by a Defaulting Lender or otherwise).

 

(h) Notwithstanding anything to the contrary contained in this Agreement, in the event that there is a Defaulting Lender, if there are any Letters of Credit outstanding, within three (3) Business Days after the written request of the
applicable Issuing Bank, Borrowers shall pay to Agent an amount equal to the Pro Rata Share of the Defaulting Lender (calculated as in effect immediately prior to such Lender becoming a Defaulting Lender) of the Letter of Credit Obligations then outstanding to be held by Agent on terms and conditions satisfactory to Agent and Issuing Bank as cash collateral for the Obligations and for so long as there is a Defaulting Lender, Issuing Bank shall not be required to issue any Letter of Credit, or increase or extend
or otherwise amend any Letter of Credit, unless upon the request of Issuing Bank, Agent has cash collateral from Borrowers in an amount equal to the Pro Rata Share of the Defaulting Lender (calculated as in effect immediately prior to such Lender becoming a Defaulting Lender) of the Letter of Credit Obligations outstanding after giving effect to any such requested Letter of Credit (or increase, extension or other amendment) to be held by Agent on its behalf on terms and conditions satisfactory to Agent and Issuing
Bank or there are other arrangements reasonably satisfactory to Issuing Bank with respect to the participation in Letters of Credit by such Defaulting Lender.  Such cash collateral shall be applied first to the Letter of Credit Obligations before application to any other Obligations, notwithstanding anything to the contrary contained in Section 6.4 hereof.

 

(i) Nothing in this Section or elsewhere in this Agreement or the other Financing Agreements shall be deemed to require Agent to advance funds on behalf of any Lender or to relieve any Lender from its obligation to fulfill its Commitment
hereunder or to prejudice any rights that any Borrower may have against a Lender as a result of any default by such Lender hereunder in fulfilling its Commitment.

 

6.11 Obligations Several; Independent Nature of Lenders’ Rights.

 

  

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The obligation of each Lender hereunder is several, and no Lender shall be responsible for the obligation or commitment of any other Lender hereunder.  Nothing contained in this Agreement or any of the other Financing Agreements and no action taken by the Lenders pursuant hereto or thereto shall be deemed to constitute the Lenders
to be a partnership, an association, a joint venture or any other kind of entity.  The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and subject to Section 12.3 hereof, each Lender shall be entitled to protect and enforce its rights arising out of this Agreement and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose.

 

6.12 Appointment of Administrative Borrower as Agent for Requesting Loans and Receipts of Loans and Statements.

 

(a) Each Borrower hereby irrevocably appoints and constitutes Administrative Borrower as its agent and attorney-in-fact to request and receive Loans and Letters of Credit pursuant to this Agreement and the other Financing Agreements from
Agent or any Lender in the name or on behalf of such Borrower.  Agent and Lenders may disburse the Loans to such bank account of Administrative Borrower or a Borrower or otherwise make such Loans to a Borrower and provide such Letters of Credit to an Obligor or Additional L/C Debtor as Administrative Borrower may designate or direct, without notice to any other Obligor.  Notwithstanding anything to the contrary contained herein, Agent may at any time and from time to time require that Loans
to or for the account of any Borrower be disbursed directly to an operating account of such Borrower.

 

(b) Administrative Borrower hereby accepts the appointment by Borrowers to act as the agent and attorney-in-fact of Borrowers pursuant to this Section 6.12.  Administrative Borrower shall ensure that the disbursement of any
Loans to each Borrower requested by or paid to or for the account of Administrative Borrower, or the issuance of any Letter of Credit for a Borrower hereunder, shall be paid to or for the account of such Borrower.

 

(c) Each Obligor hereby irrevocably appoints and constitutes Administrative Borrower as its agent to receive statements on account and all other notices from Agent and Lenders with respect to the Obligations or otherwise under or in connection
with this Agreement and the other Financing Agreements.

 

(d) Any notice, election, representation, warranty, agreement or undertaking by or on behalf of any other Obligor by Administrative Borrower shall be deemed for all purposes to have been made by such Obligor, and shall be binding upon
and enforceable against such Obligor to the same extent as if made directly by such Obligor.

 

(e) No purported termination of the appointment of Administrative Borrower as agent as aforesaid shall be effective, except after ten (10) days’ prior written notice to Agent.

 

6.13 Bank Products.  Any Obligor may (but is not required to) request that any Bank Product Provider provide or arrange for such Obligor to obtain Bank Products
from such Bank Product Provider, and any Bank Product Provider may, in its sole discretion, provide or arrange for such Obligor to obtain the requested Bank Products.  Obligors shall indemnify and hold

  

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Agent, each Lender and their respective Affiliates harmless from any and all obligations now or hereafter owing to any other Person by any Bank Product Provider in connection with any Bank Products other than for gross negligence or willful misconduct on the part of any such indemnified Person.  This Section 6.13 shall survive the
payment of the Obligations and the termination of this Agreement.  Obligors acknowledge and agree that the obtaining of Bank Products from Bank Product Providers (a) is in the sole discretion of each Bank Product Provider, and (b) is subject to all rules and regulations of such Bank Product Provider.

SECTION 7. COLLATERAL COVENANTS

 

7.1 Intentionally Deleted.

 

7.2 Accounts Covenants.

 

(a) Obligors shall notify Agent promptly of: (i) any notice of a material default by any Obligor under any of the Credit Card Agreements or of any default which has a reasonable likelihood of resulting in the Credit Card Issuer or Credit
Card Processor ceasing to make payments or suspending payments to any Obligor, (ii) any notice from any Credit Card Issuer or Credit Card Processor that such person is ceasing or suspending, or will cease or suspend, any present or future payments due or to become due to any Obligor from such person, or that such person is terminating or will terminate any of the Credit Card Agreements, and (iii) the failure of any Obligor to comply with any material terms of the Credit Card Agreements or any terms thereof which
has a reasonable likelihood of resulting in the Credit Card Issuer or Credit Card Processor ceasing or suspending payments to any Obligor.

 

(b) Each Obligor shall notify Agent promptly of the assertion of (i) any claims, offsets, defenses or counterclaims by any account debtor, with respect to Accounts constituting Collateral, Credit Card Issuer or Credit Card Processor or
any disputes with any of such persons or any settlement, adjustment or compromise thereof, to the extent any of the foregoing exceeds $10,000,000 in any one case or $20,000,000 in the aggregate and (ii) all material adverse information of which it has knowledge relating to the financial condition of any material trade account debtor, Credit Card Issuer or Credit Card Processor.  No material credit, discount, allowance or extension or agreement for any of the foregoing shall be granted to any account
debtor, Credit Card Issuer or Credit Card Processor except in the ordinary course of an Obligor’s business.  So long as no Event of Default has occurred and is continuing, each Obligor may settle, adjust or compromise any claim, offset, counterclaim or dispute with any account debtor, Credit Card Issuer, or Credit Card Processor.  At any time that an Event of Default has occurred and is continuing, Agent shall, at its option, have the right to settle, adjust or compromise any claim,
offset, counterclaim or dispute with account debtors with respect to Accounts constituting Collateral, Credit Card Issuers or Credit Card Processors or grant any credits, discounts or allowances with respect to Accounts constituting Collateral.

 

(c) With respect to each Account constituting Collateral: (i) no payments shall be made thereon except payments delivered to Agent when and as required pursuant to the terms of this Agreement, and (ii) there shall be no setoffs, deductions,
contras, defenses, counterclaims or disputes existing or asserted with respect thereto except as reported to Agent in accordance with the terms of this Agreement or as has been or will be reflected in a Borrowing Base

 

  

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Certificate to be delivered to Agent, and, additionally with respect to Credit Card Receivables, in accordance with the practices of the related Credit Card Issuer, Credit Card Processor or other Obligor thereon.

 

(d) Agent shall have the right at any time or times, in Agent’s name or in the name of a nominee of Agent, to verify the validity, amount or any other matter relating to any Receivables constituting Collateral or other Collateral,
by mail, telephone, facsimile transmission or otherwise.

 

(e) Agent  may, at any time or times that an Event of Default has occurred and is continuing, (i) notify any or all account debtors with respect to Accounts constituting Collateral, Credit Card Issuers, Credit Card Processors
or any other obligor in respect of any Receivables with respect to Accounts constituting Collateral that such Receivables have been assigned to Agent and that Agent has a security interest therein and Agent  may direct any or all account debtors, Credit Card Issuers, Credit Card Processors or other obligors in respect of any such Receivables to make payment of such Receivables directly to Agent, (ii) extend the time of payment of, compromise, settle or adjust for cash, credit, return of merchandise
or otherwise, and upon any terms or conditions, any and all Receivables constituting Collateral or other obligations included in the Collateral and thereby discharge or release the account debtor or any other party or parties in any way liable for payment thereof without affecting any of the Obligations, (iii) demand, collect or enforce payment of any Receivables constituting Collateral, but without any duty to do so, and Agent and Lenders shall not be liable for Agent’s failure to collect or enforce the
payment thereof nor for the negligence of its agents or attorneys with respect thereto and (iv) take whatever other action Agent may reasonably and in good faith deem necessary for the protection of its interests.  At any time that an Event of Default has occurred and is continuing, at Agent’s request, all invoices and statements sent to any account debtor shall state that the Accounts constituting Collateral have been assigned to Agent and are payable directly and only to Agent and each Obligor
shall deliver to Agent such originals of documents evidencing the sale and delivery of goods or the performance of services giving rise to any Accounts constituting Collateral as Agent may require.

 

7.3 Inventory Covenants.

 

With respect to the Inventory: (a) each Obligor shall and Parent shall cause each Additional L/C Debtor to at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate records itemizing and describing the kind, type, quality and quantity of Inventory, Obligors’ cost therefor and withdrawals therefrom
and additions thereto; (b) Obligors shall conduct a physical count of the Inventory at least once each year (at which representatives of Agent may be present) and at such time or times as is consistent with current practices, but at any time or times as Agent may request after an Event of Default has occurred and is continuing in accordance with clause (e) below, and promptly following such physical inventory shall supply Agent with a report in the form and with such specificity as may be reasonably satisfactory
to Agent concerning such physical count; (c) Obligors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Agent, except: (i)  for sales of Inventory in the ordinary course of any Obligor’s business, (ii) to move Inventory directly from one location set forth or permitted herein to another such location, (iii) for Inventory shipped from the manufacturer thereof to Obligors which is in transit to the

  

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locations set forth or permitted herein, and (iv) in connection with any other transactions or dispositions permitted by this Agreement; (d) upon Agent’s request, Borrowers shall deliver or cause to be delivered to Agent written reports or appraisals as to the Inventory of Obligors in form, scope and methodology reasonably acceptable
to Agent and by an appraiser reasonably acceptable to Agent, addressed to Agent and upon which Agent and Lenders are expressly permitted to rely; provided, that, (i) Borrowers acknowledge and agree that such Inventory reports and appraisals shall be requested by Agent and shall be delivered by Borrowers with at least the Required Frequency and may be requested by Agent and shall be
delivered by Borrowers at any time following the occurrence and during the continuance of an Event of Default; and (ii) all such Inventory reports and appraisals shall be at the expense of Borrowers, except for Inventory reports and appraisals in excess of the Required Frequency, provided, that, all such Inventory reports and appraisals shall be at the expense of Borrowers at any time
that an Event of Default shall exist or shall have occurred and be continuing; (e) after the occurrence and during the continuance of an Event of Default, Borrowers shall, at their expense, conduct through RGIS Inventory Specialists, Inc. or another inventory counting service reasonably acceptable to Agent, a physical count of the Inventory in form, scope and methodology acceptable to Agent, the results of which shall be reported directly by such inventory counting service to Agent and Borrowers shall promptly
deliver confirmation in a form reasonably satisfactory to Agent that appropriate adjustments have been made to the inventory records of Obligors to reconcile the inventory count to Obligors’ inventory records; (f) Obligors assume all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory; (g) each Obligor shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate Obligors
to repurchase such Inventory except for the right of return given to retail customers of Obligors in the ordinary course of the business of Obligors in accordance with the then current return policy of Obligor; (h) Obligors shall keep the Inventory in good condition (taken as a whole); and (i) Obligors shall not acquire or accept any Inventory on consignment or approval, except for the sale of lines other than apparel to the extent such Inventory is reported to Agent in accordance with the terms hereof.

7.4 Bills of Lading and Other Documents of Title.

 

With respect to Inventory in transit to premises of Obligors in the United States of America, after the occurrence and during the continuance of a Cash Dominion Event, (a) Obligors shall cause all bills of lading and other documents of title relating to goods being purchased by it which are outside the United States and in transit to such
premises in the United States of America to name Obligors as consignee, unless and until Agent directs otherwise; (b) at such time and from time to time as Agent may direct, Obligors shall cause Agent or such other financial institution or other person as Agent may specify to be named as consignee; (c) without limiting any other rights of Agent or any Secured Party hereunder, Agent shall have the right to endorse and negotiate on behalf of , and as attorney in fact for, Obligors any bill of lading or other document
of title with respect to such goods naming Obligors as consignee to Agent; (d) there shall be no more than three (3) originals of each of such bill of lading or other document of title which unless and upon Agent’s direction, shall be delivered as follows: (i) one (1) original to such customs broker as the applicable Obligor may specify (so long as Agent has received a Collateral Access Agreement duly executed and delivered by such customs broker), and (ii) two

 

  

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(2) originals to Agent or to such other person as Agent may designate for such purpose; (e) Obligors shall obtain a copy (but not the originals) of such bill of lading or other documents of title from the customs broker; and     (f) Obligors shall cause all bills of lading or other documents of title relating to goods
purchased by Obligors which are outside the United States and in transit to the locations listed on Omnibus Schedule 2 to be issued in a form so as to constitute negotiable documents as such term is defined in the UCC.  To the extent that the terms of this Section are applicable and  have not been satisfied as to any Inventory, such Inventory shall not constitute Eligible Inventory, Eligible In-Transit Inventory or Eligible L/C Inventory, as the case may be, except as Agent may otherwise agree.

 

7.5 Power of Attorney.

 

Each Obligor hereby irrevocably designates and appoints Agent (and all persons designated by Agent) as such Obligor’s true and lawful attorney in fact, and authorizes Agent, in such Obligor’s or Agent’s name, to: (a) at any time an Event of Default has occurred and is continuing (i) demand payment on Receivables constituting
Collateral or other Collateral, (ii) enforce payment of Receivables constituting Collateral by legal proceedings or otherwise, (iii) exercise all of such Obligor’s rights and remedies to collect any Receivable constituting Collateral or other Collateral, (iv) sell or assign any Receivable constituting Collateral upon such terms, for such amount and at such time or times as the Agent deems advisable, (v) settle, adjust, compromise, extend or renew an Account constituting Collateral, (vi) discharge and release
any Receivable constituting Collateral, (vii) prepare, file and sign such Obligor’s name on any proof of claim in bankruptcy or other similar document against an account debtor or other obligor in respect of any Receivable constituting Collateral or other Collateral, (viii) notify the post office authorities to change the address for delivery of remittances from account debtors or other obligors in respect of Receivables constituting Collateral or other proceeds of Collateral to an address designated by
Agent, and open and dispose of all mail addressed to such Obligor and handle and store all mail relating to the Collateral; (ix) clear Inventory the purchase of which was financed with Letters of Credit through the Bureau of Customs and Border Protection (formerly the Customs Service) or other domestic or foreign export control authorities in such Obligor’s name, Agent’s name or the name of Agent’s designee, and to sign and deliver to customs officials powers of attorney in such Obligor’s
name for such purpose, and to complete in such Obligor’s name, any necessary documents in connection therewith and endorse and negotiate any bill of lading or other document of title with respect to such goods naming such Obligor as consignee to Agent or its designee, and (x) do all acts and things which are necessary, in Agent’s determination, to fulfill such Obligor’s obligations under this Agreement and the other Financing Agreements and (b) at any time to (i) take control in any manner of
any item of payment in respect of Receivables constituting Collateral or otherwise received in or for deposit in the Blocked Accounts or otherwise received by Agent or any Lender, (ii) have access to any lockbox or postal box into which remittances from account debtors or other obligors in respect of Receivables constituting Collateral or other proceeds of Collateral are sent or received, (iii) endorse Obligor’s name upon any items of payment in respect of Receivables or constituting Collateral or otherwise
received by Agent and any Lender and deposit the same in Agent’s account for application to the Obligations, (iv) endorse Obligor’s name upon any chattel paper, document, instrument, invoice, or similar document or agreement relating to any Receivable constituting Collateral or any goods pertaining thereto or any other Collateral, including any

 

  

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warehouse or other receipts, or bills of lading and other negotiable or non-negotiable documents, and (v) sign such Obligor’s name on any verification of Receivables constituting Collateral and notices thereof to account debtors or any secondary obligors or other obligors in respect thereof.  Each Obligor hereby releases Agent
and Lenders and their respective officers, employees and designees from any liabilities arising from any act or acts under this power of attorney and in furtherance thereof, whether of omission or commission, except as a result of Agent’s own gross negligence or willful misconduct as determined pursuant to a final non-appealable order of a court of competent jurisdiction.

 

7.6 Right to Cure.

 

Agent may, at its option, upon notice to Administrative Borrower, following the occurrence and during the continuance of an Event of Default, (a) cure any material default by any Obligor under any agreement with a third party if and to the extent the termination of such agreement would materially and adversely affect the Collateral (taken
as a whole) or the value thereof or the ability of Agent to collect, sell or otherwise dispose of the Collateral or the rights and remedies of Agent or any Lender therein or the ability of Obligor to perform its obligations hereunder or under any of the other Financing Agreements; (b) pay or bond on appeal any judgment entered against any Obligor; or (c) discharge taxes, liens, security interests or other encumbrances at any time levied on or existing with respect to the Collateral excluding Permitted Liens and
pay any amount, incur any expense or perform any act which, in Agent’s reasonable judgment, is necessary to preserve, protect, insure or maintain the Collateral and the rights of Agent and Lenders with respect thereto.  Agent may add any amounts so expended to the Obligations and charge Borrowers’ account therefor, such amounts to be repayable by Borrowers promptly (but in any event within five (5) Business Days) following Agent’s written demand therefor.  Agent and Lenders
shall be under no obligation to effect such cure, payment or bonding and shall not, by doing so, be deemed to have assumed any obligation or liability of any Obligor.  Any payment made or other action taken by Agent under this Section shall be without prejudice to any right to assert an Event of Default hereunder and to proceed accordingly.

 

7.7 Access to Premises.

 

From time to time as requested by Agent, at the cost and expense of Borrowers, (a) Agent or its designee shall have complete access to all of Obligors’ premises during normal business hours and after notice to Administrative Borrower, or at any time and without notice to Obligors or Administrative Borrower if an Event of Default has
occurred and is continuing, for the purposes of inspecting, verifying and auditing the Collateral and all of Borrowers’ books and records, including the Records, and (b) Obligors shall promptly furnish or cause to be furnished to Agent such copies of such books and records or extracts therefrom as Agent may reasonably request, (including copies of any Material Contracts entered into after the date hereof, and any amendments to any Material Contracts) and (c) Agent or any Lender or Agent’s designee
may use during normal business hours such of any Obligor’s personnel, equipment, supplies and premises as may be reasonably necessary for the foregoing (provided, that, Agent shall use such personnel, equipment, supplies and premises in such manner so as to minimize any interference with the operations of Obligors) and if an Event of Default exists or has occurred and is continuing
for the collection of Accounts constituting Collateral and realization of other Collateral.

 

  

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SECTION 8. REPRESENTATIONS AND WARRANTIES

 

Obligors hereby, jointly and severally, represent and warrant to Agent, each Issuing Bank and Lenders the following (which shall survive the execution and delivery of this Agreement), the truth and accuracy of which are a continuing condition of the making of Loans and providing Letters of Credit by Agent and Lenders to Borrowers.

 

8.1 Corporate Existence, Power and Authority; Subsidiaries.

 

Each Obligor and each Additional L/C Debtor is a corporation, limited liability company or partnership duly organized and in good standing under the laws of its state or jurisdiction of formation and is duly qualified as a foreign entity and in good standing in all states or other jurisdictions where the nature and extent of the business transacted
by it or the ownership of assets makes such qualification necessary and where the failure to so qualify or be in good standing has or has a reasonably likelihood of having a Material Adverse Effect.  The execution, delivery and performance of this Agreement, the other Financing Agreements, and the transactions contemplated hereunder and thereunder are all within each Obligor’s powers, have been duly authorized and are not in contravention of law or the terms of each Obligor’s certificate
of incorporation, formation, operating or partnership agreement, by-laws, or other organizational documentation.  The execution, delivery and performance of this Agreement, the other Financing Agreements and the transactions contemplated thereby (a) are not in contravention of the terms of any indenture, or mortgage, agreement or other undertaking to which any Obligor or Additional L/C Debtor is a party or by which any Obligor or Additional L/C Debtor or its respective properties are bound where the
Indebtedness, obligations or other liability of such Obligor or Additional L/C Debtor equals or exceeds $15,000,000 or (b) will not result in, require or give rise to the creation or imposition of any Lien upon any property of Obligors or Additional L/C Debtor under any agreement or otherwise (other than in favor of Agent pursuant to the terms of the Financing Agreements or a Permitted Lien).  This Agreement and the other Financing Agreements constitute legal, valid and binding obligations of Borrowers
enforceable in accordance with their respective terms.  Obligors do not have any Subsidiaries except as set forth on Omnibus Schedule 1 hereto.

 

8.2 Financial Statements; No Material Adverse Effect.

 

All financial statements relating to Borrowers or any other Subsidiary of Parent which have been or may hereafter be delivered by Borrowers to Agent and Lenders have been prepared in accordance with GAAP and fairly present in all material respects the financial condition and the results of operation of Obligors as at the dates and for the
periods set forth therein.  There has been no act, condition or event which has had or is reasonably likely to have a Material Adverse Effect since the date of the most recent audited financial statements furnished by Borrowers to Agent prior to the date of this Agreement.  The projections for the fiscal years ending on or about January 31, 2010 through January 31, 2012 that have been delivered to Agent or any projections hereafter delivered to Agent have been prepared in light of the past
operations of the businesses of Parent and its Subsidiaries and are based upon estimates and assumptions stated therein, all of which Parent and its Subsidiaries have determined to be reasonable and fair in light of the then current conditions and current facts and reflect the good faith and reasonable estimates of Parent

 

  

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and its Subsidiaries of the future financial performance of Parent and its Subsidiaries and of the other information projected therein for the periods set forth therein.

 

8.3 Collateral Locations.

 

Each Obligor and each Obligor’s Records concerning Accounts are located only at the addresses set forth for such Obligor on Omnibus Schedule 2 hereto, subject to the right of any Obligor to establish new locations in accordance with Section 9.2 hereof.  Omnibus Schedule 2 hereto correctly identifies as of the date hereof
any of such locations which are not owned by Obligors and sets forth the owners and/or operators thereof.

 

8.4 Priority of Liens’ Title to Properties.

 

The Liens granted to Agent under this Agreement and the other Financing Agreements constitute valid and, except as otherwise specifically consented to in writing by Agent or contemplated in this Agreement, perfected first priority Liens in and upon the Collateral subject only to Liens permitted under Section 9.9 hereof.  Each Obligor
has good and marketable title to all of its respective properties and assets subject to no Liens of any kind, except Permitted Liens.

 

8.5 Tax Returns.

 

Each Obligor and the other Subsidiaries of Parent has filed, or caused to be filed, in a timely manner prior to the expiration of all properly filed extensions all tax returns, reports and declarations which are required to be filed by it, except as set forth in Omnibus Schedule 16 hereto or unless any such failure to timely file any such
tax returns, reports or declarations would not have a Material Adverse Effect.  All information in such tax returns, reports and declarations is complete and accurate in all material respects.  Each of Obligors has paid or caused to be paid all taxes due and payable or claimed due and payable, as to which non-payment thereof would result in a Material Adverse Effect, except taxes the validity of which are being contested in good faith by appropriate proceedings diligently pursued and with
respect to which adequate reserves have been set aside on its books.  Adequate provision has been made for the payment of all accrued and unpaid Federal, State, county, local, foreign and other taxes whether or not yet due and payable and whether or not disputed.  Each Obligor has collected and remitted to the appropriate tax authority when due all sales and/or use taxes applicable to its business required to be collected under the laws of the United States and each possession or territory
thereof, and each State or political subdivision thereof or any other jurisdiction, as to which non-payment thereof would result in a Material Adverse Effect.

 

8.6 Litigation.

 

Except as set forth on Omnibus Schedule 8 hereto, there is no present investigation by any Governmental Authority pending, or to the best of any Borrower’s knowledge threatened, against or affecting any Obligor, its assets or business and there is no action, suit, proceeding or claim by any Person pending, or to the best of each Borrower’s
knowledge threatened, against any Obligor or its assets or goodwill, or against or affecting any transactions contemplated by this Agreement, which, in any case, has had or has a reasonable likelihood of having a Material Adverse Effect.

 

  

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8.7 Compliance with Other Agreements and Applicable Laws.

 

(a) None of Obligors or other Subsidiaries of Parent is in default in any respect under, or in violation in any respect of the terms of, any material agreement, contract, instrument, lease or other commitment to which it is a party or
by which it or any of its assets are bound where such default has had or has a reasonable likelihood of having a Material Adverse Effect.

 

(b) Each Obligor and the other Subsidiaries of Parent is in compliance with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority relating to its business, including, without limitation,
those set forth in or promulgated pursuant to the Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as amended, ERISA, the Code, and all Environmental Laws where the failure to comply has had or has a reasonable likelihood of having a Material Adverse Effect.  No law, regulation, order, judgment or decree of any Governmental Authority exists, and no action, suit, investigation, litigation or proceeding is pending or, to Obligors’ knowledge, threatened
in any court or before any arbitrator or Governmental Authority, which (i) purports to enjoin, prohibit, restrain or otherwise affect (A) the making of the Loans or providing the Letters of Credit, or (B) the consummation of the transactions contemplated hereby or (ii) has or has a reasonable likelihood of having a Material Adverse Effect.

 

(c) Each Obligor and other Subsidiary of Parent has obtained all permits, licenses, approvals, consents, certificates, orders or authorizations of any Governmental Authority (the “Permits”) required for the lawful conduct
of its business where the failure to obtain such Permit has had or is reasonably likely to have a Material Adverse Effect.  There are no actions, claims or proceedings pending or to the best of Obligors’ knowledge, threatened that seek the revocation, cancellation, suspension or modification of any of the Permits which revocation, cancellation, suspension or modification has had or is reasonably likely to have Material Adverse Effect.

 

8.8 Environmental Compliance.

 

(a) Except as set forth on Omnibus Schedule 11 hereto, Obligors have not generated, used, stored, treated, transported, manufactured, handled, produced or disposed of any Hazardous Materials, on or off its premises (whether or not owned
by it) in any manner which at any time violates any applicable Environmental Law or any license, certificate, approval or similar authorization or other Permit thereunder where such violation would have a Material Adverse Effect and the operations of Obligors comply in all respects with all Environmental Laws and all licenses, certificates, approvals and other Permits where the failure to so comply would have a Material Adverse Effect.

 

(b) Except as set forth on Omnibus Schedule 11 hereto, there has been no investigation, proceeding, complaint, order, directive, claim, citation or notice by any Governmental Authority or any other person nor is any pending or to the
best of each Obligor’s knowledge threatened, with respect to any non-compliance with or violation of the requirements of any Environmental Law by such Obligor or the release, spill or discharge, threatened or actual, of any Hazardous Material or the generation, use, storage, treatment, transportation,

 

  

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manufacture, handling, production or disposal of any Hazardous Materials or any other environmental matter, which affects or has a reasonable likelihood of affecting Obligor or its business, operations or assets or any properties at which such Obligor has transported, stored or disposed of any Hazardous Materials which, in any case, has had
or has a reasonable likelihood of having a Material Adverse Effect.

 

(c) Obligors have no material liability (contingent or otherwise) in connection with a release, spill or discharge, threatened or actual, of any Hazardous Materials or the generation, use, storage, treatment, transportation, manufacture,
handling, production or disposal of any Hazardous Materials which has had or has a reasonable likelihood of having a Material Adverse Effect.

 

(d) Obligors have all licenses, certificates, approvals or similar authorizations and other Permits required to be obtained or filed in connection with the operations of Obligors under any Environmental Law where the failure to obtain
such licenses, certificates or similar authorizations and other Permits has had or has a reasonably likelihood of having a Material Adverse Effect and all of such licenses, certificates, approvals or similar authorizations and other Permits are valid and in full force and effect.

 

8.9 Employee Benefits.

 

(a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or State law.  Each Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the Internal Revenue Service and to the best of each Borrower’s knowledge, nothing has occurred which would cause the loss of such qualification.  Since October 30, 2002, no Borrower nor any of its ERISA Affiliates has maintained or been required to contribute to any 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.

 

(b) There are no pending, or to the best of any Borrower’s knowledge, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan which would result in a liability to Borrowers in excess
of $10,000,000.  There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan which would result in a liability to Borrowers in excess of $10,000,000.

 

(c) No ERISA Event has occurred or is reasonably expected to occur which would result in a liability in excess of $10,000,000 in any individual instance, or (ii) $20,000,000 in the aggregate.

 

8.10 Bank Accounts.  All of the deposit accounts, investment accounts or other accounts in the name of or used by Borrowers  maintained at any bank or
other financial institution are set forth on Schedule 6.3 hereto, subject to the right of Borrowers to establish new accounts in accordance with Section 5.4 hereof.

 

8.11 Intellectual Property.

 

  

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Each Obligor owns or licenses or otherwise has the right to use all Intellectual Property necessary for the operation of its business as presently conducted or proposed to be conducted where the failure to have the right to use such Intellectual Property has had or is reasonably likely to have a Material Adverse Effect.  As of the
date hereof, each Obligor does not have any Intellectual Property registered, or subject to pending applications, in the United States Patent and Trademark Office or any similar office or agency in the United States, any State thereof, any political subdivision thereof or in any other country, other than those described in Schedule 8.11 hereto and has not granted any licenses with respect thereto other than as set forth in Schedule 8.11 hereto.  No event has occurred which permits or would permit after
notice or passage of time or both, the revocation, suspension or termination of such rights where the failure to have such rights has had or is reasonably likely to have a Material Adverse Effect.  To the best of each Borrower’s knowledge, no slogan or other advertising device, product, process, method, substance or other Intellectual Property or goods bearing or using any Intellectual Property presently contemplated to be sold by or employed by each Obligor infringes any patent, trademark, servicemark,
tradename, copyright, license or other Intellectual Property owned by any other Person presently and no claim or litigation is pending or threatened against or affecting each Obligor contesting its right to sell or use any such Intellectual Property which if adversely determined would have or would be reasonably likely to have a Material Adverse Effect.  Schedule 8.11 hereto sets forth all of the agreements or other arrangements of Obligors pursuant to which such Person(s) has a license or other right
to use any trademarks, logos, designs, representations or other Intellectual Property owned by another person as in effect on the date hereof (excluding rights arising by virtue of a purchase order between an Obligor and a third party) and the dates of the expiration of such agreements or other arrangements of such Obligor as in effect on the date hereof (collectively, together with such agreements or other arrangements as may be entered into by such Obligor after the date hereof, collectively, the “License
Agreements” and individually, a “License Agreement”).  No trademark, servicemark or other Intellectual Property at any time used by such Obligor which is owned by another Person is affixed to any Eligible Inventory, except to the extent permitted under the terms of a License Agreement or Obligor’s purchase order for such goods.

 

8.12 Capitalization.

 

(a) As of the date hereof, the issued and outstanding shares of Capital Stock of each Borrower (other than Parent and FB Apparel) are directly and beneficially owned and held by Parent, and, in each case, all of such shares have been
duly authorized and are fully paid and non-assessable, free and clear of all Liens of any kind, except as disclosed in writing to Agent.  As of the date hereof, FB Clothing, Inc., which is a US Subsidiary, is the beneficial owner and holder of all of the issued and outstanding shares of Capital Stock of FB Apparel. Each of the Additional L/C Debtors is a direct or indirect Subsidiary of Parent.

 

(b) Obligors, taken as a whole, are solvent and will continue to be solvent after the creation of the Obligations, the security interests of Agent for the benefit of itself and the other Secured Parties and the other transactions contemplated
hereunder, are able to pay their debts as they mature and have (and have reason to believe they will continue to have) sufficient capital (and not unreasonably small capital) to carry on their business as and all businesses in which they are about to engage.  The assets and properties of Obligors taken as a whole, at a fair

 

  

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valuation and at their present salable value are, and will be, greater than the Indebtedness of Obligors, and including subordinated and contingent liabilities computed at the amount which, to the best of Borrowers’ knowledge, represents an amount which can reasonably be expected to become an actual or mature liability.

 

8.13 Labor Disputes.

 

(a) Set forth on Schedule 8.13 hereto is a list (including dates of termination) of all collective bargaining or similar agreements between or applicable to Obligors and any union, labor organization or other bargaining agent in respect
of the employees of Obligors on the date hereof.

 

(b) There is (i) no significant unfair labor practice complaint pending against any Obligor or, to the best of each Borrower’s knowledge, threatened against it or any Obligor, before the National Labor Relations Board, and no significant
grievance or significant arbitration proceeding arising out of or under any collective bargaining agreement is pending on the date hereof against any Obligor or, to best of each Borrower’ s knowledge, threatened against it, and (ii) no significant strike, labor dispute, slowdown or stoppage is pending against any Obligor or, to the best of each Borrower’s knowledge, threatened against any Obligor, which, in any case, has had or has a reasonable likelihood of resulting in a Material Adverse Effect.

 

8.14 Corporate Names; Prior Transactions.

 

As of the date hereof, no Obligor (other than a Retail Store Subsidiary) has, during the past five years, been known by or used any other corporate or fictitious name (other than as set forth in Schedule 8.11 hereto) or been a party to any merger or consolidation, or acquired all or substantially all of the assets of any Person, or acquired
any of its property or assets out of the ordinary course of business, except as otherwise set forth in Schedule 8.14 hereto.

 

8.15 Inactive Subsidiaries.

 

Each of the Inactive Subsidiaries (a) has no material business operations and assets or (b) has been or is in the process of being or will be dissolved.

 

8.16 Restrictions on Subsidiaries.

 

Except for restrictions contained in this Agreement or any other agreement with respect to Indebtedness of Obligors permitted hereunder and the other Financing Agreements and the Securitization Documents, there are no contractual or consensual restrictions on any Obligor which prohibit or otherwise restrict (a) the transfer of cash or other
assets (i) between such Obligor and any of its  Subsidiaries except for restrictions on the transfers of funds from Financing Subsidiaries (other than FSC) to Obligors or (ii) between any Subsidiaries of such Obligor or (b) the ability of any Obligor or any of its Subsidiaries to incur Indebtedness hereunder or grant security interests to Agent or any Lender in the Collateral.

 

8.17 Material Contracts.

 

  

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Schedule 8.17 hereto sets forth all Material Contracts to which any Obligor is a party or is bound as of the date hereof.  Borrower has delivered true, correct and complete copies of such Material Contracts in effect as of the date hereof to Agent on or before the date hereof.  No Obligor is in breach of or in default under
any Material Contract and has not received any notice of the intention of any other party thereto to terminate any Material Contract where such default or termination would have or is reasonably likely to have a Material Adverse Effect.

 

8.18 Credit Card Agreements.

 

Set forth in Schedule 8.18 hereto is a correct and complete list, as of the date hereof, of (a) all of the Credit Card Agreements, and (b)  the term of such Credit Card Agreements.  The Credit Card Agreements constitute all of such agreements necessary for each Borrower to operate its business as presently conducted with
respect to credit cards and debit cards and no Receivables of any Obligor arise from purchases by customers of Inventory with credit cards or debit cards, other than those which are issued by Credit Card Issuers with whom such Obligor has entered into one of the Credit Card Agreements set forth on Schedule 8.18 hereto.  Each of the Credit Card Agreements constitutes the legal, valid and binding obligations of the Obligor that is party thereto and to the best of each Borrower’s knowledge, the other
parties thereto, enforceable in accordance with their respective terms and is in full force and effect.  No default or event of default, or act, condition or event which after notice or passage of time or both, would constitute a default or an event of default under any of the Credit Card Agreements exists or has occurred and is continuing which would have the reasonable likelihood of having a Material Adverse Effect.  Each Obligor has complied with all of the material terms and conditions
of the Credit Card Agreements to the extent necessary for such Obligor to be entitled to receive payments thereunder.

 

8.19 Interrelated Businesses.

 

Obligors make up a related organization of various entities which share an identity of interests such that any benefit received by any of them benefits the others.  Each Obligor (a) renders services to or for the benefit of the other Obligors, (b) make loans and advances and provides other financial accommodations to or for the benefit
of the other Obligors (including, inter alia, the payment and/or guaranties by Obligors of Indebtedness of the other Obligors), and (c) provides administrative, marketing, payroll and management services to or for the benefit of the other Obligors.  Obligors have centralized accounting and legal services.  The Additional L/C Accommodations are opened solely for the purpose of (i) with respect to the Additional L/C Debtors other than CS Insurance Ltd., acquiring Inventory by Borrowers for ultimate
resale in the Retail Stores and (ii) with respect to CS Insurance Ltd., providing insurance services for Obligors.  Nothing contained in this Section 8.19 should be construed to imply that Obligors are not separate legal entities.

 

8.20 OFAC.

 

  No Obligor, Subsidiary of any Obligor or Affiliate of any Obligor: (a) is a Sanctioned Person, (b) has more than ten (10%) percent of its assets in Sanctioned Entities, or (c) derives more than ten (10%) percent of its operating income from investments in, or transactions with Sanctioned Persons or Sanctioned Entities.  The
proceeds of any Loan, to the best knowledge of each

 

  

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Obligor will not be used, and to the best of each Obligor’s knowledge have not been used, to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity.

 

8.21 No Material Adverse Effect.

 

There has been no act, condition or event which has or may have a Material Adverse Effect since the date of the most recent financial statements submitted to Agent under the terms of this Agreement.

 

8.22 Accuracy and Completeness of Information.

 

All information furnished by or on behalf of each Obligor in writing to Agent or any Lender in connection with this Agreement or any of the other Financing Agreements or any transaction contemplated hereby or thereby, including all information on the Omnibus Schedules hereto is true and correct in all material respects on the date as of which
such information is dated or certified and does not knowingly omit any material fact necessary in order to make such information not misleading.  No event or circumstance has occurred which has had or could reasonably be expected to have a Material Adverse Effect, which has not been fully and accurately disclosed to Agent in writing.

 

8.23 Survival of Warranties; Cumulative.

 

All representations and warranties contained in this Agreement or any of the other Financing Agreements shall survive the execution and delivery of this Agreement and shall be deemed to have been made again to Agent and Lenders on the date of each additional borrowing or other credit accommodation hereunder (except (i) to the extent that such
representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date) and (ii) with respect to any changes in the representations and warranties resulting from any actions, sales, mergers, acquisitions, dispositions or other transactions permitted by this Agreement or consented to by the Required Lenders or all Lenders, as applicable) and shall be conclusively presumed to have been relied on
by Agent and Lenders regardless of any investigation made or information possessed by Agent or any Lender.  The representations and warranties set forth herein shall be cumulative and in addition to any other representations or warranties which Borrowers  shall now or hereafter give, or cause to be given, to Agent or any Lender.

 

SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS

 

9.1 Maintenance of Existence.

 

Each Obligor shall, at all times, preserve, renew and keep in full force and effect (a) its rights and franchises as a corporation, limited liability company or partnership where the failure to do so would have a reasonable likelihood of having a Material Adverse Effect and (b) its existence subject to Sections 9.7 and 9.8 hereof.  Each
Obligor and Additional L/C Debtor shall at all times maintain in full force and effect all Permits, licenses, trademarks, tradenames, approvals, authorizations, leases and contracts necessary to carry on the business as presently or proposed to

 

  

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be conducted where the failure to so maintain the same would have a reasonable likelihood of having a Material Adverse Effect.  Each Obligor shall, and Parent shall cause each Additional L/C Debtor to give Agent twenty (20) days prior written notice of any proposed change in its corporate name, which notice shall accordingly set
forth the new name and each Obligor and Additional L/C Debtor, as the case may be, and Agent shall have received a copy of the amendment to the formation of such Person, as the case may be,  providing for the name change certified by the Secretary of State or other appropriate government officer of the jurisdiction of formation of such Person, as the case may be, as soon as it is available.  Additionally, no Obligor shall change its chief executive office or its mailing address or organizational
identification number (or if it does not have one, shall not acquire one), unless Agent shall have received not less than twenty (20) days’ prior written notice from such Obligor of such proposed change, which notice shall set forth such information with respect thereto as Agent may require.  No Obligor shall change its type of organization, jurisdiction of organization or other legal structure without twenty (20) days prior written notice to Agent of any such proposed change.

 

9.2 New Collateral Locations.

 

No Obligor may open any new location at which Collateral will be located other than in the United States, Canada and the United Kingdom, provided, that no Obligor will open any new locations within the continental United States, Canada or the United Kingdom except: (a) Retail Store locations, (b) locations in which Inventory stored will not
exceed $1,000,000 at any time, or (c) any other location so long as Agent receives a Collateral Access Agreement with respect to such location within thirty (30) days after Collateral is placed at such location unless delivery of such Collateral Access Agreement is not required in accordance with the definition of Collateral Access Agreement or is waived by Agent in its discretion.

 

9.3 Compliance with Laws, Regulations, Etc.

 

(a) Each Obligor shall, and Parent shall cause each other Subsidiary of Parent to, at all times, comply in all material respects with all laws, rules, regulations, licenses, approvals, orders and other Permits applicable to it and duly
observe all requirements of any foreign, Federal, State or local Governmental Authority, including ERISA, the Code, the Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as amended, and all statutes, rules, regulations, orders, permits and stipulations relating to environmental pollution and employee health and safety, including all of the Environmental Laws where the failure to do so, individually or in the aggregate, has had or has a reasonable likelihood of having
a Material Adverse Effect.

 

(b) Each Obligor shall maintain, at its expense, a system to monitor its continued compliance in all material respects with all applicable Environmental Laws.  Each Obligor and other Subsidiary of Parent shall take prompt and
appropriate action as required by Environmental Laws to respond to any non-compliance with any Environmental Laws which would have a Material Adverse Effect.

 

(c) Each Obligor shall give both oral and written notice to Agent immediately upon such Obligor’s receipt of any notice of, or such Obligor’s otherwise obtaining knowledge of, (i) the occurrence of any event involving the
release, spill or discharge, threatened or actual,

 

  

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of any Hazardous Material or (ii) any investigation, proceeding, complaint, order, directive, claims, citation or notice with respect to: (A) any non-compliance with or violation of any Environmental Law by such Person or (B) the release, spill or discharge, threatened or actual, of any Hazardous Material or (C) the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal of any Hazardous Materials or (D) any other environmental, health or safety matter, which affects such Person or its business, operations or assets or any properties at which such Obligor transported, stored or disposed of any Hazardous Materials, in any of the foregoing instances, where such matter has had or has a reasonable likelihood of having a Material Adverse Effect.

 

(d) Without limiting the generality of the foregoing, whenever Agent reasonably determines that there is material non-compliance or any condition which requires any action by or on behalf of any Obligor or Foreign Subsidiary in order
to avoid any material non-compliance with any Environmental Law which material non-compliance or condition has had or is reasonably likely to have a Material Adverse Effect, such Obligor shall, at Agent’s request and Borrowers’ expense: (i) cause an independent environmental engineer reasonably acceptable to Agent to conduct such tests of the site where such Person’s non-compliance with such Environmental Laws has occurred as to such non-compliance and prepare and deliver to Agent a report as
to such material non-compliance setting forth the results of such tests, a proposed plan for responding to any environmental problems described therein, and an estimate of the costs thereof and (ii) provide to Agent a supplemental report of such engineer whenever the scope of such material non-compliance, or Person’s response thereto or the estimated costs thereof, shall change in any material respect.

 

(e) Borrowers shall indemnify and hold harmless Agent and Lenders and their respective, directors, officers, employees, agents, invitees, representatives, successors and assigns, from and against any and all losses, claims, damages, liabilities,
costs, and expenses (including attorneys’ fees and legal expenses) directly or indirectly arising out of or attributable to the use, generation, manufacture, reproduction, storage, release, threatened release, spill, discharge, disposal or presence of a Hazardous Material, including the costs of any required or necessary repair, cleanup or other remedial work with respect to any property of such Borrower and the preparation and implementation of any closure, remedial or other required plans, other than
such loss, claim, liability, damage, cost or expense as a result of the gross negligence or willful misconduct of Agent or any Lender as determined pursuant to a final, non-appealable order of a court of competent jurisdiction.  All representations, warranties, covenants and indemnifications in this Section 9.3 shall survive the payment of the Obligations and the termination of this Agreement.

 

9.4 Payment of Taxes and Claims.

 

Each Obligor shall, and Parent shall cause each of its other Subsidiaries to, duly pay and discharge all taxes, assessments, contributions and governmental charges duly assessed upon or against it or its properties or assets, except for taxes the validity of which are being contested in good faith by appropriate proceedings diligently pursued
and available to any Obligor, as the case may be, and with respect to which adequate reserves have been set aside on its books and except where the failure to pay such taxes would not result in a liability which would exceed $10,000,000 in any individual instance or $20,000,000 in the aggregate.

 

  

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9.5 Insurance.

 

Each Obligor shall, at all times, maintain with financially sound and reputable insurers insurance with respect to the Collateral against loss or damage and all other insurance of the kinds and in the amounts customarily insured against or carried by corporations of established reputation engaged in the same or similar businesses and similarly
situated.  Said policies of insurance shall be reasonably satisfactory to Agent as to form, amount and insurer.  Borrowers shall furnish certificates, policies or endorsements to Agent as Agent shall reasonably require as proof of such insurance, and, if Borrowers fail to do so within five (5) Business Days following notice of such failure, Agent is authorized, but not required, to obtain such insurance at the expense of Borrowers.  All policies shall provide for at least thirty
(30) days prior written notice to Agent of any cancellation or reduction of coverage and that, at any time an Event of Default has occurred and is continuing, Agent may act as attorney for Obligors in obtaining, adjusting and settling such insurance.  Obligors shall cause Agent to be named as a loss payee (with respect to policies insuring the Collateral only) and an additional insured (but without any liability for any premiums) under such insurance policies and Obligors shall obtain non-contributory
lender’s loss payable endorsements to all insurance policies covering the Collateral in form and substance reasonably satisfactory to Agent.  Such lender’s loss payable endorsements shall specify that the proceeds of such insurance shall be payable to Agent as its interests may appear and further specify that Agent and Secured Parties shall be paid regardless of any act or omission by any Borrower or any of its Affiliates.  After an Event of Default has occurred and is continuing,
at its option, Agent may apply any insurance proceeds relating to the Collateral received by Agent at any time to the payment of the Obligations, whether or not then due, in any order and in such manner as Agent may determine, which amounts may be reborrowed.

 

9.6 Financial Statements, Collateral Reporting and Other Information.

 

(a) Each Obligor shall keep proper books and records in which true and complete entries shall be made of all dealings or transactions of or in relation to the Collateral and the business of such Person (if any) in accordance with GAAP
and Administrative Borrower shall furnish or cause to be furnished to Agent:

 

(i) (A) if either: (1) Excess Availability shall be equal to or less than $50,000,000 at any time during any fiscal month, then within thirty (30) days after the end of such fiscal month (or within forty-five (45) days after the end
of such fiscal month if the last day of such fiscal month is the last day of a fiscal quarter) or (2) Agent shall request (in such event delivery by Administrative Borrower shall be made within thirty (30) days of such request), monthly unaudited consolidated financial statements for Parent and its consolidated Subsidiaries (including in each case balance sheets, statements of income and loss and statements of cash flow), all in reasonable detail, fairly presenting the consolidated financial position and the
results of the consolidated operations of Parent and its consolidated Subsidiaries as of the end of and through such fiscal month and accompanied by a compliance certificate substantially in the form of Exhibit B hereto, and, in the event Section 9.21 hereof is then applicable, the calculations used in determining, as of the end of the most recent fiscal month, whether Parent and such Subsidiaries were in compliance with the covenant set forth in Section 9.21 hereof as of the end of such month, or

 

  

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(B) if Borrowers are not delivering financial statements to Agent pursuant to clause (i) above, then within forty-five (45) days after the end of each fiscal quarter (excluding the fourth fiscal quarter of each fiscal year), quarterly unaudited consolidated financial statements for Parent and its consolidated Subsidiaries (including in each
case, balance sheets, statements of income and loss, statements of cash flow and statements of shareholders’ equity), all in reasonable detail, fairly presenting the consolidated financial position and the results of the consolidated operations of Parent and its consolidated Subsidiaries as of the end of and through such fiscal quarter and accompanied by a compliance certificate substantially in the form of Exhibit B hereto, and, in the event Section 9.21 is then applicable, the calculations used in determining,
as of the end of such month, whether Parent and such Subsidiaries were in compliance with the covenant set forth in Section 9.21 hereof as of the end of such month,

 

(ii) within fifteen (15) days after the end of each fiscal month, a report of Monthly Average Liquidity and Monthly Average Excess Availability for the immediately preceding fiscal month and Liquidity and Excess Availability at the end
of such fiscal month,

 

(iii) within fifteen (15) days after the end of each fiscal month, (A) a Borrowing Base Certificate duly completed and executed by a financial officer of Administrative Borrower on behalf of Borrowers, and (B) perpetual Inventory reports
in substantially the form set forth as Exhibit G hereto, provided, that:

 

(1) in the event that either (A) Excess Availability shall be less than twenty-five (25%) percent of the Maximum Credit for five (5) consecutive Business Days, (B) the amount of all outstanding and unpaid Obligations (including Revolving Loans and Letter of Credit Obligations) is equal to or greater than $100,000,000, or (C) an
Event of Default shall exist or shall have occurred and be continuing, then (I) a Borrowing Base Certificate shall be delivered weekly or, if an Event of Default shall exist or shall have occurred and be continuing, more frequently as Agent may request, duly completed and executed by a financial officer of Administrative Borrower on behalf of Borrowers, and (II) the following reports shall be delivered to Agent on Tuesday of each week for the immediately preceding week ending on the close of business on
Saturday of that week: (AA) perpetual Inventory reports in substantially the form set forth as Exhibit G hereto, with such modifications as Agent shall reasonably request from time to time after consultation with Administrative Borrower, (BB) reports of sales of Inventory, returns, and aggregate Inventory purchases (including all costs related thereto, such as freight, duty and taxes), (CC) markdown reports by categories of Inventory, setting forth the original Cost, original retail sales price prior
to any markdowns and the Retail Sales Price, (DD) Inventory aging reports by categories of Inventory (including identifying Inventory at locations owned and operated by third parties or on consignment), and (EE) such other reports as to the Inventory as Agent may reasonably request, and

 

(2) in the event that weekly reporting is in effect and (A) Excess Availability shall be equal to or greater than twenty-five (25%) percent of the Maximum Credit for twenty (20) consecutive Business Days, (B) the amount of all outstanding and unpaid Obligations (including Revolving Loans and Letter of Credit Obligations) is less
than $100,000,000, and (C) no Event of Default shall exist or shall have occurred and be continuing, monthly Borrowing Base Certificates and Inventory reporting shall be reinstituted,

 

  

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(iv) within fifteen (15) days after the end of each fiscal month, agings of accounts payable,

 

(v) within fifteen (15) days after the end of each fiscal month, a list of all new locations of Collateral established during the preceding fiscal month,

 

(vi) within ninety (90) days after the end of each fiscal year, audited consolidated financial statements of Parent (including in each case balance sheets, statements of income and loss, statements of cash flow and statements of shareholders’
equity), and the accompanying notes thereto, all in reasonable detail, fairly presenting the consolidated financial position and the results of the consolidated operations of Parent and its consolidated Subsidiaries,  as of the end of and for such fiscal year, together with the opinion (which does not contain a “going concern” or other similar exception) of independent certified public accountants, which accountants shall be an independent accounting firm selected by Parent and reasonably
acceptable to Agent, that such financial statements have been prepared in accordance with GAAP, and present fairly the results of operations and financial condition of Parent and its consolidated Subsidiaries, as of the end of and for the fiscal year then ended, and

 

(vii) at such time as available, but in no event later than forty-five (45) days after the commencement of each fiscal year of Parent (commencing with the fiscal year of Parent commencing on or about January 31, 2010), projected consolidated
financial statements (including in each case, forecasted balance sheets and statements of income and loss, statements of cash flow, and statements of shareholders’ equity) of Parent and its Subsidiaries for such fiscal year, all in reasonable detail, and in a format reasonably satisfactory to Agent, together with such supporting information as Agent may reasonably request.  Such projected financial statements shall be prepared on a monthly basis for such year and shall have been prepared in light
of the past operations of the businesses of Parent and its Subsidiaries and based upon estimates and assumptions stated therein, all of which Parent and its Subsidiaries have determined to be reasonable and fair in light of the then current conditions and current facts and reflect the good faith and reasonable estimates of Parent and its Subsidiaries of the future financial performance of Parent and its Subsidiaries and of the other information projected therein for the periods set forth therein (it being understood
that actual results may differ from those set forth in such projected financial statements).

 

(b) Administrative Borrower shall promptly notify Agent in writing of the details of the following (upon obtaining notice or knowledge thereof): (i) any loss, damage, investigation, action, suit, proceeding or claim relating to Inventory
having a cost of $7,500,000 or more or which, if adversely determined, would result in any Material Adverse Effect; (ii) the termination of any Material Contract or any amendment to a Material Contract which would have or could reasonably be expected to have a Material Adverse Effect; (iii) any order, judgment or decree in excess of $5,000,000 shall have been entered against any Obligor or any of its properties or assets; (iv) any notification of a violation of laws or regulations received by any Obligor which
would have or could reasonably be expected to have a Material Adverse Effect; (v) any ERISA Event which would result in liability to Obligors in excess $10,000,000; (vi) the filing of any Lien securing the payment of taxes in respect of any Collateral having a value in excess of $10,000,000 that has priority over the liens and security interests of Agent, and (vii) the occurrence of any Default or Event of Default.

 

  

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(c) Administrative Borrower shall promptly after the sending or filing thereof furnish or cause to be furnished to Agent copies of all reports which Parent or any other Borrower sends to its stockholders generally and copies of all reports
and registration statements which Parent or any other Borrower files with the Securities and Exchange Commission, any national securities exchange or the National Association of Securities Dealers, Inc.

 

(d) Administrative Borrower shall furnish or cause to be furnished to Agent such budgets, forecasts, projections and other information respecting the Collateral and the consolidated business of the Obligors, as Agent may, from time to
time, reasonably request.  Agent is hereby authorized to deliver a copy of any financial statement or any other information relating to the business of any Obligor to any court or other government agency or to any participant or assignee or prospective participant or assignee, subject to the confidentiality provisions of Section 13.5 hereof.  Any documents, schedules, invoices or other papers delivered to Agent may be destroyed or otherwise disposed of by Agent one (1) year after the same
are delivered to Agent, except for any longer period as otherwise designated by Administrative Borrower to Agent in writing.

 

(e) Upon Agent’s reasonable request upon the occurrence and during the continuance of a Cash Dominion Event, Administrative Borrower will furnish (i) copies of deposit slips and bank statements, (ii) copies of purchase orders, invoices
and delivery documents for Inventory acquired by Obligors including copies of all packing slips, invoices, and bills of lading with respect to all Eligible In-Transit Inventory, subject to Section 7.4 hereof, (iii) the monthly statements received by any Obligor from any Credit Card Issuers or Credit Card Processors, together with such additional information with respect thereto as shall be sufficient to enable Lender to monitor the transactions pursuant to the Credit Card Agreements, (iv) a report of credit card
sales on a periodic basis, including the amount of the chargebacks, fees and credits issued during such period; (v) agings of accounts receivable (together with a reconciliation to the previous month’s aging and general ledger), and (vi)  a certificate from a financial officer of Administrative Borrower on behalf of the Borrowers (A) representing that Obligors have made payment of sales and use taxes during such month or, at Agent’s request, other evidence of such payment and (B) reporting
each claim filed by lessor or a third party operator of locations where Collateral is located against an Obligor in an amount equal to or in excess of $500,000 (the report should indicate the amount of the dispute and whether reserves (and the amount thereof) are set aside therefor).

 

(f) Administrative Borrower shall promptly notify Agent in writing in the event that FSC or any other Financing Subsidiary shall fail to (i) make settlements on each Business Day (except for delays arising from force majeure, in which
case such failure to make settlements on each Business Day shall not continue for more than one (1) Business Day) with respect to amounts owed to CS Delaware or any other Obligor under any Credit Card Agreement, and (ii) remit to CS Delaware all funds its receives in respect of amounts owed to CS Delaware pursuant to the C.D. Credit Plan Agreement no later than the same Business Day it receives such funds.

 

(g) Administrative Borrower shall promptly furnish to Agent all notices of default under the Indebtedness evidenced by the Convertible 2007 Senior Notes received by any Obligor and, at any time that Excess Availability is less than $40,000,000,
all other material

 

  

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notices or demands in connection with such Indebtedness, in each case to the extent such notices or demands are either received by Parent or any other Obligor from any of the holders of the Convertible 2007 Senior Notes or the Convertible 2007 Senior Note Trustee, or on their behalf, or sent by Parent or any other Obligor, or on their behalf,
to any of the holders of the Convertible 2007 Senior Notes or the Convertible 2007 Senior Note Trustee, concurrently with the sending thereof, as the case may be.

 

9.7 Consolidation and Merger; Dissolution.

 

No Obligor shall:

 

(a) merge into or with or consolidate with any other Person or permit any other Person to merge into or with or consolidate with it, except that an Obligor may merge into or consolidate with any other Obligor and any Obligor may merge
into or consolidate with any other Person as permitted in Sections 9.8 or 9.12 hereof; provided, that, each of the following conditions is satisfied: (i) Administrative Borrower or Parent, as applicable, shall be the surviving corporation in any merger with another Obligor, (ii) Agent shall have received not less than five (5) Business Days’ prior written notice of the intention
of such Obligors to so merge or consolidate, the Obligors that are merging or consolidating and which Obligor will be the surviving entity, (iii) Agent shall have received such other information with respect to such merger or consolidation as Agent may reasonably request, (iv) as of the effective date of the merger or consolidation and after giving effect thereto, no Event of Default shall exist or have occurred and be continuing, (v) if requested by Agent, the applicable Obligors shall deliver to Agent true,
correct and complete copies of all agreements, documents and instruments relating to such merger or consolidation, including, but not limited to, the certificate or certificates of merger to be filed with each appropriate Secretary of State or comparable governmental official, as applicable (with a copy as filed promptly after such filing), and  (vi) the surviving Obligor shall execute and deliver such other agreements, documents and instruments as Agent may reasonably request in connection therewith;
or

 

(b) wind up, liquidate or dissolve, except, that, any Obligor (other than Parent and Administrative Borrower) may wind up, liquidate or dissolve, provided, that,
each of the following conditions is satisfied: (i) Agent shall have received not less than five (5) Business Days prior written notice of the intention of such Obligor to wind up, liquidate or dissolve,      (ii)  no Obligor shall assume any Indebtedness, obligations or liabilities as a result of such winding up, liquidation or dissolution, other than liabilities assumed by law not to exceed the value of the assets received in such liquidation or dissolution or as would
be otherwise permitted under the terms of this Agreement and the other Financing Agreements, (iii) all of the assets and properties of the Obligor which is winding up, liquidating or dissolving (after payment or provision for payment of any and all obligations of such Obligor) shall be distributed to its shareholders, members or partners, as the case may be (so long as the applicable shareholders, members or partners are Obligors) promptly following the effective date of  such winding up, liquidation
or dissolution, (iv) if requested by Agent, Obligors shall have delivered to Agent all documents and agreements that any Obligor has filed with any Governmental Authority or as were otherwise required to effectuate such winding up, liquidation or dissolution, and (v) on the date of and immediately after giving effect to any such winding-up, dissolution or liquidation, no Event of Default shall exist or shall have occurred and be continuing.

 

  

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9.8 Sales of Assets and Equity Issuances.  No Obligor shall sell, assign, issue, lease, license, transfer, abandon or otherwise dispose of any Capital Stock or
Indebtedness to any other Person or any of its assets to any other Person, except for:

 

(a) the sale of Inventory in the ordinary course of business;

 

(b) the sale or other transfer of any Collateral (including, without limitation, the Capital Stock of an Obligor) or any Excluded Property to any other Obligor;

 

(c) the sale, transfer or other disposition of Cash Equivalents and other investments that are permitted under Section 9.11 hereof;

 

(d) any disposition permitted under Section 9.7 hereof;

 

(e) the sale by Chestnut Acquisition Sub, Inc. of the Capital Stock of Crosstown (the owner of the Capital Stock of the Figi Companies) or the sale by the Figi Companies of all or substantially all of their assets and properties, so long
as the following conditions precedent are satisfied:

 

(i) if requested by Agent, Administrative Borrower shall deliver to Agent true, correct and complete copies of the purchase agreements with respect to such sale, and such other information and documents with respect thereto that Agent
may request,

 

(ii) the net after-tax proceeds received in connection with such sale shall be applied to the Obligations in accordance with Section 6.4 hereof, which amounts may be reborrowed;

 

(iii) as of the date of such sale, (A) Excess Availability immediately after giving effect to such sale shall not be less than $65,000,000, (B) Agent shall have received, in a form reasonably satisfactory to Agent, current, updated monthly
projections of the amount of Excess Availability for the twelve (12) month period after the date of the proposed sale, representing Borrowers’ reasonable estimate of the Excess Availability for the period set forth therein, which projections shall have been prepared on the basis of the assumptions set forth therein which Borrowers believe are fair and reasonable as of the date of preparation in light of current and reasonably foreseeable business conditions, and (C) immediately after giving effect to such
sale, the monthly projected pro forma Excess Availability for the twelve (12) consecutive months after giving effect thereto, shall not be less than $65,000,000, and

 

(iv) as of the date of such sale and immediately after giving effect thereto, no Event of Default shall exist or shall have occurred and be continuing;

 

(f) the sale, assignment or other transfer of Receivables and Securitization Program Assets pursuant to Permitted Securitization Transactions;

 

(g) the disposition of worn-out or obsolete Equipment in the ordinary course of business or Equipment no longer used or useful in the business so long as, to the extent a Cash Dominion Event (other than an Event of Default) exists, any
net proceeds are paid to Agent, to

 

  

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be applied to the outstanding principal amount of Revolving Loans, which amounts may be reborrowed;

 

(h) the sale (including by way of merger or consolidation), assignment, lease or other transfer of any Collateral (including, without limitation, the Capital Stock of an Obligor) to any other Person (which is not an Obligor) outside of
the ordinary course of its business, so long as the following conditions are satisfied:

 

(i) such sales, assignments, leases or other transfers do not involve Collateral having an aggregate fair market value in excess of $10,000,000 for all such Collateral sold, assigned, leased or transferred in any fiscal year or as Agent
may otherwise agree;

 

(ii) immediately after giving effect to such sale, assignment, lease or other transfer, Excess Availability shall be not less than $50,000,000,

 

(iii) the net after-tax proceeds received by such Obligor in respect of such Collateral shall be applied to the Obligations in accordance with Section 6.4 hereof, which amounts may be reborrowed; and

 

(iv) as of the date of any such sale, assignment, lease or other transfer and after giving effect thereto, no Event of Default shall exist or shall have occurred and be continuing;

 

(i) the sale (including by way of merger or consolidation), assignment, lease, transfer, abandonment or other disposition of all or any portion of Real Property or Equipment to a Person that is not an Obligor, so long as the following
conditions precedent are satisfied:

 

(i) the net after-tax proceeds received by such Obligor in respect of such Real Property or Equipment shall be applied to the outstanding principal amount of Revolving Loans, which amounts may be reborrowed; and

 

(ii) as of the date of any such sale, assignment, lease or other transfer and immediately after giving effect thereto, no Event of Default shall exist or shall have occurred and be continuing;

 

(j) the sale (including by way of merger or consolidation) of Excluded Property (other than Real Property or Equipment), so long as the following conditions precedent are satisfied:

 

(i) the net after-tax proceeds received by such Obligor in respect of such Excluded Property shall be applied to the outstanding principal amount of Revolving Loans, which amounts may be reborrowed;

 

(ii) as of the date of such sale, (A) Excess Availability immediately after giving effect to such sale shall not be less than $65,000,000, (B) Agent shall have received, in a form reasonably satisfactory to Agent, current, updated monthly
projections of the amount of Excess Availability for the twelve (12) month period after the date of the proposed sale, representing Borrowers’ reasonable estimate of the Excess Availability for the period set forth

 

  

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therein, which projections shall have been prepared on the basis of the assumptions set forth therein which Borrowers believe are fair and reasonable as of the date of preparation in light of current and reasonably foreseeable business conditions, and (C) immediately after giving effect to such sale, the monthly projected pro forma Excess
Availability for the twelve (12) consecutive months after giving effect thereto, shall not be less than $65,000,000, and

 

(iii) as of the date of any such sale and immediately after giving effect thereto, no Event of Default shall exist or shall have occurred and be continuing;

 

(k) the licensing by an Obligor of Intellectual Property owned by it to another Obligor; provided, that, as to any such license: (A) any rights of such Obligor shall be subject to the rights of Agent in such Intellectual Property (including
the rights of Agent to use such Intellectual Property upon an Event of Default), and (B) such license shall not impair, hinder or otherwise adversely affect the rights of Agent hereunder;

 

(l) the abandonment or cancellation of Intellectual Property of any Obligor that is not material and is no longer used or useful in the business of such Obligor;

 

(m) the grant by any Obligor after the date hereof of a non-exclusive license to any Person (other than another Obligor) for the use of any Intellectual Property consisting of trademarks owned by such Obligor; provided, that, as to any
such license, each of the following conditions is satisfied: (i) Obligors shall have received any consents and approvals required for it to license such trademark and any such consents and approvals shall be in full force and effect and all conditions thereto satisfied, (ii) each such license shall be in a bona fide arms-length transaction, (iii) such license shall only be for the use of trademarks in the manufacture, distribution or sale of products outside the United States of America and Canada or if such
license is for the use of such trademarks in the manufacture, distribution or sale of products within the United States of America or Canada, such license shall not adversely affect in any material respect the Value of Inventory of any Obligor or Agent's ability to dispose of or realize any such Inventory, (iv) such license shall not include any limitations or restrictions on the use of such trademarks that would affect the ability of Agent to use such trademarks in order to sell or otherwise realize upon any
of the Inventory, (v) if requested by Agent, such Obligor shall deliver to Agent true, correct and complete copies of the executed license agreement, and (vi) at the time of the grant of such license and after giving effect thereto, no Event of Default shall exist or shall have occurred and be continuing;

 

(n) the issuance and sale by any Obligor of Capital Stock of such Obligor to a Person other than an Obligor; provided, that,
(i) Agent shall have received not less than five (5) Business Days’ prior written notice of such issuance and sale by such Obligor, which notice shall specify the parties to whom such shares are to be sold (except Parent shall not be required to specify the parties if such Capital Stock will be sold pursuant to a public offering), the terms of such sale, the total amount which it is anticipated will be realized from such issuance and sale and the net cash proceeds which it is anticipated will be received
by such Obligor from such sale, (ii) such Obligor shall not be required to make any Restricted Payments in respect of such Capital Stock, except as otherwise permitted in Section 9.15 hereof, (iii) the terms of such Capital Stock, and the terms and conditions of the purchase and sale thereof, shall not include any terms that include any limitation on the right of any Borrower to request or receive Loans or

 

  

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Letters of Credit or the right of any Obligor to amend or modify any of the terms and conditions of this Agreement or any of the other Financing Agreements or otherwise in any way relate to or affect the arrangements of Obligors with Agent and Lenders or are more restrictive or burdensome to any Obligor than the terms of any Capital Stock
in effect on the date hereof, (iv) if a Cash Dominion Event shall exist or shall have occurred and be continuing, all of the proceeds of the sale and issuance of such Capital Stock shall be paid to Agent for application to the Obligations in accordance with Section 6.4 hereof, which amounts may be reborrowed, and (v) after giving effect to such issuance and sale, no Event of Default shall exist or have occurred and be continuing; and

 

(o) the issuance of Capital Stock of any Obligor consisting of common stock pursuant to an employee stock option or grant or similar equity plan or 401(k) plans of such Obligor for the benefit of its employees, directors and consultants, provided, that,
in no event shall such Obligor be required to issue, or shall such Obligor issue, Capital Stock pursuant to such stock plans or 401(k) plans which would result in a Change of Control or other Event of Default.

 

9.9 Encumbrances.  No Obligor shall create, incur, assume or suffer to exist any Lien on any of its assets or properties, including the Collateral, except the
following (collectively, “Permitted Liens”):

 

(a) the Liens of Agent for itself and the benefit of the Secured Parties and the rights of setoff of Secured Parties provided for herein or under applicable law;

 

(b) Liens securing the payment of taxes which are either (i) not yet due and payable or (ii) the validity of which are being contested in good faith by appropriate proceedings diligently pursued by such Obligor and with respect to which
adequate reserves have been set aside on its books;

 

(c) contractual Liens of carriers or Freight Forwarders on in-transit Inventory for freight charges arising in the ordinary course of any Obligor’s business to the extent such Liens secure obligations which are not overdue by more
than thirty (30) days or which, if more than thirty (30) days overdue, do not exceed $5,000,000 in the aggregate or which obligations are being contested in good faith by appropriate proceedings diligently pursued by such Obligor and with respect to which adequate reserves have been set aside in its books;

 

(d) non-consensual statutory Liens (other than Liens securing the payment of taxes) arising in the ordinary course of any Obligor’s business to the extent: (i) such Liens secure Indebtedness or other obligations which are not overdue
by more than thirty (30) days or which, if more than thirty (30) days overdue, do not exceed $5,000,000 in the aggregate or which obligations are being contested in good faith by appropriate proceedings diligently pursued by such Obligor with respect to which adequate reserves have been set aside in its books; (ii) such Liens secure Indebtedness or other obligations relating to claims or liabilities which are fully insured and being defended principally at the cost and expense and at the risk of the insurer or
are being contested in good faith by appropriate proceedings diligently pursued by such Obligor, in each case prior to the commencement of foreclosure or other similar proceedings and with

 

  

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respect to which adequate reserves have been set aside on its books, or (iii) non-payment of the obligations secured by such Liens would not result in a Material Adverse Effect;

 

(e) deposits of cash by any Obligor to secure the performance of bids, trade contracts (other than for borrowed money), freight and customs duties, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations
of a like nature incurred in the ordinary course of business; provided, that, such deposit of cash is the only security for such Obligor’s performance thereunder;

 

(f) pledges and deposits of cash by any Obligor after the date hereof in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security benefits;

 

(g) zoning restrictions, easements, licenses, covenants and other restrictions affecting the use of Real Property of an Obligor which do not interfere in any material respect with the use of such Real Property or ordinary conduct of the
business of any Obligor as conducted thereon or materially impair the value of the Real Property subject thereto;

 

(h) Liens or rights of setoff against credit balances of Obligors maintained with Credit Card Issuers or Credit Card Processors or amounts owing by such Credit Card Issuers or Credit Card Processors to any Obligor in accordance with the
then current practices of the related Credit Card Issuer or Credit Card Processor or other obligor thereon, but not Liens on or rights of setoff against any other property or assets of Obligors, pursuant to the Credit Card Agreements to secure the obligations of Obligors to the Credit Card Issuers or Credit Card Processors as a result of fees and chargebacks;

 

(i) bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash, Cash Equivalents, financial assets or investment property on deposit in one or more accounts maintained by any Obligor, in each case,
granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank or banks with respect to cash management, operating account and investment account arrangements, provided, that, Deposit Account Control Agreements are obtained if required in accordance with the terms of this Agreement;

 

(j) Liens in favor of an Obligor to secure the Indebtedness permitted by Sections 9.10(f) and 9.10(g) hereof, which Liens are subordinated in favor of and assigned to Agent for the benefit of the Secured Parties pursuant to the Financing
Agreements;

 

(k) judgments and other similar liens arising in connection with court proceedings that do not constitute an Event of Default, provided, that,
(i) such liens are being contested in good faith and by appropriate proceedings diligently pursued, (ii) adequate reserves or other appropriate provision, if any, as are required by GAAP have been made therefor, (iii) a stay of enforcement of any such liens is in effect, and (iv) Agent, at its option, may establish a Reserve with respect thereto in accordance with the provisions of the definition of “Reserves” set forth herein;

 

  

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(l) license agreements permitted hereunder (to the extent constituting Liens); and

 

(m) Liens in favor of an Obligor, a Subsidiary of Parent (not an Obligor) or a Person (not a Subsidiary of Parent) on Excluded Property, provided, that,
(i) on the date of creation, incurrence or assumption of any such Lien and immediately after giving effect thereto, no Event of Default has occurred and is continuing, (ii) such Lien does not extend to any Collateral, and (iii) if the Excluded Property which is the subject of any such Lien is Real Property upon which Collateral is or may be located (excluding any location for which no Collateral Access Agreement is required to be delivered pursuant to the terms of this Agreement), Obligors shall, if requested
by Agent, obtain a Collateral Access Agreement from the Person in whose favor such Lien is granted.

 

9.10 Indebtedness.

 

No Obligor shall incur, create, assume, become or be liable in any manner with respect to, or permit to exist, any Indebtedness except:

 

(a) the Obligations;

 

(b) Indebtedness (including Capital Leases) existing or arising after the date hereof to the extent secured by security interests in and mortgages on Excluded Property, so long as (i) such Indebtedness does not exceed the cost of the
Excluded Property so acquired and      (ii) the aggregate amount of such Indebtedness outstanding at any time does not exceed $50,000,000;

 

(c) purchase money Indebtedness or a Capital Lease incurred after the date hereof to finance the purchase of new point-of-sale Equipment, so long as (i) such Indebtedness does not exceed the cost of the Equipment so acquired and (ii)
the aggregate amount of such Indebtedness outstanding at any time does not exceed $30,000,000;

 

(d) unsecured Indebtedness of Parent under the Convertible 2007 Senior Notes of up to the maximum principal amount of $275,000,000, less the aggregate amount of all repayments or repurchases or redemptions, optional or mandatory, of principal
in respect thereof, plus interest thereon at the rate provided for in the Convertible 2007 Senior Notes (as in effect on the date of issuance thereof); provided, that:

 

(i) Parent shall only make regularly scheduled payments of interest and premium, if any, or other mandatory payments in respect of such Indebtedness in accordance with the terms of the Convertible 2007 Senior Notes or the Convertible
2007 Senior Note Indenture (as in effect on the date of issuance of the Convertible 2007 Senior Notes);

 

(ii) neither Parent nor any other Obligor shall, directly or indirectly, make any optional prepayments of principal in respect of such Indebtedness or redeem, retire, defease, purchase or otherwise acquire such Indebtedness, or set aside
or otherwise deposit or invest any sums for such purpose in any sinking fund, or otherwise, except any Obligor may redeem or repurchase Convertible 2007 Senior Notes so long as each of the following conditions

 

  

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is satisfied: (A) Agent shall have received ten (10) days prior written notice of the intention of such Obligor to make such redemption or repurchase, (B) as of the date of any such redemption or repurchase and after giving effect thereto, Excess Availability for each of the immediately preceding thirty (30) consecutive days shall be not less
than $65,000,000 and as of the date of any such redemption or repurchase and immediately after giving effect thereto, the Excess Availability shall be not less than $65,000,000, (C) Agent shall have received, in a form reasonably satisfactory to Agent, current, updated monthly projections of the amount of Excess Availability for the twelve (12) month period after the date of the proposed redemption or repurchase, representing Borrowers’ reasonable estimate of the Excess Availability for the period set forth
therein, which projections shall have been prepared on the basis of the assumptions set forth therein which Borrowers believe are fair and reasonable as of the date of preparation in light of current and reasonably foreseeable business conditions, (D) as of the date of the making of such redemption or repurchase and immediately after giving effect thereto, the monthly projected pro forma Excess Availability for the twelve (12) consecutive months after giving effect thereto, shall not be less than $65,000,000,
and (E) as of the date of any such redemption or repurchase and immediately after giving effect thereto, no Event of Default shall exist or shall have occurred and be continuing;

 

(iii) neither Parent nor any other Obligor shall, directly or indirectly, amend, modify, alter or change the terms of the Convertible 2007 Senior Notes or any of the other Convertible 2007 Senior Note Agreements (as in effect on the
date of issuance of the Convertible 2007 Senior Notes), except, that, Parent may, after prior written notice to Agent, amend, modify, alter or change the terms thereof so as to (A) extend the maturity thereof,        (B) defer the timing of any payments in respect thereof, (C) forgive or cancel any portion of such Indebtedness, other than pursuant to payments thereof, (D) reduce the interest rate or any fees in connection therewith, or (E) make any other changes to any
of the Convertible 2007 Senior Note Agreements in a manner which is favorable to Obligors or reduces the obligations of Obligors thereunder and is not adverse to the interests of Agent and Lenders; and

 

(iv) Obligors may refinance, extend, renew or replace the Indebtedness under the Convertible 2007 Senior Notes so long as (A) the principal amount of such refinanced, extended, renewed or replacement Indebtedness is not greater
than the principal amount of the Indebtedness under the Convertible 2007 Senior Notes (as in effect on the date of issuance thereof), plus the amount of any premiums or penalties to the extent set forth in the Convertible 2007 Senior Note Agreements (as in effect on the date of issuance of the Convertible 2007 Senior Notes), accrued and unpaid interest paid thereon, and reasonable fees and expenses, in each case, associated with such refinancing, extension, renewal or replacement, (B) such refinanced, extended,
renewed or replacement Indebtedness has a final maturity that is no sooner than, and a weighted average life to maturity that is no shorter than, the Convertible 2007 Senior Notes (as in effect on the date of issuance thereof), and (C) such refinanced, extended, renewed or replacement Indebtedness contains conditions, covenants and events of default, which, taken as a whole, are no less favorable to Obligors in any material respect than the conditions, covenants and events of default in respect of the Indebtedness
evidenced under the Convertible 2007 Senior Notes (as in effect on the date of issuance thereof);

 

  

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(e) Indebtedness of Obligors in respect of surety bonds (whether bid, performance or otherwise) and other obligations of a like nature incurred in the ordinary course of business;

 

(f) Indebtedness of an Obligor to another Obligor, provided, that, such Indebtedness shall be subject to,
and subordinate in right of payment to the right of Agent and Lenders to receive payment and satisfaction in full of all of the Obligations on terms and conditions acceptable to Agent, except, that, payments in respect of such Indebtedness may be made so long as before and immediately after making such payment no Event of Default has occurred and is continuing and the Obligor holding the Indebtedness complies with Section 9.11(a) hereof;

 

(g) Indebtedness of an Obligor to an Excluded Subsidiary which may be unsecured or secured by Liens on Excluded Property, provided, that,
such Indebtedness shall be subject to, and subordinate in right of payment to the right of Agent and Lenders to receive payment and satisfaction in full of all of the Obligations pursuant to the terms of a subordination agreement between Agent and such Person, in form and substance satisfactory to Agent, except, that, payments in respect of such Indebtedness may be made so long as before and immediately after making such payment no Event of Default has occurred and is continuing;

 

(h) guarantees permitted under Section 9.13 hereof;

 

(i) Indebtedness of any Obligor entered into in the ordinary course of business pursuant to a Hedge Agreement; provided, that,
(i) such arrangements are not for speculative purposes (provided that for purposes of this clause (i), speculative purposes shall not include arrangements to protect against or manage exposure to fluctuations in interest or exchange rates, currency valuations or commodity prices), and (ii) such Indebtedness shall be unsecured, except to the extent such Indebtedness constitutes part of the Obligations arising under or pursuant to Bank Group Hedge Agreements that are secured under the terms hereof;

 

(j) Indebtedness of Obligors incurred in the ordinary course of business under license agreements;

 

(k) any other license agreements otherwise permitted hereunder; and

 

(l) Indebtedness of Obligors which is existing on the date hereof or arising after the date hereof to any Person not otherwise permitted by this Section 9.10, provided, that:
(i) such Indebtedness shall be unsecured or secured by Liens on Excluded Property, (ii) in no event shall the aggregate principal amount of such Indebtedness outstanding at any time exceed $15,000,000, (iii) if a Cash Dominion Event shall have occurred and be continuing, all of the proceeds of the loans or other accommodations giving rise to such Indebtedness shall be paid to Agent for application to the Obligations in accordance with Section 6.4 hereof, which amounts may be reborrowed, (iv) as of the date such
Indebtedness is incurred, created or assumed and immediately after giving effect thereto, (A) no Event of Default shall exist or shall have occurred and be continuing, and (B) Excess Availability shall not be less than $50,000,000, and              (v) Obligors shall not make any prepayments in respect of such Indebtedness, except, that,          (A) Obligors may prepay such Indebtedness
in accordance with the terms of the agreement or

 

  

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instrument evidencing or giving rise to such Indebtedness so long as immediately after giving effect to any such prepayment, no Event of Default shall have occurred and be continuing or would be caused thereby, and (B) the aggregate of all such prepayments shall not exceed $5,000,000 in any fiscal year.

 

9.11 Loans, Advances and Investments.

 

No Obligor shall, directly or indirectly, make any loan or advance of money or property to any person, or invest in (by capital contribution, dividend or otherwise) or purchase or repurchase the Capital Stock or Indebtedness of any person, except:

 

(a) loans and advances to another Obligor; provided, that, the Indebtedness arising pursuant to any such
loan shall not be evidenced by a promissory note or other instrument, unless the single original of such note or other instrument is promptly delivered to Agent upon its request to hold as part of the Collateral, with such endorsement and/or assignment by the payee of such note or other instrument as Agent may require;

 

(b) the endorsement of instruments for collection or deposit in the ordinary course of business;

 

(c) investments in cash or Cash Equivalents; provided, that, the terms and conditions of Section 5.4 hereof
shall have been satisfied with respect to the deposit account, investment account or other account in which such cash or Cash Equivalents are held;

 

(d) investments in indebtedness with a maturity date of ten (10) years or less from the date acquired by an Obligor and which is issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality
thereof or by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Federal Farm Credit Bank, the Federal Home Loan Bank or the Tennessee Valley Authority; provided, that, the full faith and credit of the United States of America is pledged in support thereof;

 

(e) loans or advances of money by any Obligor to any Person (other than another Obligor or an Excluded Subsidiary) after the date hereof or investments by Obligors by capital contribution in any Person (other than in another Obligor or
an Excluded Subsidiary) after the date hereof (unless such investments are otherwise permitted in this Section 9.11 or are Permitted Acquisitions); provided, that, as to any such loans, advances or investments (constituting one loan, advance or investment or a series of the foregoing) (whether individually, or in the aggregate), each of the following conditions is satisfied:

 

(i) the aggregate amount of all such loans or investments in any calendar year shall not exceed $10,000,000 and the aggregate amount of all such loans or investments during the term of this Agreement shall not exceed $25,000,000;

 

(ii) the Person receiving such loan, advance or investment is engaged in a business related, ancillary or complementary to the business of any Obligor permitted in this Agreement;

 

  

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(iii) as of the date of any such loan, advance or investment and immediately after giving effect thereto, no Default or Event of Default shall have occurred and be continuing,

 

(iv) Excess Availability for each of the thirty (30) consecutive days immediately preceding such loan, advance or investment shall be not less than $65,000,000;

 

(v) as of the date of any such loan, advance or investment and immediately after giving effect thereto, Excess Availability shall be not less than $65,000,000;

 

(vi) Agent shall have received, in a form reasonably satisfactory to Agent, current, updated monthly projections of the amount of Excess Availability for the twelve (12) month period after the date of the proposed such loan, advance
or investment, representing Borrowers’ reasonable estimate of Excess Availability for the period set forth therein, which projections shall have been prepared on the basis of the assumptions set forth therein which Borrowers believe are fair and reasonable as of the date of preparation in light of current and reasonably foreseeable business conditions;

 

(vii) as of the date of the making of such loan, advance or investment and immediately after giving effect thereto, the monthly projected pro forma Excess Availability for the twelve (12) consecutive months after giving effect thereto,
shall not be less than $65,000,000; and

 

(viii) Agent shall have received (A) not less than five (5) Business Days’ prior written notice thereof setting forth in reasonable detail the nature and terms thereof, (B) if requested by Agent, true, correct and complete copies
of all agreements, documents and instruments relating thereto, and (C) such other information with respect thereto as Agent may reasonably request;

 

(f) Permitted Acquisitions;

 

(g) Capital Stock or obligations issued to any Obligor by any Person (or the representative of such Person) in respect of Indebtedness of such Person owing to such Obligor in connection with an Insolvency Proceeding of such Person; provided, that,
the original, if any, of any such Capital Stock or instrument evidencing such obligations shall be promptly delivered to Agent, upon Agent’s request, together with such stock power, assignment or endorsement by such Obligor as Agent may request;

 

(h) loans and advances to or investments in any Excluded Subsidiary existing as of the date hereof;

 

(i) loans and advances to an Excluded Subsidiary in connection with payroll, accounts payable and the cash management system of Parent and its Subsidiaries in the ordinary course of business consistent with Obligors’ then current
practice, provided, that, as of the date any such loans or advances are made, and after giving effect thereto, Excess Availability is not less than $10,000,000; and

 

  

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(j) loans and advances to or investments in any Excluded Subsidiary not permitted by subsections (h) or (i) of this Section 9.11, provided, that,
(i) the amount of such loans, advances and investments shall not exceed $50,000,000 in the aggregate at any time outstanding; (ii) as of the date of such loan, advance or investment and immediately after giving effect thereto, no Event of Default shall exist or shall have occurred and be continuing, (iii) Excess Availability for each of the thirty (30) consecutive days immediately preceding such loan, advance or investment shall be not less than $65,000,000, (iv) as of the date of any such loan, advance or investment
and immediately after giving effect thereto, Excess Availability shall be not less than $65,000,000, (v) Agent shall have received, in a form reasonably satisfactory to Agent, current, updated monthly projections of the amount of Excess Availability for the twelve (12) month period after the date of the proposed such loan, advance or investment, representing Borrowers’ reasonable estimate of Excess Availability for the period set forth therein, which projections shall have been prepared on the basis of
the assumptions set forth therein which Borrowers believe are fair and reasonable as of the date of preparation in light of current and reasonably foreseeable business conditions, and (vi) as of the date of the making of such loan, advance or investment and immediately after giving effect thereto, the monthly projected pro forma Excess Availability for the twelve (12) consecutive months after giving effect thereto, shall not be less than $65,000,000.

 

9.12 Acquisitions.

 

No Obligor shall, directly or indirectly, acquire (which term shall include acquisition by way of merger or consolidation), all or substantially all of the Capital Stock or assets or property of any Person, except the following (collectively, “Permitted Acquisitions”):

 

(a) any Obligor may acquire all or a substantial part of the assets or property or all or a majority of the Capital Stock of any Person located in the United States, Canada or the United Kingdom (such acquired assets, including the assets
acquired in a Capital Stock acquisition, being referred to herein as the “Acquired Business”), provided, that:

 

(i) if the total consideration (including all cash, property or assumed Indebtedness payable on or immediately after consummation of such acquisition) payable in respect of such Acquired Business is less than or equal to $25,000,000
(so long as the aggregate amount of all consideration paid for all acquisitions pursuant to this Section 9.12(a) at the time of, or immediately after giving effect to such proposed acquisition pursuant to this Section 9.12(a), shall be less than $100,000,000 in the aggregate), each of the following conditions is satisfied:

 

(A) Agent shall have received not less than five (5) days’ prior written notice of the proposed acquisition, which notice shall set forth in reasonable detail:       (1) the total consideration
payable in respect of such acquisition (and the terms of payment),    (2) the nature of such acquisition (including, whether the newly acquired entity will be an Excluded Subsidiary), (3) if a Capital Stock acquisition (including by merger or consolidation), the name, address and jurisdiction of incorporation of the person whose Capital Stock is being purchased, (4) the proposed closing date of the acquisition, and (5) such other information with respect thereto as Agent may reasonably request;

 

  

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(B) the Acquired Business shall be related, ancillary or complementary to the business of Parent and its Subsidiaries;

 

(C) as of the closing date of any such acquisition and immediately after giving pro forma effect thereto, no Event of Default shall exist or shall have occurred and be continuing;

 

(D) (1) for each of the thirty (30) consecutive days immediately preceding the date of any such acquisition and as of the closing date of such acquisition but prior to giving effect thereto, Excess Availability shall have been not less
than $50,000,000, and (2) as of the closing date of any such acquisition and immediately after giving effect thereto (including any payments in respect of such acquisition), Excess Availability shall not be less than $50,000,000;

 

(E) the assets acquired which constitute Collateral or, if the Acquired Business will not be, or be owned by, an Excluded Subsidiary, the assets which constitute Collateral of the Acquired Business and the Capital Stock so acquired shall
be free and clear of any Liens (other than Permitted Liens) and Agent shall have received evidence reasonably satisfactory to it of the same;

 

(F) promptly upon consummation of such acquisition, Agent shall have received true, correct and complete copies of all agreements, documents and instruments relating thereto, duly executed and delivered by the parties thereto;

 

(G) promptly upon consummation of such acquisition, Agent shall have received all items required by Sections 5.4, 9.14(a)(ii) and (iii) and 9.26 hereof in connection with the Acquired Business (except with respect to an entity which
shall be an Excluded Subsidiary) to the extent required under such Sections; and

 

(H) such acquisition either (1) shall be a bona fide arms’ length transaction with a Person that is not an Affiliate of an Obligor or (2) if such transaction is with an Affiliate other than an Obligor or an Excluded Subsidiary,
shall satisfy the requirements of Section 9.16(b) hereof;

 

(ii) if the total consideration (including all cash, property or assumed Indebtedness payable on or immediately after consummation of such acquisition) payable in respect of such Acquired Business is greater than $25,000,000 (or the
aggregate amount of all consideration paid for all acquisitions pursuant to this Section 9.12(a) at the time of, or immediately after giving effect to such proposed acquisition pursuant to this Section 9.12(a) shall be greater than $100,000,000 in the aggregate), each of the following conditions is satisfied:

 

(A) Agent shall have received not less than fourteen (14) days’ prior written notice of the proposed acquisition (unless Agent otherwise agrees), which notice shall set forth in reasonable detail: (1) the total consideration payable
in respect of such acquisition (and the terms of payment), (2) the nature of such acquisition (including, whether the newly acquired entity will be an Excluded Subsidiary), (3) a list and description of the assets to be acquired (including the addresses of the locations thereof and whether such locations are

 

  

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owned, leased or operated by a thirty party, and if leased or operated by a third party, the name and address of the lessor or third party), (4) if a Capital Stock acquisition (including by merger or consolidation), the name, address and jurisdiction of incorporation of the person whose Capital Stock is being purchased, (5) the proposed closing
date of the acquisition, and (6) such other information with respect thereto as Agent may reasonably request;

 

(B) the Acquired Business shall be related, ancillary or complementary to the business of Parent and its Subsidiaries;

 

(C) as of the closing date of any such acquisition and immediately after giving pro forma effect thereto, no Default or Event of Default shall exist or shall have occurred and be continuing;

 

(D) Agent shall have received, in a form reasonably satisfactory to Agent, current, updated monthly projections of the amount of the Borrowing Base and Excess Availability for the twelve (12) month period after the date of the proposed
acquisition, representing Borrowers’ reasonable estimate of the Borrowing Base and Excess Availability for the period set forth therein, which projections shall have been prepared on the basis of the assumptions set forth therein which Borrowers believe are fair and reasonable as of the date of preparation in light of current and reasonably foreseeable business conditions;

 

(E) (1) for each of the thirty (30) consecutive days immediately preceding the date of any such acquisition and as of the closing date of such acquisition but prior to giving effect thereto, Excess Availability shall have been not less
than $65,000,000, and (2) as of the date of such acquisition and immediately after giving effect thereto (including the payment of all costs related to such acquisition), the monthly projected pro forma Excess Availability shall not be less than $65,000,000 immediately preceding such acquisition and for the twelve (12) consecutive months after giving effect thereto;

 

(F) the assets acquired which constitute Collateral or, if the Acquired Business will not be, or be owned by, an Excluded Subsidiary, the assets which constitute Collateral of the Acquired Business and the Capital Stock so acquired shall
be free and clear of any Liens (other than Permitted Liens) and Agent shall have received evidence reasonably satisfactory to it of the same;

 

(G) promptly upon consummation of such acquisition, Agent shall have received true, correct and complete copies of all agreements, documents and instruments relating thereto, duly executed and delivered by the parties thereto;

 

(H) promptly upon consummation of such acquisition, Agent shall have received all items required by Sections 5.4, 9.14(a)(ii) and (iii) and 9.26 hereof in connection with the Acquired Business (except with respect to an entity which
shall be an Excluded Subsidiary) to the extent required under such Sections;

 

(I) such acquisition either (1) shall be a bona fide arms’ length transaction with a Person that is not an Affiliate of an Obligor or (2) if such transaction is with an

 

  

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Affiliate other than an Obligor or a Excluded Subsidiary, shall satisfy the requirements of Section 9.16(b) hereof;

 

(J) in the case of the acquisition of the Capital Stock of another Person, the board of directors (or other comparable governing body) of such other Person shall have duly approved such acquisition and such Person shall not have announced
that it will oppose such acquisition or shall not have commenced any action which alleges that such acquisition will violate applicable law; and

 

(K) Agent shall have received a certificate of a financial officer or executive officer of Administrative Borrower on behalf of Administrative Borrower certifying to Agent and Lenders compliance with the conditions set forth in this
Section 9.12(a)(ii);

 

(iii) the aggregate amount of all consideration paid for all Permitted Acquisitions during the term of this Agreement shall not be greater than $100,000,000;

 

(iv) the Inventory, Credit Card Receivables and Installment Sales Receivables of any Acquired Business shall not be or be deemed to be Eligible Inventory, Eligible Credit Card Receivables and/or Eligible Installment Sales Receivables
until Agent shall have conducted a field examination with respect to such assets and the results of such field examination and other due diligence shall be reasonably satisfactory to Agent, and then only to the extent the criteria for Eligible Inventory, Eligible Credit Card Receivables and Eligible Installment Sales Receivables set forth herein are satisfied with respect thereto (as such criteria may be reasonably modified by Agent to reflect the results of Agent’s field examination including any separate
advance percentage with respect to such Inventory, Credit Card Receivables or Installment Sales Receivables or Reserves as Agent may reasonably determine but otherwise in accordance with the definitions of Eligible Inventory, Eligible Credit Card Receivables and Eligible Installment Sales Receivables;

 

(v) upon the reasonable request of Agent, if practicable, the Inventory, Credit Card Receivables or Installment Sales Receivables acquired by such Obligor shall be separately identified and reported to Agent in a manner reasonably satisfactory
to Agent for a time period reasonably satisfactory to Agent, and if Obligor is seeking to have the acquired Inventory included in the Borrowing Base, Agent shall require an appraisal thereof in form and containing assumptions and appraisal methods reasonably satisfactory to Agent by an appraiser reasonably acceptable to Agent, on which Agent and Lenders are expressly permitted to rely (and any Inventory to be included in the Borrowing Base of the Acquired Business shall only be included in the Borrowing Base
to the extent that Agent has received such appraisal with respect thereto);

 

(b) any Obligor may acquire any other Obligor or all or any part of the assets of any other Obligor; and

 

(c) any Obligor may acquire any Excluded Subsidiary or the assets thereof provided, that, (i) as of the
closing date of such acquisition but prior to giving effect thereto, Excess Availability shall be not less than $50,000,000, (ii) immediately after giving effect thereto and any payments in respect of such acquisition, the Excess Availability on a pro forma

 

  

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basis shall be not less than $50,000,000 and (iii) as of the date of such acquisition and immediately after giving effect thereto, no Event of Default shall have occurred and be continuing.

 

9.13 Guarantees.

 

No Obligor shall, directly or indirectly, guarantee, assume, endorse, or otherwise become responsible for (directly or indirectly) the Indebtedness, performance, obligations or dividends of any Person, except:

 

(a) guarantees by any Obligor or any Subsidiary of an Obligor of the Obligations in favor of Agent and Secured Parties;

 

(b) guarantees by any Obligor of any Indebtedness permitted by Section 9.10 hereof, which guarantees shall be unsecured or secured only by Excluded Property;

 

(c) guarantees by any Obligor (other than Parent) of the Indebtedness, performance, obligations or dividends of any Subsidiary of Parent (other than Excluded Subsidiaries), to any third party, provided, that,
such guarantees shall be unsecured or secured only by Excluded Property;

 

(d) guarantees by Parent of the Indebtedness, performance, obligations or dividends of any Subsidiary of Parent (other than Excluded Subsidiaries), provided, that,
such guarantees shall be unsecured or secured only by Excluded Property or Letters of Credit issued for the account of Parent;

 

(e) guarantees by Obligors of the Indebtedness, performance, obligations or dividends of any Excluded Subsidiary, provided, that,
(i) such guarantees shall be unsecured or secured only by Excluded Property, and (ii) in no event shall the aggregate principal amount of the liability of Obligors under such guarantees during the term of this Agreement exceed $25,000,000;

 

(f) any guarantee, comfort letter or any other any agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire obligations of a Financing Subsidiary, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain the solvency or any balance sheet or other financial condition of a Financing Subsidiary, in any such case if the purpose or intent of such agreement is to provide assurance that such obligation will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such obligation will be protected against loss in respect thereof by any Obligor so long as such
guarantee, comfort letter or other agreement is unsecured and is required or mandated by a Governmental Authority; and

 

(g) CS Securitization Undertakings.

 

9.14 New Subsidiaries.

 

  

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(a) An Obligor may form or acquire new Subsidiaries which are not Excluded Subsidiaries (subject, with respect to Permitted Acquisitions, to the conditions set forth in Section 9.12 hereof) or convert an Excluded Subsidiary to an Obligor
so long as:

 

(i) such Subsidiary is organized under the laws of the United States or any state or territory thereof,

 

(ii) promptly upon any such formation, acquisition or conversion (but no later than thirty (30) days after the formation, acquisition or conversion thereof), (A) such Obligor shall cause any such Subsidiary to execute and deliver to
Agent: (1) a Guarantor Joinder Agreement pursuant to which such Subsidiary (x) absolutely and unconditionally guarantees payment of any and all present and future Obligations of Borrowers to Agent and (y) grants to Agent a first and prior security interest and lien upon all of the assets of such Subsidiary which constitute Collateral subject to Permitted Liens or Liens otherwise consented to in writing by Agent, and (2) such other agreements, documents and instruments as Agent may reasonably require which shall
be reasonably satisfactory in form and substance to Agent, including, but not limited to, supplements and amendments hereto, authorization to file UCC financing statements, Collateral Access Agreements (to the extent required to be delivered pursuant to the terms hereof) and other consents, waivers, acknowledgments and other agreements from third persons which Agent may deem necessary or desirable in order to permit, protect and perfect its security interests in and liens upon the assets purchased, corporate
resolutions and other organization and authorizing documents of such Person, and opinions of counsel (in connection with Permitted Acquisitions), (B) such Obligor shall execute and deliver to Agent in form and substance satisfactory to Agent, a pledge and security agreement granting to Agent a first pledge of and lien on all of the issued and outstanding shares of Capital Stock of such Subsidiary, and (C) such Obligor shall deliver the original stock certificates evidencing such shares of Capital Stock (or such
other evidence as may be issued in the case of a limited liability company) together with stock powers with respect thereto duly executed in blank (or the equivalent thereof in the case of a limited liability company).

 

(iii) Agent shall have received, in form and substance satisfactory to Agent, evidence that Agent has valid and perfected security interests in and liens upon all of the assets of such Subsidiary, to the extent such assets constitute
Collateral hereunder, and

 

(iv) as of the date of the organization, formation or acquisition of any Obligor and immediately after giving effect thereto, no Event of Default shall have occurred and be continuing.

 

(b) An Obligor may form or acquire Excluded Subsidiaries on and after the date hereof so long as on the date of such formation or acquisition and immediately after giving effect thereto, the conditions set forth in Section 9.12(c) hereof
are satisfied.  Unless such Person has been designated by Administrative Borrower as an Excluded Subsidiary in accordance with Section 9.12(c) hereof, Administrative Borrower shall designate such newly formed or acquired Person as an Excluded Subsidiary promptly upon such formation or acquisition in a writing by Administrative Borrower delivered to Agent.

 

  

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(c) With respect to the formation of an Obligor or conversion of an Excluded Subsidiary to an Obligor pursuant to this Section (other than a Retail Store Subsidiary in the United States), in no event shall any Inventory, Credit Card Receivables
or Installment Sales Receivables of any new Obligor be deemed Eligible Inventory, Eligible Credit Card Receivables or Eligible Installment Sales Receivables be or be deemed to be Eligible Inventory, Eligible Credit Card Receivables and/or Eligible Installment Sales Receivables until Agent shall have conducted a field examination with respect to such assets and the results of such field examination and other due diligence shall be reasonably satisfactory to Agent, and then only to the extent the criteria for Eligible
Inventory, Eligible Credit Card Receivables and Eligible Installment Sales Receivables set forth herein are satisfied with respect thereto (as such criteria may be reasonably modified by Agent to reflect the results of Agent’s field examination including any separate advance percentage with respect to such Inventory, Credit Card Receivables or Installment Sales Receivables or Reserves as Agent may reasonably determine but otherwise in accordance with the definitions of Eligible Inventory, Eligible Credit
Card Receivables and Eligible Installment Sales Receivables.  Upon the reasonable request of Agent, if practicable, the Inventory, Credit Card Receivables or Installment Sales Receivables of such Obligor shall be separately identified and reported to Agent in a manner reasonably satisfactory to Agent for a time period reasonably satisfactory to Agent.  In addition, if the new Obligor is seeking to have Inventory included in the Borrowing Base, Agent shall require an appraisal thereof in form
and containing assumptions and appraisal methods reasonably satisfactory to Agent by an appraiser reasonably acceptable to Agent, on which Agent and Lenders are expressly permitted to rely (and any Inventory to be included in the Borrowing Base of such new Obligor shall only be included in the Borrowing Base to the extent that Agent has received such appraisal with respect thereto).

 

9.15 Dividends and Redemptions.

 

No Obligor shall, directly or indirectly, or permit any Subsidiary to, declare, pay or make, any Restricted Payment, except, that:

 

(a) any Obligor (other than Parent), or any other Subsidiary of Parent may declare and pay a dividend, directly or indirectly, to Parent or to any other Obligor of which it is a Subsidiary;

 

(b) Parent may make Restricted Payments (other than payments of cash distributions or dividends, as provided in clause (c) below); provided, that,
each of the following conditions is satisfied: (i) as of the date of any such repurchase and immediately after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing,    (ii) any such repurchase shall be paid with funds legally available therefor, (iii) any such repurchase shall not violate any law or regulation or the terms of any indenture, agreement or undertaking to which Parent is a party or by which Parent or its property is bound, (iv) as
of the date of any such repurchase, Excess Availability for each of the immediately preceding thirty (30) consecutive days shall not have been less than $65,000,000, and immediately after giving effect to any such repurchase, Excess Availability shall not be less than $65,000,000;    (v) Agent shall have received, in a form reasonably satisfactory to Agent, current, updated monthly projections of the amount of Excess Availability for the twelve (12) month period after the date of the
proposed repurchase, representing Borrowers’ reasonable estimate of the Excess

 

  

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Availability for the period set forth therein, which projections shall have been prepared on the basis of the assumptions set forth therein which Borrowers believe are fair and reasonable as of the date of preparation in light of current and reasonably foreseeable business conditions, and (vi) as of the date of the making of any such repurchase
and immediately after giving effect thereto, the projected pro forma Excess Availability for the twelve (12) consecutive months after giving effect thereto, shall not be less than $65,000,000; and

 

(c) Parent may make Restricted Payments consisting of cash dividends or distributions; provided, that, each
of the following conditions is satisfied: (i) the aggregate amount of all such Restricted Payments paid in cash in any fiscal year shall not exceed $15,000,000; (ii) as of the date of any such Restricted Payment and immediately after giving effect thereto, no Default or Event of Default shall have occurred and be continuing, (iii) any such Restricted Payment shall be paid with funds legally available therefor, (iv) any such Restricted Payment shall not violate any law or regulation or the terms of any indenture,
agreement or undertaking to which Parent is a party or by which Parent or its property is bound, (v) as of the date of any such Restricted Payment, Excess Availability for each of the immediately preceding thirty (30) consecutive days shall not have been less than $65,000,000, and immediately after giving effect to any such Restricted Payment, Excess Availability shall not be less than $65,000,000, (vi) Agent shall have received current, updated projections of the amount of Excess Availability for the twelve
(12) month period after the date of the proposed Restricted Payment, in a form reasonably satisfactory to Agent, representing Borrowers’ reasonable estimate of the Excess Availability for the period set forth therein, which projections shall have been prepared on the basis of the assumptions set forth therein which Borrowers believe are fair and reasonable as of the date of preparation in light of current and reasonably foreseeable business conditions, and (vii) as of the date of the making of any such
Restricted Payment and immediately after giving effect thereto, the projected pro forma Excess Availability for the twelve (12) consecutive months after giving effect thereto, shall not be less than $65,000,000.

 

9.16 Transactions with Affiliates.

 

Except for transactions between or among any Obligor and any other Obligor permitted under this Agreement or the other Financing Agreements, no Obligor shall enter into any transaction for the purchase, sale or exchange of property to or by any Affiliate except (a) in the ordinary course consistent with the business practices in effect on
the date of such transaction and pursuant to the reasonable requirements of such Obligor’s business, and provided, that, each Obligor is in compliance with and utilizes the arms length standard for course of dealing transactions applicable to Affiliates as contemplated in Section 482 of the Code, as amended, and the regulations promulgated thereunder, such that no material amount
of Taxes are due and owing and unpaid as a result of any such transaction or series of transactions or (b) upon fair and reasonable terms no less favorable to such Obligor than such Obligor would obtain in a comparable arm’s length transaction with an unaffiliated person, except with respect to sales of Inventory to or purchases of Inventory by an Obligor, as to which the sales or purchase price is not less than the cost thereof to the seller thereof.

 

9.17 Compliance with ERISA.

 

  

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Borrowers shall not with respect to any “employee pension benefit plans” maintained by any Borrower or any of its ERISA Affiliates to the extent any of the following would create a Lien on any of the Collateral: (a) terminate any of such employee pension benefit plans so as to incur any liability to the Pension Benefit Guaranty
Corporation established pursuant to ERISA, (b) allow or suffer to exist any prohibited transaction involving any of such employee pension benefit plans or any trust created thereunder which would subject Borrowers or such ERISA Affiliate to a tax or penalty or other liability on prohibited transactions imposed under Section 4975 of the Code or ERISA, (c)  fail to pay to any such employee pension benefit plan any contribution which it is obligated to pay under Section 302 of ERISA, Section 412 of
the Code or the terms of such plan, (d)  allow or suffer to exist any accumulated funding deficiency, whether or not waived, with respect to any such employee pension benefit plan, (e) allow or suffer to exist any occurrence of a reportable event or any other event or condition which presents a material risk of termination by the Pension Benefit Guaranty Corporation of any such employee pension benefit plan that is a single employer plan, which termination could result in any liability to the Pension
Benefit Guaranty Corporation or (f) incur any withdrawal liability with respect to any Multiemployer Plan.  As used in this Section, the term “employee pension benefit plans,” “employee benefit plans”, “accumulated funding deficiency” and “reportable event” shall have the respective meanings assigned to them in ERISA, and the term “prohibited transaction” shall have the meaning assigned to it in Section 4975 of the Code and ERISA.

 

9.18 End of Fiscal Years: Fiscal Quarters.

 

Parent shall, for financial reporting purposes, and cause its and each of its Subsidiaries’ (excluding Foreign Subsidiaries) (a) fiscal years to end on the Saturday closest to the 31st day of January of each year, and (b) fiscal quarters to end on the last day of the thirteenth (13th) week following the end of the immediately preceding
fiscal quarter, provided, that, the end of the fourth fiscal quarter shall be on the last day of the fourteenth (14th) week following the end of the third fiscal quarter whenever necessary to have the fourth fiscal quarter end on the Saturday closest to January 31 of each year.  Each Foreign Subsidiary’s fiscal year shall end on December 31 of each calendar year.  Notwithstanding the foregoing, Parent and its Subsidiaries may change any fiscal year or fiscal quarter end date upon written
notice to Agent not more than thirty (30) days prior to the commencement of such fiscal year or fiscal quarter.

 

9.19 Change in Business.

 

No Obligor shall engage in any business other than the business of such Person on the date hereof or any business reasonably related, ancillary or complementary to the business in which Obligors are engaged on the date hereof.

 

9.20 Limitation of Restrictions Affecting Subsidiaries.

 

No Obligor shall, directly, or indirectly, create or otherwise cause or suffer to exist any encumbrance or restriction which prohibits or limits the ability of (a) any Obligor (other than Parent) to pay dividends or make other distributions or pay any Indebtedness owed to any Obligor; (b) any Obligor to make loans or advances to any other
Obligor, (c) any Obligor to transfer any Collateral to any Obligor; or  (d) any Obligor to create, incur, assume or suffer to exist any Lien upon any Collateral, other than Liens and restrictions arising under (i) applicable

 

  

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law, (ii) this Agreement, (iii) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of any Obligor, (iv) customary restrictions on dispositions of real property interests found in reciprocal easement agreements of any Obligor, (v) any agreement relating to permitted Indebtedness incurred prior
to the date on which such Person was acquired by any Obligor and outstanding on such acquisition date, and (vi) the existence, extension or continuation of contractual obligations in existence on the date hereof; provided, that, any such encumbrances or restrictions contained in such extension or continuation are no less favorable to Agent and Lenders than those encumbrances and restrictions
under or pursuant to the contractual obligations so extended or continued.

 

9.21 Fixed Charge Coverage Ratio.

 

At any time that Excess Availability is less than $40,000,000, Parent and its Subsidiaries, on a consolidated basis, shall, when measured as of the fiscal month most recently ended for which Agent has received financial statements in accordance with Section 9.6(a)(i), for the period of the immediately preceding twelve (12) consecutive fiscal
months ending on the last day of such fiscal month, maintain a Fixed Charge Coverage Ratio of not less than 1.10 to 1.00.  For purposes of this covenant, when calculating “Excess Availability” for the month of November, clause (a) of the definition of “Excess Availability shall be deemed to read: “(a) the lesser of (i) the Borrowing Base and (ii) the sum of (A) Maximum Credit plus (B) $10,000,000 (in each case under (i) or (ii) after giving effect to any Reserves other than any
Reserves in respect of Letter of Credit Obligations) minus.”

 

9.22 Credit Card Agreements.

 

Each Obligor shall:

 

(a) observe and perform all material terms, covenants, conditions and provisions of the Credit Card Agreements to be observed and performed by it at the times set forth therein;

 

(b) not do, permit, suffer or refrain from doing anything, as a result of which there could be a material default under or material breach of any of the terms of any of the Credit Card Agreements;

 

(c) at all times, maintain in full force and effect the Credit Card Agreements and not terminate, cancel, surrender, modify, amend, waive or release any of the Credit Card Agreements, or consent to or permit to occur any of the foregoing;
except, that an Obligor may terminate, cancel, surrender, modify, amend, waive or release any of the Credit Card Agreements in the ordinary course of operations of such Obligor;

 

(d) not enter into any new Credit Card Agreements with any new Credit Card Issuer unless Obligor deliver, or cause to be delivered to Agent, a Credit Card Acknowledgment in favor of Agent; and

 

  

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(e) give Agent immediate written notice of any Credit Card Agreement entered into by such Obligor after the date hereof, together with a true, correct and complete copy thereof and such other information with respect thereto as Agent
may reasonably request.

 

9.23 Use of Private Label Credit Cards.

 

(a) Upon the occurrence of an Event of Default described in Section 10.1(j) hereof, at the request of Agent, Obligors shall cease accepting any Private Label Credit Card for sales of merchandise to customers.

 

(b) Upon the occurrence and during the continuance of any Event of Default, at the request of Agent, Parent shall cause each Obligor to cease accepting in-store payments from their customers in respect of accounts receivable owing by
such customers to any of the Financing Subsidiaries or other Persons in respect of Private Label Credit Cards.

 

9.24 Change of Control of Parent’s Subsidiaries.

 

(a) Parent shall at all times own, directly or indirectly, not less than (i) one hundred (100%) percent of the total outstanding Voting Stock of (A) each Borrower, (B) each Additional L/C Debtor, (C) FSC, (D) each Obligor existing as
of the date of this Agreement and (E) each other Obligor, formed or acquired after the date hereof, the assets of which Administrative Borrower wishes to include in the Borrowing Base, and (ii) a majority of the total outstanding Voting Stock (or such greater amount of the total outstanding amount of the Voting Stock of such Obligor as is necessary to appoint a majority of the Board of Directors of such Obligor) of each Obligor formed or acquired after the date hereof whose assets are not included in the calculation
of the Borrowing Base.

 

(b) Parent shall not permit (i) the transfer (in one transaction or a series of transactions) of all or substantially all of the assets of any Obligor to any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act)
other than as permitted in this Agreement; (ii) the adoption of a plan by the stockholders of any Obligor relating to the dissolution or liquidation of such Obligor other than as permitted in this Agreement; or (iii) FSC to own, directly or indirectly, less than one hundred (100%) percent of the total outstanding Voting Stock of each of the other Financing Subsidiaries and substantially all of the assets of each of the other Financing Subsidiaries, except as otherwise permitted in this Agreement.

 

(c) Notwithstanding the foregoing, any sale (including by way of merger or consolidation) of the Voting Stock or substantially all of the assets of a Subsidiary of Parent that would otherwise be prohibited by the terms of the Financing
Agreements shall be permitted, so long as the following conditions precedent are satisfied:

 

(i) such sale of Capital Stock of a Subsidiary of Parent or other assets of the Subsidiary of Parent would not be prohibited by Section 9.8 hereof and Agent shall have received notice of any such sale at least ten (10) Business Days
prior to consummation of such sale, or such lesser amount of notice as Agent may otherwise agree;

 

  

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(ii) the net after-tax proceeds received in respect of such sale shall be applied to the outstanding principal amount of Revolving Loans, which amounts may be reborrowed;

 

(iii) as of the date of such sale, either:

 

(A) (1) Excess Availability immediately after giving effect to such sale, shall not be less than $65,000,000, (2) Agent shall have received, in a form reasonably satisfactory to Agent, current, updated monthly projections of the amount
of Excess Availability for the twelve (12) month period after the date of the proposed sale, representing Borrowers’ reasonable estimate of the Excess Availability for the period set forth therein, which projections shall have been prepared on the basis of the assumptions set forth therein which Borrowers believe are fair and reasonable as of the date of preparation in light of current and reasonably foreseeable business conditions, (3) Agent shall have received, in a form reasonably satisfactory to Agent,
current, updated monthly projections of EBITDA for the twelve (12) month period after the date of the proposed sale, representing Borrowers’ reasonable estimate of the EBITDA for the period set forth therein, which projections shall have been prepared on the basis of the assumptions set forth therein which Borrowers believe are fair and reasonable as of the date of preparation in light of current and reasonably foreseeable business conditions and which projections demonstrate to the reasonable satisfaction
of Agent that EBITDA for such period will not be reduced by more than thirty-three (33%) percent as a result of such sale, and                   (4) immediately after giving effect thereto, the monthly projected pro forma Excess Availability for the twelve (12) consecutive months after giving effect thereto, shall not be less than $65,000,000, or

 

(B) (1) Excess Availability immediately after giving effect to such sale shall not be less than $75,000,000, (2) Agent shall have received, in a form reasonably satisfactory to Agent, current, updated monthly projections of the amount
of Excess Availability for the twelve (12) month period after the date of the proposed sale, representing Borrowers’ reasonable estimate of the Excess Availability for the period set forth therein, which projections shall have been prepared on the basis of the assumptions set forth therein which Borrowers believe are fair and reasonable as of the date of preparation in light of current and reasonably foreseeable business conditions, and (3) immediately after giving effect thereto, the monthly projected
pro forma Excess Availability for the twelve (12) consecutive months after giving effect thereto, shall not be less than $75,000,000, and

 

(iv) as of the date of any such sale and immediately after giving effect thereto, no Event of Default shall exist or shall have occurred and be continuing.

 

9.25 Foreign Assets Control Regulations, Etc.

 

None of the requesting or borrowing of the Loans or the requesting or issuance, extension or renewal of any Letter of Credit Accommodation or the use of the proceeds of any thereof will violate the Trading With the Enemy Act (50 U.S.C. §1 et seq., as amended) (the “Trading With the Enemy Act”) or any of the foreign assets
control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) (the “Foreign Assets Control Regulations”) or any enabling legislation or executive order relating thereto (including, but not

 

  

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limited to (a) Executive order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive Order”) and (b) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (Public Law 107-56).  None of Parent or any of its Subsidiaries or other Affiliates is or will become a Sanctioned Entity or Sanctioned Person as described in the Executive Order, the Trading with the Enemy Act or the Foreign Assets Control Regulations or to the best of their knowledge engages or will engage in any dealings or transactions, or be otherwise associated, with any such Sanctioned Entity or Sanctioned Person.

 

9.26 Costs and Expenses.

 

Borrowers shall pay to Agent promptly (but in any event within two (2) Business Days) following Agent’s written demand therefor (other than those costs and expenses that are due and payable on the date hereof pursuant to the terms of this Agreement and the Engagement Letters), all costs and expenses paid or payable in connection with
the preparation, negotiation, execution, delivery, recording, syndication, administration, collection, liquidation, enforcement and defense of the Obligations, Agent’ s rights in the Collateral, this Agreement, the other Financing Agreements and all other documents related hereto or thereto, including any amendments, supplements or consents which may hereafter be contemplated (whether or not executed) or entered into in respect hereof and thereof, including: (a) all out-of-pocket costs and expenses of filing
or recording (including UCC financing statement filing taxes and fees, documentary taxes and intangibles taxes, if applicable); (b) all out-of-pocket costs and expenses for insurance premiums, appraisal fees (except as otherwise provided in Section 7.3 hereof) and search fees, and costs and expenses of remitting loan proceeds, collecting checks and other items of payment, and establishing and maintaining the Blocked Accounts, together with Agent’s customary charges and fees with respect thereto; (c) charges,
fees or expenses charged by any Issuing Bank in connection with the Letters of Credit; (d) all out-of-pocket costs and expenses of preserving and protecting the Collateral; (e) costs and expenses paid or incurred in connection with obtaining payment of the Obligations, enforcing the Liens of Agent, selling or otherwise realizing upon the Collateral, and otherwise enforcing the provisions of this Agreement and the other Financing Agreements or defending any claims made or threatened against Agent or any Lender
arising out of the transactions contemplated hereby and thereby (including preparations for and consultations concerning any such matters); (f) all out of pocket expenses and costs heretofore (with respect to the Agent) and from time to time hereafter incurred by Agent during the course of periodic field examinations of the Collateral and any Obligor’s operations, plus a per diem charge at Agent’s then standard rate for Agent’s examiners in the field and office (which rate as of the date hereof
is $1,000 per person per day); provided, that, (i) Borrowers acknowledge and agree that Agent shall have the right to conduct field examinations with at least the Required Frequency and at any time that Agent may determine following the occurrence and during the continuance of an Event of Default; and (ii) all such field examinations shall be at the expense of Borrowers, except for
field examinations in excess of the Required Frequency, provided, that, all such field examinations shall be at the expense of Borrowers at any time that an Event of Default shall exist or shall have occurred and be continuing; and (g) the reasonable fees and disbursements of counsel (including legal assistants) to Agent in connection with any of the foregoing.

  

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9.27 Further Assurances.

 

  At the request of Agent at any time and from time to time, Obligors shall, and Parent shall cause each Additional L/C Debtor to, at Borrowers’ expense, duly execute and deliver, or cause to be duly executed and delivered, such further agreements, documents and instruments, and do or cause to be done such further acts as may
be necessary to evidence, perfect, maintain and enforce the security interests and the priority thereof in the Collateral and to otherwise effectuate the provisions of this Agreement or any of the other Financing Agreements.

 

9.28 Modifications to Other Agreements.

 

  No Obligor shall amend, modify or otherwise change its certificate of incorporation, articles of association, certificate of formation, limited liability agreement or other organizational documents, as applicable, except for amendments, modifications or other changes that do not adversely affect the rights and privileges of any
Obligor and do not adversely affect the ability of any Obligor to amend, modify, renew or supplement the terms of this Agreement or any of the other Financing Agreements, or otherwise adversely affect the interests of Agent or Lenders.

 

SECTION 10. EVENTS OF DEFAULT AND REMEDIES

 

10.1 Events of Default.

 

The occurrence or existence of any one or more of the following events are referred to herein individually as an “Event of Default”, and collectively as “Events of Default”:

 

(a) (i) any Obligor or Additional L/C Debtor fails to pay any of the Obligations when due, (ii) any Obligor fails to perform any of the covenants contained in Sections 5.4, 6.3, 6.5, 7.2, 7.3, 7.4, 7.5, 9.3, 9.4, 9.17, 9.18, 9.19, 9.20,
9.22 and 9.23 of this Agreement and such failure shall continue for twenty (20) days; provided, that, such twenty (20) day period shall not apply in the case of: (A) any failure to observe any such covenant which is not capable of being cured at all or within such twenty (20) day period or which has been the subject of a prior failure more than three (3) times in any consecutive
twelve (12) month period or (B) an intentional breach by any Obligor of any such covenant or (iii) any Obligor fails to perform any of the terms, covenants, conditions or provisions contained in this Agreement other than those described in Sections 10.1(a)(i) and 10.1(a)(ii) above;

 

(b) any representation, warranty or statement of fact made by any Obligor or Additional L/C Debtor to Agent in this Agreement, the other Financing Agreements or any other written agreement, schedule, confirmatory assignment or otherwise
shall when made or deemed made be false or misleading in any material respect;

 

(c) any Guarantor or Additional L/C Debtor revokes or terminates any guarantee, endorsement or other agreement of such party in favor of Agent except in connection with the sale or other disposition of any Guarantor or Additional L/C
Debtor in a transaction permitted under this Agreement;

 

  

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(d) any judgment for the payment of money is rendered against any Obligor in excess of $20,000,000 in any one case or in excess of $40,000,000 in the aggregate (to the extent not covered by insurance) and shall remain undischarged or
unvacated for a period in excess of thirty (30) days or execution shall at any time not be effectively stayed, or any judgment other than for the payment of money, or injunction, attachment, garnishment or execution is rendered against any Obligor or any of the Collateral having a value in excess of $20,000,000;

 

(e) any Obligor dissolves or suspends or discontinues doing business, other than as permitted in this Agreement;

 

(f) [Intentionally Deleted];

 

(g) a case or proceeding under the bankruptcy laws of the United States of America now or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at law or in equity) is filed against any Obligor or all or any part of its properties and such petition or application is not dismissed within sixty (60) days after the date of its filing or any Obligor shall file any answer admitting or not contesting such petition or application or indicates its consent to, acquiescence in or approval of, any such action or proceeding or the relief requested is granted sooner (each such case or proceeding, an “Involuntary
Proceeding”); provided that if any Involuntary Proceeding is an Immaterial Insolvency Event, then such Immaterial Insolvency Event shall not be an Event of Default;

 

(h) any Obligor shall make an assignment for the benefit of creditors, or admit in writing its inability to pay its debts as they mature or become due or a case or proceeding under the bankruptcy laws of the United States of America now
or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether at law or equity) is filed by any Obligor or for all or any part of its property (each such assignment, admission, case or proceeding, a “Voluntary Proceeding”); provided that if any Voluntary Proceeding is an Immaterial Insolvency Event, then such Immaterial Insolvency Event shall not be an Event of Default;

 

(i) any default in respect of any Indebtedness of any Borrower or Guarantor (other than the Obligations), in any case in an amount in excess of $15,000,000, which default continues for more than the applicable notice or cure period, if
any, with respect thereto, which default is not waived in writing by the other parties thereto or cured, or any default by any Obligor under any Material Contract, which default continues for more than the applicable notice or cure period, if any, with respect thereto and/or is not waived in writing by the other parties thereto or cured and which would have a Material Adverse Effect;

 

(j) any Credit Card Issuer or Credit Card Processor (i) withholds payment of amounts otherwise payable to any Obligor to fund a reserve account or otherwise hold as collateral, or shall require any Obligor to pay funds into a reserve
account or for such Credit Card Issuer or Credit Card Processor to otherwise hold as collateral, (ii) any Obligor shall, or shall be required to, provide a letter of credit, guarantee, indemnity or similar instrument to or in favor of such Credit Card Issuer or Credit Card Processor such that in the aggregate all of such

 

  

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funds in the reserve account, other amounts held as collateral and the amount of such letters of credit, guarantees, indemnities or similar instruments shall exceed $15,000,000 in any individual instance or $30,000,000 in the aggregate; (iii) shall send notice to any Obligor that it is ceasing to make or suspending payments to an Obligor of
amounts due or to become due to such Obligor or shall cease or suspend such payments, or (iv) shall send notice to any Obligor that it is terminating its arrangements with any Obligor or such arrangements shall terminate as a result of any event of default under such arrangements, which continues for more than the applicable cure period, if any, with respect thereto, unless such Obligor shall have entered into arrangements with another Credit Card Issuer or Credit Card Processor, as the case may be, within one
hundred twenty (120) days after the date of any such notice;

 

(k) any bank at which any deposit account of any Obligor is maintained shall fail to comply with any of the terms of any Deposit Account Control Agreement (required to be delivered under Section 6.3 hereof) to which such bank is a party
or any securities intermediary, commodity intermediary or other financial institution at any time in custody, control or possession of any investment property of any Obligor (which investment property is required by the terms of this Agreement to be subject to an Investment Property Control Agreement) shall fail to comply with any of the terms of any Investment Property Control Agreement to which such person is a party and such account is not closed and re-established at another securities intermediary, commodity
intermediary or financial institution, as applicable, with a Deposit Account Control Agreement or Investment Property Control Agreement in favor of Agent within thirty (30) days of the earlier of (i) notice of such non-compliance from Agent or                      (ii) Administrative Borrower or Parent obtaining knowledge of the occurrence of such non-compliance;

 

(l) any material provision hereof or of any of the other Financing Agreements shall for any reason cease to be valid, binding and enforceable with respect to any party hereto or thereto (other than Agent or Lenders) in accordance with
its terms, or any such party shall challenge the enforceability hereof or thereof, or shall assert in writing, or take any action or fail to take any action based on the assertion that any provision hereof or of any of the other Financing Agreements has ceased to be or is otherwise not valid, binding or enforceable in accordance with its terms, or any security interest provided for herein or in any of the other Financing Agreements shall cease to be a valid and perfected first priority security interest in any
of the Collateral purported to be subject thereto (except as otherwise permitted herein or therein) in any such case, (i) which has not been cured within thirty (30) days of Administrative Borrower or Parent obtaining knowledge thereof; provided, that, such thirty (30) day period shall not apply in the case of: (A) any such default which is not capable of being cured within such thirty
(30) day period or (B) any such default which is the result of an intentional breach by any Obligor and (ii) which results in a Material Adverse Effect;

 

(m) an ERISA Event shall occur which results in or could reasonably be expected to result in a Material Adverse Effect;

 

(n) any Change of Control;

 

(o) FSC or any other Financing Subsidiary shall fail to (i) make settlements in an aggregate amount in excess of $5,000,000 on each Business Day and such failure shall

 

  

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continue for five (5) consecutive Business Days (except for delays arising solely from force majeure, in which case such failure to make settlements on each Business Day shall not continue for more than eight (8) Business Days) with respect to amounts owed to any  Obligor under any Permitted Securitization Transaction or (ii) remit
to CS Delaware all funds its receives pursuant to any Permitted Securitization Transaction in respect of amounts owed to CS Delaware pursuant to any Credit Card Agreement no later than the Business Day following receipt of such funds;

 

(p) the indictment by any Governmental Authority of any Obligor of which any Obligor or Agent receives notice, in either case, as to which there is a reasonable likelihood of an adverse determination, in the good faith determination of
Agent, under any criminal statute, or commencement of criminal or civil proceedings against such Obligor, pursuant to which statute or proceedings the penalties or remedies sought include forfeiture of (i) any of the Collateral having a value in excess of $20,000,000 or (ii) any property of Obligors which would have a Material Adverse Effect; or

 

(q) any Obligor fails to perform any of the terms, covenants, conditions or provisions contained in the Financing Agreements (other than this Agreement) beyond any applicable grace or cure period provided for in such other Financing Agreements.

 

10.2 Remedies.

 

(a) At any time an Event of Default exists or has occurred and is continuing, Agent and Lenders shall have all rights and remedies provided in this Agreement, the other Financing Agreements, the UCC and other applicable law, all of which
rights and remedies may be exercised without notice to or consent by any Obligor, except as such notice or consent is expressly provided for hereunder or required by applicable law.  All rights, remedies and powers granted to Agent or Lenders hereunder, under any of the other Financing Agreements, the UCC or other applicable law, are cumulative, not exclusive and enforceable, in Agent’s discretion, alternatively, successively, or concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to restrain a breach or threatened breach by any Obligor of this Agreement or any of the other Financing Agreements.  Subject to Section 12 hereof, Agent may, and at the direction of the Required Lenders shall, at any time or times, proceed directly against any Obligor to collect the Obligations without prior recourse to the Collateral.

 

(b) Without limiting the foregoing, at any time an Event of Default exists or has occurred and is continuing, Agent, may, in its discretion and upon the direction of the Required Lenders shall and without limitation (except with respect
to clause (i) hereof which Agent may do in its discretion and at the direction of Required Lenders), (i) (A) reduce the lending formulas or amounts of Loans and Letters of Credit available to Borrowers and Additional L/C Debtors or (B) terminate the Commitments, whereupon the obligation of each Lender to make any Loan and Issuing Bank to issue any Letter of Credit shall immediately terminate (provided, that,
upon the occurrence of any Event of Default described in Sections 10.1(g) and 10.1(h), the Commitments and any other obligation of the Agent or a Lender hereunder shall automatically terminate), (ii) accelerate the payment of all Obligations and demand immediate payment thereof to Agent, for itself and the benefit of each of the Secured Parties (provided, that, upon the occurrence
of any Event of Default described in

 

  

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Sections 10.1(g) or 10.1(h) hereof involving any Obligor, all Obligations shall automatically become immediately due and payable and the obligation of each Lender to make any Loan and Issuing Bank to issue any Letter of Credit shall immediately terminate; provided, further, that,
in the event that an Immaterial Insolvency Event has occurred, the Obligations of such Obligor shall automatically become immediately due and payable for the purposes of such Voluntary or Involuntary Proceeding (but not as to any other Obligors or for any other purpose), (iii) with or without judicial process or the aid or assistance of others, enter upon any premises on or in which any of the Collateral may be located and take possession of the Collateral or complete processing, manufacturing and repair of all
or any portion of the Collateral, (iv) require any Obligor, at Borrowers’ expense, to assemble and make available to Agent any part or all of the Collateral at any place and time designated by Agent, (v) collect, foreclose, receive, appropriate, setoff and realize upon any and all Collateral, (vi) remove any or all of the Collateral from any premises on or in which the same may be located for the purpose of effecting the sale, foreclosure or other disposition thereof or for any other purpose, and (vii)
sell, lease, transfer, assign, deliver or otherwise dispose of any and all Collateral (including, without limitation, entering into contracts with respect thereto, public or private sales at any exchange, broker’s board, at any office of Agent or elsewhere) at such prices or terms as Agent may deem reasonable, for cash, upon credit or for future delivery, with the Agent having the right to purchase the whole or any part of the Collateral at any such public sale, all of the foregoing being free from any
right or equity of redemption of each Obligor, which right or equity of redemption is hereby expressly waived and released by each Obligor. and/or (viii) terminate this Agreement.  If any of the Collateral is sold or leased by Agent upon credit terms or for future delivery, the Obligations shall not be reduced as a result thereof until payment therefor is finally collected by Agent.  If notice of disposition of Collateral is required by law, five (5) days prior notice by Agent to Administrative
Borrower designating the time and place of any public sale or the time after which any private sale or other intended disposition of Collateral is to be made, shall be deemed to be reasonable notice thereof and each Obligor waives any other notice.  In the event Agent institutes an action to recover any Collateral or seeks recovery of any Collateral by way of prejudgment remedy, each Obligor waives the posting of any bond which might otherwise be required. At any time an Event of Default exists or has
occurred and is continuing, upon Agent’s request, Borrowers will either, as Agent shall specify, furnish cash collateral to each Issuing Bank to be used to secure and fund the reimbursement obligations to each Issuing Bank in connection with any Letter of Credit Obligations or furnish cash collateral to Agent for the Letter of Credit Obligations.  Such cash collateral shall be in the amount equal to one hundred five (105%) percent of the amount of the Letter of Credit Obligations plus the amount
of any fees and expenses payable in connection therewith through the end of the latest expiration date of the Letters of Credit giving rise to such Letter of Credit Obligations.

 

(c) Upon the occurrence and during the continuance of an Event of Default for the purpose of enabling Agent to exercise the rights and remedies hereunder, each Obligor hereby grants to Agent, to the extent assignable, an irrevocable,
non-exclusive license (exercisable without payment of royalty or other compensation to any Obligor) to use, assign, license or sublicense any of the trademarks, service marks, trade names, business names, trade styles, designs, logos and other source of business identifiers and other Intellectual Property and general intangibles now owned or hereafter acquired by any Obligor, wherever the same maybe located, including in such license reasonable access to all media in which any of the licensed

 

  

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items may be recorded or stored and to all computer programs used for the compilation or printout thereof, provided, that, such license shall terminate on the date that Agent and Lenders have received final payment
and satisfaction in full of all of the Obligations in immediately available funds and this Agreement has been terminated or the Event of Default shall no longer be continuing.

 

(d) Agent may apply the cash proceeds of Collateral actually received by Agent from any sale, lease, foreclosure or other disposition of the Collateral to payment of the Obligations, in whole or in part and in such order as Agent may
elect, subject to Section 6.4 hereof, whether or not then due.  Borrowers shall remain jointly and severally liable to Agent and Lenders for the payment of any deficiency with interest at the highest rate provided for in the Loan Agreement and all costs and expenses of collection or enforcement, including reasonable attorneys’ fees and legal expenses.

 

(e) Agent may, at any time or times that an Event of Default has occurred and is continuing, enforce any Obligor’s rights against any account debtor, secondary obligor or other obligor in respect of any of the Accounts or other
Receivables that constitute Collateral.  Without limiting the generality of the foregoing, Agent may at such time or times (i) notify any or all account debtors, secondary obligors or other obligors in respect thereof that the Receivables constituting Collateral have been assigned to Agent and that Agent has a security interest therein for the benefit of Secured Parties and Agent may direct any or all account debtors, secondary obligors and other obligors to make payment of Receivables constituting
Collateral directly to Agent, (ii) extend the time of payment of, compromise, settle or adjust for cash, credit, return of merchandise or otherwise, and upon any terms or conditions, any and all Receivables constituting Collateral or other obligations included in the Collateral and thereby discharge or release the account debtor or any secondary obligors or other obligors in respect thereof without affecting any of the Obligations, (iii) demand, collect or enforce payment of any Receivables constituting Collateral
or such other obligations, but without any duty to do so, and neither Agent nor any Lender shall be liable for its failure to collect or enforce the payment thereof nor for the negligence of its agents or attorneys with respect thereto, and (iv) take whatever other action with respect to the Collateral that Agent may deem necessary or desirable for the protection of its interests and the interests of Agent and Lenders.  At any time that an Event of Default has occurred and is continuing, at Agent’s
request, all invoices and statements sent to any account debtor shall state that the Accounts and such other obligations have been assigned to Agent and are payable directly and only to Agent and each Obligor shall deliver to Agent such originals of documents evidencing the sale and delivery of goods or the performance of services giving rise to any Accounts constituting Collateral as Agent may require.  In the event any account debtor returns Inventory when an Event of Default has occurred and is continuing,
each Obligor shall, upon Agent’s request, hold the returned Inventory in trust for Agent, segregate all returned Inventory from all of its other property, dispose of the returned Inventory solely according to Agent’s instructions, and  not issue any credits, discounts or allowances with respect thereto without Agent’s prior written consent.

 

(f) To the extent that applicable law imposes duties on Agent or any Lender to exercise remedies in a commercially reasonable manner (which duties cannot be waived under such law), each Obligor acknowledges and agrees that it is not commercially
unreasonable for

 

  

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Agent or any Lender (i) to fail to incur expenses reasonably deemed significant by Agent to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by other law, to fail to obtain consents of any Governmental Authority or other third party for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against account debtors, secondary obligors or other persons obligated on Collateral or to remove Liens against Collateral, (iv) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection
agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other persons, whether or not in the same business as any Obligor, for expressions of interest in acquiring all or any portion of the Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the collateral is of a specialized nature,
(viii) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, (xi) to purchase insurance or credit enhancements to insure Agent and Lenders against risks of loss, collection or disposition of Collateral or to provide to Agent a guaranteed
return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist Agent in the collection or disposition of any of the Collateral.

 

(g) Each Obligor acknowledges that the purpose of this Section is to provide non-exhaustive indications of what actions or omissions by Agent or any Lender would not be commercially unreasonable in Agent’s exercise of remedies against
the Collateral and that other actions or omissions by Agent or any Lender shall not be deemed commercially unreasonable solely on account of not being indicated in this Section. Without limitation of the foregoing, nothing contained in this Section shall be construed to grant any rights to any Obligor or to impose any duties on Agent or any Lender that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section.

 

(h) Without limiting the foregoing, upon the occurrence and during the continuance of a Default or an Event of Default, Agent and Lenders may, at Agent’s option, and upon the occurrence of an Event of Default at the direction of
the Required Lenders, Agent, each Issuing Bank and Lenders shall, without notice, (i) cease making Loans or arranging for Letters of Credit or reduce the lending formulas or amounts of Loans and Letters of Credit available to Borrowers and/or (ii) terminate any provision of this Agreement providing for any future Loans to be made by Agent and Lenders or Letters of Credit to be issued by Issuing Bank.

 

SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS

 

  AND CONSENTS; GOVERNING LAW                                                                                     

 

11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.

 

  

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(a) The validity, interpretation and enforcement of this Agreement and the other Financing Agreements and any dispute arising out of the relationship between the parties hereto, whether in contract, tort, equity or otherwise, shall be
governed by the internal laws of the State of New York (without giving effect to principles of conflicts of law that would apply any other law).

 

(b) Each of the Borrowers, Guarantors, Agent, Lenders and each Issuing Bank irrevocably consents and submits to the non-exclusive jurisdiction of the Supreme Court of the State of New York in New York County and the United States District
Court for the Southern District of New York, whichever Agent may elect, and waives any objection based on venue or forum non-conveniens with respect to any action instituted therein arising under this Agreement or any of the other Financing Agreements or in any way connected with or related or incidental to the dealings of the parties hereto in respect of this Agreement or any of the other Financing Agreements or the transactions related hereto or thereto, in each case whether now existing or hereafter arising,
and whether in contract, tort, equity or otherwise, and agree that any dispute with respect to any such matters shall be heard only in the courts described above (except that Agent and Lenders shall have the right to bring any action or proceeding against any Obligor or its property in the courts of any other jurisdiction which Agent deems necessary or appropriate in order to realize on the Collateral or to otherwise enforce its rights against any Obligor or its property).

 

(c) Each Obligor and Administrative Borrower hereby waives personal service of any and all process upon it and consents that all such service of process may be made by certified mail (return receipt requested) directed to its address
set forth on the signature pages hereof and service so made shall be deemed to be completed five (5) days after the same shall have been so deposited in the U.S. mails, or, at Agent’s option, by service upon any Obligor in any other manner provided under the rules of any such courts.

 

(d) EACH OF THE BORROWERS, GUARANTORS, AGENT, LENDERS AND EACH ISSUING BANK HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS
OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.  EACH BORROWER, GUARANTOR, AGENT, LENDER AND ISSUING BANK HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY
AND THAT EACH BORROWER, GUARANTOR, AGENT, LENDER AND ISSUING BANK MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

(e) Agent and the other Secured Parties shall not have any liability to any Obligor (whether in tort, contract, equity or otherwise) for losses suffered by such Obligor in

 

  

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connection with, arising out of, or in any way related to the transactions or relationships contemplated by this Agreement, or any act, omission or event occurring in connection herewith, unless it is determined by a final and non-appealable judgment or court order binding on Agent or such other Secured Parties that the losses were the result
of acts or omissions constituting gross negligence or willful misconduct. Each Obligor: (i) certifies that neither Agent, any Lender, any Issuing Bank nor any representative, agent or attorney acting for or on behalf of Agent, any Lender or Issuing Bank has represented, expressly or otherwise, that Agent, Lenders and Issuing Bank would not, in the event of litigation, seek to enforce any of the waivers provided for in this Agreement or any of the other Financing Agreements and (ii) acknowledges that in entering
into this Agreement and the other Financing Agreements, Agent, Lenders and each Issuing Bank are relying upon, among other things, the waivers and certifications set forth in this Section 11.1 and elsewhere herein and therein.

 

11.2 Waiver of Notices.  Each Obligor hereby expressly waives demand, presentment, protest and notice of protest and notice of dishonor with respect to any and
all instruments and chattel paper, included in or evidencing any of the Obligations or the Collateral, and any and all other demands and notices of any kind or nature whatsoever with respect to the Obligations, the Collateral and this Agreement, except such as are expressly provided for herein.  No notice to or demand on any Obligor which Agent or any Lender may elect to give shall entitle any Obligor to any other or further notice or demand in the same, similar or other circumstances.

 

11.3 Amendments and Waivers.

 

(a) Neither this Agreement nor any other Financing Agreement nor any terms hereof or thereof may be amended, waived, discharged or terminated unless such amendment, waiver, discharge or termination is in writing signed by Agent and the
Required Lenders (or at Agent’s option, by Agent with the authorization or consent of the Required Lenders), and as to amendments to any of the Financing Agreements (other than with respect to any provision of Section 12 hereof but exclusive of any provision of Sections 12.11, 12.13 and 12.15 hereof that expressly require the written consent of (or consultation with) Administrative Borrower), by Administrative Borrower and such amendment, waiver, discharge or termination shall be effective and binding as
to all Lenders and each Issuing Bank only in the specific instance and for the specific purpose for which given; except, that, no such amendment, waiver, discharge or termination shall:

 

(i) reduce the interest rate or any fees or extend the time of payment of principal, interest or any fees or reduce the principal amount of any Loan or Letters of Credit, in each case without the consent of each Lender directly affected
thereby,

 

(ii) increase the Commitment of any Lender over the amount thereof then in effect or provided hereunder or extend the duration of such Lender’s Commitment beyond the date provided for herein, in each case without the consent of
the Lender directly affected thereby,

 

(iii) release any Collateral or Obligor (except as expressly required hereunder or under any of the other Financing Agreements or applicable law and except as permitted under Section 12.11(b) hereof), without the consent of Agent and
all Lenders,

 

  

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(iv) reduce any percentage specified in, or otherwise modify the definition of “Required Lenders” or “Supermajority Lenders”, without the consent of Agent and all Lenders,

 

(v) consent to the assignment or transfer by any Obligor of any of their rights and obligations under this Agreement, without the consent of Agent and all Lenders,

 

(vi) amend, modify or waive any terms of this Section 11.3, Section 6.4(a) hereof or the definition of “Pro Rata Share”, without the consent of Agent and all Lenders,

 

(vii) increase the advance rates constituting part of the Borrowing Base or increase the Letter of Credit Limit, without the consent of Agent and all Lenders;

 

(viii) amend, modify or change the definition of the term “Borrowing Base” or any component definition thereof without the consent of Agent and the Supermajority Lenders if, as a result of such amendment, modification or
change, the amounts available to be borrowed by Borrowers hereunder would be increased; provided, that, the foregoing shall not limit the discretion of Agent to revise, reduce or eliminate any Reserves, or

 

(ix) amend or modify the provisions of Sections 7.3(d), 9.6(a)(iii) or 9.6(g) hereof or the definitions of “Minimum Frequency” or “Required Frequency” in a manner that would make the collateral monitoring and
reporting requirements set forth in any such Sections less restrictive, without in each case the consent of either (A) Agent and the Supermajority Lenders or (B) Agent, Wells Fargo, Bank of America, N.A. and one other Lender.

 

(b) Agent, Lenders and each Issuing Bank shall not, by any act, delay, omission or otherwise be deemed to have expressly or impliedly waived any of its or their rights, powers and/or remedies unless such waiver shall be in writing and
signed as provided herein.  Any such waiver shall be enforceable only to the extent specifically set forth therein.  A waiver by Agent, any Lender or Issuing Bank of any right, power and/or remedy on any one occasion shall not be construed as a bar to or waiver of any such right, power and/or remedy which Agent, any Lender or Issuing Bank would otherwise have on any future occasion, whether similar in kind or otherwise.

 

(c) Notwithstanding anything to the contrary contained in Section 11.3(a) above, in connection with any amendment, waiver, discharge or termination, in the event that any Lender whose consent thereto is required shall fail to consent
or fail to consent in a timely manner (such Lender being referred to herein as a “Non-Consenting Lender”), but the consent of any other Lenders to such amendment, waiver, discharge or termination that is required are obtained, if any, then Wells Fargo shall have the right, but not the obligation, at any time thereafter, and upon the exercise by Wells Fargo of such right, such Non-Consenting Lender shall have the obligation, to sell, assign and transfer to Wells Fargo or such Eligible Transferee as
Wells Fargo may specify, the Commitment of such Non-Consenting Lender and all rights and interests of such Non-Consenting Lender pursuant thereto.  Wells Fargo shall provide the Non-Consenting Lender with prior written notice of its intent to exercise its right under this Section, which notice shall specify on date on which such purchase and sale shall occur.  Such purchase and sale shall be pursuant to the terms of an Assignment and Acceptance (whether or not

 

  

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executed by the Non-Consenting Lender), except that on the date of such purchase and sale, Wells Fargo, or such Eligible Transferee specified by Wells Fargo, shall pay to the Non-Consenting Lender (except as Wells Fargo and such Non-Consenting Lender may otherwise agree) the amount equal to: (i) the principal balance of the Loans held by the
Non-Consenting Lender outstanding as of the close of business on the business day immediately preceding the effective date of such purchase and sale, plus (ii) amounts accrued and unpaid in respect of interest and fees payable to the Non-Consenting Lender to the effective date of the purchase (but in no event shall the Non-Consenting Lender be deemed entitled to any early termination fee).  Such purchase and sale shall be effective on the date of the payment of such amount to the Non-Consenting Lender
and the Commitment of the Non-Consenting Lender shall terminate on such date.

 

(d) The consent of Agent shall be required for any amendment, waiver or consent affecting the rights or duties of Agent hereunder or under any of the other Financing Agreements, in addition to the consent of the Lenders otherwise required
by this Section and the exercise by Agent of any of its rights hereunder with respect to Reserves or Eligible Accounts or Eligible Inventory shall not be deemed an amendment to the advance rates provided for in this Section 11.3.  The consent of an Issuing Bank shall be required for any amendment, waiver or consent affecting the rights or duties of such Issuing Bank hereunder or under any of the other Financing Agreements, in addition to the consent of the Lenders otherwise required by this Section, provided, that,
the consent of any Issuing Bank shall not be required for any other amendments, waivers or consents.  The consent of Swing Line Lender shall be required for any amendment, waiver or consent affecting the rights or duties of Swing Line Lender hereunder or under any of the other Financing Agreements, in addition to the consent of the Lenders otherwise required by this Section.  Notwithstanding anything to the contrary contained in Section 11.3(a) above, (i) in the event that Agent shall agree
that any items otherwise required to be delivered to Agent as a condition of the initial Loans and Letters of Credit hereunder may be delivered after the date hereof, Agent may, in its discretion, agree to extend the date for delivery of such items or take such other action as Agent may deem appropriate as a result of the failure to receive such items as Agent may determine or may waive any Event of Default as a result of the failure to receive such items, in each case without the consent of any Lender and (ii)
Agent may consent to any change in the type of organization, jurisdiction of organization or other legal structure of any Obligor and amend the terms hereof or of any of the other Financing Agreements as may be necessary or desirable to reflect any such change, in each case without the approval of any Lender.

 

(e) The consent of Agent and each Bank Product Provider that is providing Bank Products and has outstanding any such Bank Products at such time that are secured hereunder shall be required for any amendment to the priority of payment
of the Obligations arising under or pursuant to any Bank Group Hedge Agreements of a Borrower or Guarantor or other Bank Products as set forth in Section 6.4(a) hereof.  Notwithstanding anything to the contrary herein, the Engagement Letters may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto.

 

(f) Notwithstanding the foregoing, any provision of this Agreement may be amended by an agreement in writing entered into by Borrowers and Agent with the express

 

  

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consent of the Required Lenders (and, if its rights or obligations are affected thereby, the Issuing Banks or Swing Line Lender) if (i) by the terms of such agreement the Commitment of each Lender not consenting to the amendment provided for therein shall terminate upon the effectiveness of such amendment, and (ii) at the time such amendment
becomes effective, each Lender not consenting thereto receives payment in full of the principal of and interest accrued on each Loan made by it and all other amounts owing to it or accrued for its account under this Agreement.

 

11.4 Waiver of Counterclaims.

 

Each Obligor waives all rights to interpose any claims, deductions, setoffs or counterclaims of any nature (other then compulsory counterclaims) in any action or proceeding with respect to this Agreement, the Obligations, the Collateral or any matter arising therefrom or relating hereto or thereto.

 

11.5 Indemnification.

 

Each Obligor shall, jointly and severally, indemnify and hold Agent, each Lender and Issuing Bank, and their respective officers, directors, agents, employees, advisors and counsel and their respective Affiliates (each such person being an “Indemnitee”), harmless from and against any and all losses, claims, damages, liabilities,
costs or expenses (including attorneys’ fees and expenses) imposed on, incurred by or asserted against any of them in connection with any litigation, investigation, claim or proceeding commenced or threatened related to the negotiation, preparation, execution, delivery, enforcement, performance or administration of this Agreement, any other Financing Agreements, or any undertaking or proceeding related to any of the transactions contemplated hereby or any act, omission, event or transaction related or attendant
thereto, including amounts paid in settlement, court costs, and the fees and expenses of counsel except that Obligors shall not have any obligation under this Section 11.5 to indemnify an Indemnitee with respect to a matter covered hereby resulting from the gross negligence or willful misconduct of such Indemnitee as determined pursuant to a final, non-appealable order of a court of competent jurisdiction (but without limiting the obligations of Obligors as to any other Indemnitee).   To the extent
that the undertaking to indemnify, pay and hold harmless set forth in this Section may be unenforceable because it violates any law or public policy, Obligors shall pay the maximum portion which it is permitted to pay under applicable law to Agent and Lenders in satisfaction of indemnified matters under this Section.  To the extent permitted by applicable law, no Obligor shall assert, and each Obligor hereby waives, any claim against any Indemnitee, on any theory of liability for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any of the other Financing Agreements or any undertaking or transaction contemplated hereby.  No Indemnitee referred to above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with
this Agreement or any of the other Financing Agreements or the transaction contemplated hereby or thereby except those damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined pursuant to a final, non-appealable order of a court of competent jurisdiction (but without limiting the obligations of Obligors as to any other Indemnitee).  All amounts due under this Section shall be payable promptly (but in any event

 

  

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within two (2) Business Days) following Agent’s written demand therefor.  The foregoing indemnity shall survive the payment of the Obligations and the termination of this Agreement.

 

SECTION 12. THE AGENT

 

12.1 Appointment, Powers and Immunities.

 

Each Secured Party irrevocably designates, appoints and authorizes Wells Fargo to act as Agent hereunder and under the other Financing Agreements with such powers as are specifically delegated to Agent by the terms of this Agreement and of the other Financing Agreements, together with such other powers as are reasonably incidental thereto.  Agent
(a) shall have no duties or responsibilities except those expressly set forth in this Agreement and in the other Financing Agreements, and shall not by reason of this Agreement or any other Financing Agreement be a trustee or fiduciary for any Secured Party; (b) shall not be responsible to the other Secured Parties for any recitals, statements, representations or warranties contained in this Agreement or in any of the other Financing Agreements, or in any certificate or other document referred to or provided
for in, or received by any of them under, this Agreement or any other Financing Agreement, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Financing Agreement or any other document referred to or provided for herein or therein or for any failure by any Obligor or any other Person to perform any of its obligations hereunder or thereunder; and (c) shall not be responsible to the other Secured Parties for any action taken or omitted to be taken
by it hereunder or under any other Financing Agreement or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith, except for its own gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction.  Agent may employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it in good faith.  Agent
may deem and treat the payee of any note as the holder thereof for all purposes hereof unless and until the assignment thereof pursuant to an agreement (if and to the extent permitted herein) in form and substance satisfactory to Agent shall have been delivered to and acknowledged by Agent.

 

12.2 Reliance by Agent.

 

Agent shall be entitled to rely upon any certification, notice or other communication (including any thereof by telephone, electronic mail or telecopy) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants
and other experts selected, in good faith by Agent.  As to any matters not expressly provided for by this Agreement or any other Financing Agreement, Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or thereunder in accordance with instructions given by the Required Lenders or all of Lenders as is required in such circumstance, and such instructions of Agent and any action taken or failure to act pursuant thereto shall be binding on all Lenders.

 

12.3 Events of Default.

 

  

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(a) Agent shall not be deemed to have knowledge or notice of the occurrence of a Default or an Event of Default or other failure of a condition precedent to the Loans and Letters of Credit hereunder, unless and until Agent has received
written notice from a Lender, or Borrower specifying such Event of Default or any unfulfilled condition precedent, and stating that such notice is a “Notice of Default or Failure of Condition”.  In the event that Agent receives such a Notice of Default or Failure of Condition, Agent shall give prompt notice thereof to the Lenders.  Agent shall (subject to Section 12.7 hereof) take such action with respect to any such Event of Default or failure of condition precedent as shall be
directed by the Required Lenders to the extent provided for herein; provided, that, unless and until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to or by reason of such Event of Default or failure of condition precedent, as it shall deem advisable in the best interest of Lenders.  Without
limiting the foregoing, and notwithstanding the occurrence and continuance of an Event of Default or any other failure to satisfy any of the conditions precedent set forth in Section 4 of this Agreement to the contrary, unless and until otherwise directed by the Required Lenders, Agent may, but shall have no obligation to, continue to make Loans and an Issuing Bank may, but shall have no obligation to, issue or cause to be issued any Letter of Credit for the ratable account and risk of Lenders from time to time
if Agent believes making such Loans or issuing or causing to be issued such Letter of Credit is in the best interests of Lenders.

 

(b) Except with the prior written consent of Agent, no Lender or Issuing Bank may assert or exercise any enforcement right or remedy in respect of the Loans, Letters of Credit or other Obligations, as against any Obligor or any of the
Collateral or other property of any Obligor or otherwise under the Financing Agreements.

 

12.4 Wells Fargo in its Individual Capacity.

 

With respect to its Commitment and the Loans made and Letters of Credit issued or caused to be issued by it (and any successor acting as Agent), so long as Wells Fargo shall be a Lender hereunder, it shall have the same rights and powers hereunder as any other Lender (except as set forth in Section 13.7 hereof) and may exercise the same as
though it were not acting as Agent, and the term “Lender” or “Lenders” shall, unless the context otherwise indicates, include Wells Fargo in its individual capacity as Lender hereunder.  Wells Fargo (and any successor acting as Agent) and its Affiliates may (without having to account therefor to any Lender) lend money to, make investments in and generally engage in any kind of business with Borrowers (and any of its Subsidiaries or Affiliates) as if it were not acting as Agent,
and Wells Fargo and its Affiliates may accept fees and other consideration from Borrowers and any of their Subsidiaries and Affiliates for services in connection with this Agreement or otherwise without having to account for the same to Lenders.

 

12.5 Indemnification.

 

Lenders agree to indemnify Agent and each Issuing Bank (to the extent not reimbursed by Obligors hereunder and without limiting any obligations of Obligors hereunder) ratably, in accordance with their Pro Rata Shares, for any and all claims of any kind and nature whatsoever that may be imposed on, incurred by or asserted against Agent (including
by any Lender) arising out of or by reason of any investigation in or in any way relating to or arising out of this

 

  

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Agreement or any other Financing Agreement or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby (including the costs and expenses that Agent is obligated to pay hereunder) or the enforcement of any of the terms hereof or thereof or of any such other documents, provided, that,
no Lender shall be liable for any of the foregoing to the extent it arises from the gross negligence or willful misconduct of the party to be indemnified as determined by a final non-appealable judgment of a court of competent jurisdiction.  The foregoing indemnity shall survive the payment of the Obligations and termination of this Agreement.

 

12.6 Non-Reliance on Agent and Other Lenders.

 

Each Secured Party agrees that it has, independently and without reliance on Agent or any other Secured Party, and based on such documents and information as it has deemed appropriate, made its own credit analysis of Obligors and has made its own decision to enter into this Agreement and that it will, independently and without reliance upon
Agent or any other Secured Party, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement or any of the other Financing Agreements.  Agent shall not be required to keep itself informed as to the performance or observance by Obligors of any term or provision of this Agreement or any of the other Financing Agreements or any other document referred to or provided for herein
or therein or to inspect the properties or books of any Obligor.  Agent will use reasonable efforts to provide Lenders with any information received by Agent from any Obligor which is required to be provided to Lenders hereunder and with a copy of any Notice of Default or Failure of Condition received by Agent from Administrative Borrower or any Lender; provided, that, Agent
shall not be liable to any Lender for any failure to do so, except to the extent that such failure is attributable to Agent’s own gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction.  Except for notices, reports and other documents expressly required to be furnished to Lenders by Agent hereunder, Agent shall not have any duty or responsibility to provide any Lender with any other credit or other information concerning the
affairs, financial condition or business of any Obligor that may come into the possession of Agent.

 

12.7 Failure to Act.

 

Except for action expressly required of Agent hereunder and under the other Financing  Agreements, Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction from Lenders of their indemnification obligations under Section 12.5 hereof
against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.

 

12.8 Additional Revolving Loans.

 

Agent and Swing Line Lender (or Agent on behalf of Swing Line Lender) shall not make any Loans nor shall any Issuing Bank provide any Letters of Credit to Borrowers on behalf of Lenders intentionally and with actual knowledge that such Revolving Loans or Letters of Credit would cause the aggregate amount of the total outstanding Revolving
Loans and Letters of Credit to Borrowers to exceed the Borrowing Base, without the prior consent of all Lenders, except,

 

  

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that, Agent may make such additional Revolving Loans or an Issuing Bank may provide such additional Letters of Credit on behalf of Lenders, intentionally and with actual knowledge that such Revolving Loans or Letters of Credit will cause the total outstanding Revolving Loans and Letters of Credit to Borrowers to exceed the Borrowing Base (an
“Over Advance”), as Agent may deem necessary or advisable in its discretion, provided, that: (a) the total principal amount of the additional Revolving Loans or additional Letters of Credit to any Borrower which Agent may make or provide after obtaining such actual knowledge that the aggregate principal amount of the Loans and Letters of Credit equals or exceeds the Borrowing
Base, plus the amount of Special Agent Advances made pursuant to Section 12.11(a)(ii) hereof then outstanding, shall not exceed the aggregate amount equal to five (5%) of the Maximum Credit and shall not cause the total principal amount of the Loans and Letters of Credit to exceed the Maximum Credit and (b) no such additional Revolving Loan or Letter of Credit shall be outstanding more than ninety (90) days after the date such additional Revolving Loan or Letter of Credit is made or issued (as the case may be),
except as the Required Lenders may otherwise agree.  Each Lender shall be obligated to pay Agent the amount of its Pro Rata Share of any such additional Revolving Loans or Letters of Credit.

 

12.9 Concerning the Collateral and the Related Financing Agreements.

 

Each Secured Party authorizes and directs Agent to enter into this Agreement and the other Financing Agreements.  Each Secured Party agrees that any action taken by Agent or Required Lenders (or such greater percentage as may be required hereunder) in accordance with the terms of this Agreement or the other Financing Agreements and
the exercise by Agent or Required Lenders (or such greater percentage as may be required hereunder) of their respective powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Secured Parties.

 

12.10 Field Audit, Examination Reports and other Information; Disclaimer by Lenders.  By signing this Agreement, each Lender:

 

(a) is deemed to have requested that Agent furnish such Lender (and Agent agrees that it will furnish to such Lender), promptly after it becomes available, a copy of each field audit or examination report and each report with respect
to the Borrowing Base prepared or received by Agent (each field audit or examination report and report with respect to the Borrowing Base being referred to herein as a “Report” and collectively, “Reports”), appraisals with respect to the Collateral and financial statements with respect to Parent and its Subsidiaries received by Agent;

 

(b) expressly agrees and acknowledges that Agent (i) does not make any representation or warranty as to the accuracy of any Report, appraisal or financial statements, or (ii) shall not be liable for any information contained in any Report,
appraisal or financial statements;

 

(c) expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Agent or any other party performing any audit or examination will inspect only specific information regarding Obligors and will
rely significantly

 

  

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upon each Obligor’s books and records, as well as on representations of any Obligor’s personnel; and

 

(d) agrees to keep all Reports confidential and strictly for its internal use in accordance with the terms of Section 13.6 hereof, and not to distribute or use any Report in any other manner.

 

12.11 Collateral Matters.

 

(a) Agent may, at its option, from time to time, at any time on or after an Event of Default and for so long as the same is continuing or upon any other failure of a condition precedent to the Revolving Loans and Letters of Credit hereunder,
make such disbursements and advances (“Special Agent Advances”) which Agent, in its sole discretion, deems necessary or desirable either to (i) preserve or protect the Collateral or any portion thereof or (ii) enhance the likelihood or maximize the amount of repayment by Obligors of the Revolving Loans and other Obligations, provided, that, (A) the aggregate principal amount
of the Special Agent Advances pursuant to this clause (ii) outstanding at any time, plus the then outstanding principal amount of the additional Revolving Loans and Letters of Credit which Agent may make or provide as set forth in Section 12.8 hereof, shall not exceed the amount equal to five (5%) percent of the Maximum Credit and (B) the aggregate principal amount of the Special Agent Advances pursuant to this clause (ii) outstanding at any time, plus the then outstanding principal amount of the Loans and Letters
of Credit, shall not exceed the Maximum Credit, or (iii) to pay any other amount chargeable to any Obligor pursuant to the terms of this Agreement or any of the other Financing Agreements consisting of (A) costs, fees and expenses and (B) payments to any Issuing Bank in respect of any Letter of Credit Obligations.  The Special Agent Advances shall be repayable upon written demand by Agent and together with all interest thereon shall constitute Obligations secured by the Collateral.  Special
Agent Advances shall not constitute Revolving Loans or Swing Line Loans but shall otherwise constitute Obligations hereunder.  Interest on Special Agent Advances shall be payable at the Interest Rate then applicable to Base Rate Loans and shall be payable on demand.  Without limitation of its obligations pursuant to Section 6.10 hereof, each Lender agrees that it shall make available to Agent, upon Agent’s demand, in immediately available funds, the amount equal to such Lender’s
Pro Rata Share of each such Special Agent Advance.  If such funds are not made available to Agent by such Lender, such Lender shall be deemed a Defaulting Lender and Agent shall be entitled to recover such funds, on demand from such Lender together with interest thereon for each day from the date such payment was due until the date such amount is paid to Agent at the Federal Funds Rate for each day during such period (as published by the Federal Reserve Bank of New York or at Agent’s option based
on the arithmetic mean determined by Agent of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by each of the three leading brokers of Federal funds transactions in New York City selected by Agent) and if such amounts are not paid within three (3) days of Agent’s demand, at the highest Interest Rate provided for in Section 3.1 hereof applicable to Base Rate Loans.

 

(b) Lenders hereby irrevocably authorize Agent, at its option and in its discretion to release any security interest in, mortgage or Lien upon, any of the Collateral or release any Obligor from the Obligations (i) upon termination of
the Commitments and payment

 

  

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and satisfaction of all of the Obligations and delivery of cash collateral to the extent required under Section 13.1 below, or (ii) upon any sale, disposition or other transfer of Collateral if Administrative Borrower certifies to Agent that the sale or disposition is made in compliance with Section 9.7 (b) or 9.8 of this Agreement (and Agent
may rely conclusively on any such certificate, without further inquiry), or (iii) constituting property in which any Obligor did not own an interest at the time the security interest, mortgage or Lien was granted or at any time thereafter, or (iv) having a value in the aggregate in any twelve (12) month period of less than $25,000,000, and to the extent Agent may release its security interest in and lien upon any such Collateral pursuant to the sale or other disposition or transaction, such sale, transaction
or other disposition shall be deemed consented to by all Lenders, or (v) if required or permitted under the terms of any of the other Financing Agreements, including any intercreditor agreement, or (vi) approved, authorized or ratified in writing by all of Lenders.  Except as provided above, Agent will not release any security interest in, mortgage or lien upon, any of the Collateral without the prior written authorization of all of Lenders.  Upon request by Agent at any time, Lenders will
promptly confirm in writing Agent’s authority to release particular types or items of Collateral pursuant to this Section.  In no event shall the consent or approval of an Issuing Bank to any release of Collateral be required.  Nothing contained herein shall be construed to require the consent of any Bank Product Provider to any release of any Collateral or termination of security interests in any Collateral.

 

(c) Without in any manner limiting Agent’s authority to act without any specific or further authorization or consent by the Required Lenders, each Lender agrees to confirm in writing, upon request by Agent, the authority to release
Collateral or Obligors conferred upon Agent under this Section 12.11.  Agent shall (and is hereby irrevocably authorized by Lenders to) execute such documents as may be necessary to evidence the release of any Obligor or of the security interest, mortgage or Liens granted to Agent upon any Collateral to the extent set forth in this Section 12.11 and Section 5.5 hereof; provided, that,      (i)
Agent shall not be required to execute any such document on terms which, in Agent’s opinion, would expose Agent to liability or create any obligations or entail any consequence other than the release of such Obligor or security interest, mortgage or Liens without recourse or warranty and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any security interest, mortgage or Lien upon (or obligations of Obligors in respect of) the Collateral retained by Obligors.

 

(d) Agent shall have no obligation whatsoever to Issuing Bank, any Lender or any other Person to investigate, confirm or assure that the Collateral exists or is owned by any Obligor or is cared for, protected or insured or has been encumbered,
or that any particular items of Collateral meet the eligibility criteria applicable in respect of the Revolving Loans or Letters of Credit hereunder, or whether any particular reserves are appropriate, or that the liens and security interests granted to Agent pursuant hereto or any of the Financing Agreements or otherwise have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent in this Agreement or in any of the other Financing Agreements, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, Agent may act in any manner it may deem appropriate, in its discretion,

 

  

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given Agent’s own interest in the Collateral as a Lender and that Agent shall have no duty or liability whatsoever to any Issuing Bank or any other Lender.

 

12.12 Agency for Perfection.

 

  Each Issuing Bank and other Secured Party hereby appoints Agent and each other Secured Party as agent and bailee for the purpose of perfecting the security interests in and liens upon the Collateral of Agent in assets which, in accordance with Article 9 of the UCC can be perfected only by possession (or where the security interest
of a secured party with possession has priority over the security interest of another secured party) and Agent, Issuing Bank and each other Secured Party hereby acknowledges that it holds possession of any such Collateral for the benefit of Agent as secured party.  Should Issuing Bank or any other Secured Party obtain possession of any such Collateral, such Secured Party, as the case may be, shall notify Agent thereof, and, promptly upon Agent’s request therefor shall deliver such Collateral to
Agent or in accordance with Agent’s instructions.

 

12.13 Successor Agent.

 

Agent may resign as Agent upon thirty (30) days’ notice to Lenders and Administrative Borrower.  If Agent resigns under this Agreement, the Required Lenders shall appoint from among the Lenders a successor agent for Lenders.  If no successor agent is appointed prior to the effective date of the resignation of Agent,
Agent may appoint, after consulting with Lenders and Administrative Borrower, a successor agent from among Lenders.  Upon the acceptance by the Lender so selected of its appointment as successor agent hereunder, such successor agent shall succeed to all of the rights, powers and duties of the retiring Agent and the term “Agent” as used herein and in the other Financing Agreements shall mean such successor agent and the retiring Agent’s appointment, powers and duties as Agent shall
be terminated.  After any retiring Agent’s resignation hereunder as Agent, the provisions of this Section 12 shall inure to its benefit as to any actions taken or omitted by it while it was Agent under this Agreement.  If no successor agent has accepted appointment as Agent by the date which is thirty (30) days after the date of a retiring Agent’s notice of resignation, the retiring Agent’s resignation shall nonetheless thereupon become effective and Lenders shall perform
all of the duties of Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above.

 

12.14 Other Agent Designations.

 

Agent may at any time and from time to time determine that a Lender may, in addition, be a “Co-Agent”, “Syndication Agent”, “Documentation Agent” or similar designation hereunder and enter into an agreement with such Lender to have it so identified for purposes of this Agreement.  Any such designation
shall be effective upon written notice by Agent to Administrative Borrower of any such designation.  Any Lender that is so designated as a Co-Agent, Syndication Agent, Documentation Agent or such similar designation by Agent shall have no right, power, obligation, liability, responsibility or duty under this Agreement or any of the other Financing Agreements other than those applicable to all Lenders as such, except the rights of Bank of America, N.A., as Syndication Agent, to determine, together with
the Agent, the eligibility criteria for Eligible Installment Sales Receivables as set forth in Section 1.62 hereof.  Without limiting the foregoing, the Lenders so identified shall not have or be deemed to have any

 

  

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fiduciary relationship with any Lender and no Lender shall be deemed to have relied, nor shall any Lender  rely, on a Lender so identified as a Co-Agent, Syndication Agent, Documentation Agent or such similar designation in deciding to enter into this Agreement or in taking or not taking action hereunder.

 

12.15 Resignation of Issuing Bank.

 

Any Issuing Bank may resign as an Issuing Bank upon thirty (30) days’ notice to Agent (with copies to the Lenders) and Administrative Borrower.  If any Issuing Bank resigns under this Agreement, the Agent, to the extent it determines is necessary, shall appoint a successor Issuing Bank, provided, that,
such successor Issuing Bank shall have the same or better rating than the resigning Issuing Bank.  Upon the appointment of any successor Issuing Bank hereunder, such successor Issuing Bank shall succeed to all of the rights, powers and duties of the retiring Issuing Bank and the term “Issuing Bank” as used herein and in the other Financing Agreements shall mean such successor Issuing Bank and the retiring Issuing Bank’s appointment, powers and duties as Issuing Bank shall be terminated
except with respect to its Letters of Credit outstanding as of the effective date of its resignation and all Letter of Credit Obligations with respect thereto (including the right to require Lenders to make Loans or fund risk participations in outstanding Letter of Credit Obligations), shall continue.

 

SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS

 

13.1 Term.

 

(a) This Agreement and the other Financing Agreements shall become effective as of the date set forth on the first page hereof and shall continue in full force and effect for a term ending on July 31, 2012 (the “Termination Date”).  Administrative
Borrower, may, on behalf of Borrowers, at any time, upon ten (10) Business Days prior written notice to Agent, terminate this Agreement; provided, that, this Agreement and all other Financing Agreements must be terminated simultaneously.  Upon the effective date of termination of the Financing Agreements, Borrowers shall pay to Agent all outstanding and unpaid Obligations
and shall furnish cash collateral to Agent (or at Agent’s option, a letter of credit issued for the account of Borrowers and at Borrowers’ expense, in form and substance satisfactory to Agent, by an issuer acceptable to Agent and payable to Agent as beneficiary) in such amounts as Agent reasonably determines are necessary to secure Agent, Lenders and Issuing Bank from loss, cost, damage or expense, including attorneys’ fees and expenses, in connection with any contingent Obligations, including
issued and outstanding Letter of Credit Obligations and checks or other payments provisionally credited to the Obligations and/or as to which Agent or any Lender has not yet received final payment and any continuing obligations of Agent or any Lender pursuant to any Deposit Account Control Agreement and for any of the Obligations arising under or in connection with any Bank Products in such amounts as the Bank Product Provider providing such Bank Products may require (unless such Obligations arising under or
in connection with such Bank Products are paid in full in cash and terminated in a manner satisfactory to such Bank Product Provider).  The amount of such cash collateral (or letter of credit, as Agent may determine) as to any Letter of Credit Obligations shall be in the amount equal to one hundred three (103%) percent of the amount of the Letter of Credit Obligations plus the amount of any fees and expenses payable in connection therewith through the end of the latest expiration date of

 

  

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the Letters of Credit giving rise to such Letter of Credit Obligations.  Such payments in respect of the Obligations and cash collateral shall be remitted by wire transfer in Federal funds to the Agent Payment Account or such other bank account of Agent, as Agent may, in its discretion, designate in writing to Administrative Borrower
for such purpose.  Interest shall be due until and including the next Business Day, if the amounts so paid by Borrowers to the Agent Payment Account or other bank account designated by Agent are received in such bank account later than 12:00 p.m., New York City time.

 

(b) No termination of the Commitments, this Agreement or the other Financing Agreements shall relieve or discharge any Obligor of its duties, obligations and covenants under this Agreement or the other Financing Agreements until all Obligations
have been fully and finally discharged and paid, and Agent’s continuing security interest in the Collateral and the rights and remedies of Agent hereunder, under the other Financing Agreements and applicable law, shall remain in effect until all such Obligations have been fully and finally discharged and paid.  Accordingly, each Obligor waives any rights it may have under the UCC to demand the filing of termination statements with respect to the Collateral and Agent shall not be required to send
such termination statements to Obligor, or to file them with any filing office, unless and until this Agreement shall have been terminated in accordance with its terms and all Obligations paid in full in immediately available funds or as otherwise required under Sections 12.11(b) and Section 5.5 hereof.

 

13.2 Interpretative Provisions.

 

(a) All terms used herein which are defined in Article 1, Article 8 or Article 9 of the UCC shall have the meanings given therein unless otherwise defined in this Agreement.

 

(b) All references to the plural herein shall also mean the singular and to the singular shall also mean the plural unless the context otherwise requires.

 

(c) All references to Borrower, Obligor, Administrative Borrower, Agent and Lenders pursuant to the definitions set forth in the recitals hereto, or to any other person herein, shall include their respective successors and assigns.

 

(d) The words “hereof”, “herein”, “hereunder”, “herewith”, “this Agreement” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and
not any particular provision of this Agreement and as this Agreement now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

 

(e) The word “including” when used in this Agreement shall mean “including, without limitation”.

 

(f) All references to the terms “good faith” used herein or in the other Financing Agreements when applicable to Agent or any Lender shall mean, notwithstanding anything to the contrary contained herein or in the UCC, honesty
in fact in the conduct or transaction concerned.  Obligors shall have the burden of proving any lack of good faith on the part of Agent or any Lender alleged by any Obligor at any time.  All references to the term “reasonably” or “reasonable” as applied to any conduct or determination by Agent shall be based

 

  

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on how an asset-based lender with similar rights providing a credit facility of the type set forth herein would act in similar circumstances with the information then available to it.

 

(g) An Event of Default shall be continuing until such Event of Default is waived in accordance with Section 11.3 or , if capable of being cured, is cured.

 

(h) Any accounting term used in this Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given in accordance with GAAP, and all financial computations hereunder shall be computed unless otherwise
specifically provided herein, in accordance with GAAP as consistently applied.

 

(i) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”, the words “to” and “until” each mean “to but
excluding” and the word “through” means “to and including”.

 

(j) Unless otherwise expressly provided herein, (i) references herein to any agreement, document or instrument shall be deemed to include all subsequent amendments, modifications, supplements, extensions, renewals, restatements or replacements
with respect thereto, but only to the extent the same are not prohibited by the terms hereof or of any other Financing Agreement, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, recodifying, supplementing or interpreting the statute or regulation.

 

(k) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.

 

(l) This Agreement and other Financing Agreements may use several different limitations, tests or measurements to regulate the same or similar matters.  All such limitations, tests and measurements are cumulative and shall each
be performed in accordance with their terms.

 

(m) All Schedules annexed hereto are deemed to include information as of the date hereof.

 

(n) Each reference to a threshold for Excess Availability set forth in the Agreement or any of the other Financing Agreements (other than thresholds set forth in the definitions of “Applicable L/C Fee Rate” and “Applicable
Margin”) shall be automatically increased each time the Maximum Credit is increased pursuant to Section 2.4 hereof to an amount such that the ratio of the Excess Availability to the Maximum Credit as so increased remains the same as prior to such increase in the Maximum Credit.

 

(o) This Agreement and the other Financing Agreements are the result of negotiations among and have been reviewed by counsel to Agent and the other parties, and are the products of all parties.  Accordingly, this Agreement and
the other Financing Agreements shall not be construed against Agent or Lenders merely because of Agent’s or any Lender’s involvement in their preparation.

 

  

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13.3 Notices.

 

(a) All notices, requests and demands hereunder shall be in writing and deemed to have been given or made:  if delivered in person, immediately upon delivery; if by facsimile transmission, immediately upon sending and upon confirmation
of receipt; if by nationally recognized overnight courier service with instructions to deliver the next Business Day, one (1) Business Day after sending; and if by certified mail, return receipt requested, five (5) days after mailing.  Notices delivered through electronic communications shall be effective to the extent set forth in Section 13.3(b) below .  All notices, requests and demands upon the parties are to be given to the following addresses (or to such other address as any party
may designate by notice in accordance with this Section):

 

	
If to Obligors:
	
Charming Shoppes of Delaware, Inc.

Administrative Borrower

3750 State Road

Bensalem, Pennsylvania 19020

Attention:  Chief Financial Officer

Telephone No.:  215-638-6740

Telecopy No.:  215-604-5687

	 	 
	
And
	
Charming Shoppes of Delaware, Inc.,

Administrative Borrower

3750 State Road

Bensalem, Pennsylvania 19020

Attention:  General Counsel

Telephone No.:  215-638-6898

Telecopy No.:  215-604-5615

	 	 
	
with a copy to:
	
Drinker Biddle & Reath, LLP

One Logan Square

18th and Cherry

Philadelphia, Pennsylvania 19103

Attention:  Howard A. Blum, Esq.

Telephone No.:  215-988-2700

Telecopy No.:  215-988-2757

	 	 
	
If to Agent:
	
Wells Fargo Retail Finance, LLC

One Boston Place, 18th Floor

Boston, MA 02108

Attn: Brent E. Shay (Charming Shoppes)

Telephone: 617-624-4463

Telecopy: 866-328-8544

  

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If to Wachovia, as Issuing Bank:
	
Wachovia Bank, National Association

1133 Avenue of the Americas

New York, New York 10036

Attention:   Portfolio Manager-Charming Shoppes

Telephone No.:  212-840-2000

Telecopy No.:  212-545-4283

 

(b) Notices and other communications to Lenders and an Issuing Bank hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by Agent or as
otherwise determined by Agent, provided, that, the foregoing shall not apply to notices to any Lender or Issuing Bank pursuant to Section 2 hereof if such Lender or Issuing Bank, as applicable, has notified Agent that it is incapable of receiving notices under such Section by electronic communication.  Unless Agent otherwise requires, (i) notices and other communications
sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided, that, if such notice or other communication is not given during the normal business hours of the recipient, such notice shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or
communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communications is available and identifying the website address therefor.

 

13.4 Partial Invalidity.

 

If any provision of this Agreement is held to be invalid or unenforceable, such invalidity or unenforceability shall not invalidate this Agreement as a whole, but this Agreement shall be construed as though it did not contain the particular provision held to be invalid or unenforceable and the rights and obligations of the parties shall be
construed and enforced only to such extent as shall be permitted by applicable law.

 

13.5 Confidentiality.

 

(a) Agent, each Lender and Issuing Bank shall use all reasonable efforts to keep confidential, in accordance with its customary procedures for handling confidential information and safe and sound lending practices, any non-public information
supplied to it by any Borrower pursuant to this Agreement, provided, that, nothing contained herein shall limit the disclosure of any such information: (i) to the extent required by statute, rule, regulation, subpoena or court order, (ii) to bank examiners and other regulators, auditors and/or accountants, (iii) in connection with any litigation to which Agent, any Lender or Issuing
Bank is a party,   (iv) to any Lender or Participant (or prospective Lender or Participant) or Issuing Bank or to any Affiliate of any Lender so long as such assignee or Participant (or prospective assignee or Participant), Issuing Bank or Affiliate shall have been instructed to treat such information as

 

  

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confidential in accordance with this Section 13.5 and shall have acknowledged such instructions and agreed to comply therewith, or (v) to counsel for Agent or any Participant, Lender (or prospective Participant, Lender or Issuing Bank) or Issuing Bank.

 

(b) In the event that Agent, any Issuing Bank or Lender receives a request or demand to disclose any confidential information pursuant to any subpoena or court order, Agent, such Issuing Bank or Lender, as the case may be, agrees (i)
to the extent permitted by applicable law or if permitted by applicable law, statute, rule or regulation to the extent Agent determines in good faith that it will not create any risk of liability to Agent, such Issuing Bank or Lender, that Agent, such Issuing Bank or Lender will promptly notify Administrative Borrower of such request so that Borrowers may seek a protective order or other appropriate relief or remedy and (ii) if disclosure of such information is required, disclose such information and, subject
to reimbursement by Borrowers of Agent’s, or such Issuing Bank’s or such Lender’s reasonable expenses, cooperate with Borrowers in their reasonable efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to such portion of the disclosed information which Borrowers so designates, to the extent permitted by applicable law or if permitted by applicable law, to the extent Agent, Issuing Bank or such Lender determines in good faith that it will not create
any risk of liability to Agent, such Issuing Bank or Lender.

 

(c) In no event shall this Section 13.5 or any other provision of this Agreement or applicable law be deemed: (i) to apply to or restrict disclosure of information that has been or is made public by any Borrower or any third party without
breach of this Section 13.5 or otherwise become generally available to the public other than as a result of a disclosure in violation hereof, or in violation of any other confidentiality agreement in favor of Obligors to the extent Agent, any Issuing Bank or Lender involved has actual knowledge of such agreement and the violation thereof at the time it receives or discloses such information, (ii) to apply to or restrict disclosure of information that was or becomes available to Agent, any Issuing Bank or any
Lender on a non-confidential basis from a person other than any Borrower other than in violation of a confidentiality agreement in favor of any Obligor by such person to the extent Agent, any Issuing Bank or Lender involved has actual knowledge of such agreement and the violation thereof at the time it receives or discloses such information, (iii) to require Agent, any Issuing Bank or any Lender to return any materials furnished by Obligors to Agent, any Issuing Bank or any Lender as the case may be or (iv) to
prevent Agent from responding to routine informational requests in accordance with the Code of Ethics for the Exchange of Credit Information promulgated by The Robert Morris Associates or other applicable industry standards relating to the exchange of credit information.  The obligations of Agent, Lenders and any Issuing Bank under this Section 13.5 shall supersede and replace the obligations of Agent, any Issuing Bank and Lenders under any confidentiality letter signed prior to the date hereof.

 

13.6 Successors.

 

This Agreement, the other Financing Agreements and any other document referred to herein or therein shall be binding upon and inure to the benefit of and be enforceable by Agent, Lenders, Issuing Bank, Borrowers, Guarantors and their respective successors and assigns, except that Borrowers may not assign its rights under this Agreement, the
other Financing Agreements and any other document referred to herein or therein without the prior written consent of Agent and Lenders.  Any such purported assignment without such express prior written consent shall be

 

  

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void.  No Lender may assign its rights and obligations under this Agreement without the prior written consent of Agent, except as provided in Section 13.7 below. The terms and provisions of this Agreement and the other Financing Agreements are for the purpose of defining the relative rights and obligations of Borrowers, Guarantors,
Agent, Lenders and Issuing Bank with respect to the transactions contemplated hereby and there shall be no third party beneficiaries of any of the terms and provisions of this Agreement or any of the other Financing Agreements.

 

13.7 Assignments; Participations.

 

(a) Each Lender may, with the prior written consent of Agent, assign all or, if less than all, a portion equal to at least $5,000,000 in the aggregate for the assigning Lender, of such rights and obligations under this Agreement to one
or more Eligible Transferees (but not including for this purpose any assignments in the form of a participation), each of which assignees shall become a party to this Agreement as a Lender by execution of an Assignment and Acceptance; provided, that, (i) such transfer or assignment will not be effective until recorded by Agent on the Register, (ii) Agent shall have received for its
sole account payment of a processing fee from the assigning Lender  or the assignee in the amount of $3,000 (such fee shall be waived if (A) the assigning Lender is the Agent or any Syndication Agent, or (B) such assignment is by a Lender to an Affiliate of such Lender); and (iii) in the event the proposed assignee is not an Eligible Transferee, such assignee shall be approved in writing, by Administrative Borrower (which approval shall not be unreasonably withheld or delayed) prior to any assignment
pursuant to Section 13.7(a) hereof, except that, the approval of the Administrative Borrower shall not be required in respect of any assignment by any Lender made either (A) after the occurrence and during the continuance of any Event of Default, or (B) in connection with an assignment by any Lender upon the merger, consolidation, sale, transfer or other disposition of all or any substantial portion of any Lender’s business, loan portfolio or other assets.

 

(b) Agent shall maintain a register of the names and addresses of Lenders, their Commitments and the principal amount of their Loans (the “Register”).  Agent shall also maintain a copy of each Assignment and Acceptance
delivered to and accepted by it and shall modify the Register to give effect to each Assignment and Acceptance.  The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and any Borrowers, Obligors, Agent and Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement.  The Register shall be available for inspection by Administrative Borrower and any Lender at any reasonable time and
from time to time upon reasonable prior notice.

 

(c) Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance,  the assignee thereunder shall be a party hereto and to the other Financing Agreements
and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations (including, without limitation, the obligation to participate in Letter of Credit Obligations) of a Lender hereunder and thereunder and  the assigning Lender shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under
this Agreement.

 

  

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(d) By execution and delivery of an Assignment and Acceptance, the assignor and assignee thereunder confirm to and agree with each other and the other parties hereto as follows:  (i) other than as provided in such Assignment
and Acceptance, the assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any of the other Financing Agreements or the execution, legality, enforceability, genuineness, sufficiency or value of this Agreement or any of the other Financing Agreements furnished pursuant hereto, (ii) the assigning Lender makes no representation or warranty and assumes no responsibility with respect
to the financial condition of any Obligor or any of its Subsidiaries or the performance or observance by any Obligor of any of the Obligations; (iii) such assignee confirms that it has received a copy of this Agreement and the other Financing Agreements, together with such other documents and information it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (iv) such assignee will, independently and without reliance upon the assigning Lender, Agent
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 this Agreement and the other Financing Agreements, (v) such assignee appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the other Financing Agreements as are delegated to Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto,
and (vi) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement and the other Financing Agreements are required to be performed by it as a Lender.  Agent and Lenders may furnish any information concerning any Obligor in the possession of Agent or any Lender from time to time to assignees and Participants.

 

(e) Each Lender may sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Agreement and the other Financing Agreements (including, without limitation, all or a portion
of its Commitments and the Loans owing to it and its participation in the Letter of Credit Obligations, without the consent of Agent or the other Lenders); provided, that, (i) such Lender’s obligations under this Agreement (including, without limitation, its Commitment hereunder) and the other Financing Agreements shall remain unchanged, (ii) such Lender shall remain solely responsible
to the other parties hereto for the performance of such obligations, and Borrowers, Guarantors, the other Lenders and Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and the other Financing Agreements, and (iii) the Participant shall not have any rights under this Agreement or any of the other Financing Agreements (the Participant’s rights against such Lender in respect of such participation to be those
set forth in the agreement executed by such Lender in favor of the Participant relating thereto) and all amounts payable by any Borrower or Guarantor hereunder shall be determined as if such Lender had not sold such participation.

 

(f) Nothing in this Agreement shall prevent or prohibit any Lender from pledging its Loans hereunder to a Federal Reserve Bank in support of borrowings made by such Lenders from such Federal Reserve Bank; provided, that,
no such pledge shall release such Lender from any of its obligations hereunder or substitute any such pledgee for such Lender as a party hereto.

 

  

148

  

(g) At any time prior to the date that Agent confirms to Administrative Borrower that there has been a successful syndication and at any time after an Event of Default has occurred and is continuing, Obligors shall assist Agent or any
Lender permitted to sell assignments or participations under this Section 13.7 in whatever manner reasonably necessary in order to enable or effect any such assignment or participation, including (but not limited to) the execution and delivery of any and all agreements, notes and other documents and instruments as shall be requested and the delivery of informational materials, appraisals or other documents for, and the participation of relevant management in meetings and conference calls with, potential Lenders
or Participants. In connection with the foregoing, Administrative Borrower shall upon request of Agent, certify the correctness, completeness and accuracy, in all material respects, of all descriptions of Obligors and their affairs provided, prepared or reviewed by any Obligor that are contained in any selling materials and all other information provided by it and included in such materials.

 

(h) Any Lender that is an Issuing Bank may at any time assign all of its Commitments pursuant to this Section 13.7.  If such Issuing Bank ceases to be Lender, it may, at its option, resign as Issuing Bank in accordance with
Section 12.15 and such Issuing Bank’s obligations to issue Letters of Credit shall terminate but it shall retain all of the rights and obligations of Issuing Bank hereunder with respect to Letters of Credit outstanding as of the effective date of its resignation and all Letter of Credit Obligations with respect thereto (including the right to require Lenders to make Loans or fund risk participations in outstanding Letter of Credit Obligations), shall continue.

 

13.8 Entire Agreement.

 

This Agreement, the other Financing Agreements, any supplements hereto or thereto, and any instruments or documents delivered or to be delivered in connection herewith or therewith represents the entire agreement and understanding concerning the subject matter hereof and thereof between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written.  In the event of any inconsistency between the terms of this Agreement and any schedule or exhibit hereto, the terms of this Agreement shall govern.

 

13.9 USA Patriot Act.

 

Each Lender subject to the USA PATRIOT Act (Title III of Pub.L. 107-56 (signed into law October 26, 2001) (the “Act”) hereby notifies each Obligor that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies each person or corporation who opens an account and/or enters into
a business relationship with it, which information includes the name and address of each Obligor and other information that will allow such Lender to identify such person in accordance with the Act  and any other applicable law.

 

13.10 Counterparts.

 

This Agreement or any of the other Financing Agreements may be executed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute

 

  

149

  

one and the same agreement. Delivery of an executed counterpart of this Agreement or any of the other Financing Agreements by telefacsimile or other electronic method of transmission shall have the same force and effect as the delivery of an original executed counterpart of this Agreement or any of such other Financing Agreements.  Any
party delivering an executed counterpart of any such agreement by telefacsimile or other electronic method of transmission shall also deliver an original executed counterpart, but the failure to do so shall not affect the validity, enforceability or binding effect of such agreement.

 

SECTION 14. ACKNOWLEDGMENT AND RESTATEMENT

 

14.1 Acknowledgment of Existing Obligations.

 

Each Obligor hereby acknowledges, confirms and agrees that Obligors are indebted to Agent and Lenders for loans and advances to Borrowers under the Existing Financing Agreements, as of the close of business on July 30, 2009, in the aggregate principal amount of $-0-, together with all interest accrued and accruing thereon (to the extent applicable),
and all fees, costs, expenses and other charges relating thereto (including reasonable fees and expenses of counsel to Agent), all of which are unconditionally owing by Obligors to Agent and Lenders, without offset, defense or counterclaim of any kind, nature or description whatsoever and the aggregate outstanding face amount of all Letter of Credit Accommodations (as defined in the Existing Financing Agreements) issued and outstanding as of the close of business on July 30, 2009 was $18,680,009.48.

 

14.2 Acknowledgment of Security Interests.

 

(a) Each Obligor hereby acknowledges, confirms and agrees that Agent, has and shall continue to have a security interest in and lien upon the Collateral (as such term is amended herein) granted to Agent pursuant to the Existing Financing
Agreements to secure the Obligations, as well as any Collateral granted under this Agreement or under any of the other Financing Agreements or otherwise granted to or held by Agent.

 

(b) The Liens and security interests of Agent in the Collateral (as such term is amended herein) shall be deemed to be continuously granted and perfected from the earliest date of the granting and perfection of such Liens and security
interests, whether under the Existing Financing Agreements, this Agreement or any other Financing Agreements.

 

14.3 Existing Financing Agreements.

 

Each Obligor hereby acknowledges, confirms and agrees that: (a) the Existing Financing Agreements have been duly executed and delivered by such Obligor and are in full force and effect as of the date hereof, and (b) the agreements and obligations of such Obligor contained in the Existing Financing Agreements on the date hereof constitute the
legal, valid and binding obligations of such Obligor enforceable against it in accordance with their respective terms and such Obligor has no defense to the enforcement of such obligations and (c) Agent and Lenders are entitled to all of the rights and remedies provided for in the Existing Financing Agreements as in effect on the date hereof.

 

  

150

  

14.4 Restatement.

 

(a) Except as otherwise stated in Section 14.1 hereof and this Section 14.4, as of the date hereof, the terms, conditions, agreements, covenants, representations and warranties set forth in the Existing Loan Agreement, the Second Amended
and Restated Guarantee, dated July 28, 2005, by the Guarantors parties thereto in favor of Agent and Lenders, and the Amended and Restated General Security Agreement, dated January 29, 2004, by the Guarantors parties thereto in favor of Agent and Lenders are hereby amended and restated in their entirety on the date hereof, and as so amended and restated, replaced and superseded, by the terms, conditions, agreements, covenants, representations and warranties set forth in this Agreement and the other Financing
Agreements, except that nothing herein or in the other Financing Agreements shall impair or adversely affect the continuation of the liability of Obligors for the Obligations.  The amendment and restatement contained herein shall not, in any manner, be construed to constitute payment of, or impair, limit, cancel or extinguish, or constitute a novation in respect of, the Indebtedness and other obligations and liabilities of Obligors evidenced by or arising under the Existing Financing Agreements, and
the liens and security interests securing such Indebtedness and other obligations and liabilities, which shall not in any manner be impaired, limited, terminated, waived or released except for the termination and release of any Liens and security interests of Agent in and to any Excluded Property.

 

(b) The principal amount of the Revolving Loans and Letters of Credit outstanding as of the date hereof under the Existing Financing Agreements shall be allocated to the Revolving Loans and Letters of Credit hereunder in such amounts
as Agent shall determine based upon the Commitments.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

 

 

 

 

 

 

 

 

 

  

151

  

IN WITNESS WHEREOF, the parties hereto have caused these presents to be duly executed as of the day and year first above written.

 

	
ADMINISTRATIVE BORROWER

	
CHARMING SHOPPES OF DELAWARE, INC.,

  as Administrative Borrower

	  
	
By: _____________________________

	
Name:           Eric M. Specter

	
Title:             Vice President

	  
	
Chief Executive Office:

	  
	
3750 State Road

Bensalem, Pennsylvania 19020

	  
	  
	
BORROWERS

	  
	
CHARMING SHOPPES, INC.

	  
	
By: _____________________________

	
Name:           Eric M. Specter

	
Title:             Executive Vice President

	  
	
Chief Executive Office:

	  
	
3750 State Road

Bensalem, Pennsylvania 19020

	  
	  
	
CHARMING SHOPPES OF DELAWARE, INC.

	  
	
By: _____________________________

	
Name:           Eric M. Specter

	
Title:             Vice President

	  
	
Chief Executive Office:

	  
	
3750 State Road

Bensalem, Pennsylvania 19020

[SIGNATURES CONTINUED ON NEXT PAGE]

 

	
 
	  	
[Signature page to Third Amended and Restated Loan and Security Agreement]

  

  

  

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

	
CSI INDUSTRIES, INC.

	  
	
By: _____________________________

	
Name:           Eric M. Specter

	
Title:             President

	  
	
Chief Executive Office:

	  
	
1105 N. Market Street, Suite 607

Wilmington, Delaware 19810

	  
	  
	
FB APPAREL, INC.

	  
	
By: _____________________________

	
Name:           Eric M. Specter

	
Title:             President

	  
	
Chief Executive Office:

	  
	
1901 State Road 240E

Greencastle, Indiana 46135

	  
	  
	
LANE BRYANT, INC.

	  
	
By:  _____________________________

	
Name:         Eric M. Specter

	
Title:           Vice President

	  
	
Chief Executive Office:

	  
	
3344 Morse Crossing Road

Columbus, Ohio 43219

[SIGNATURES CONTINUED ON NEXT PAGE]

 

	
 
	  	
[Signature page to Third Amended and Restated Loan and Security Agreement]

  

  

  

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

	
CATHERINES STORES CORPORATION

	  
	
By: _____________________________

	
Name:         Eric M. Specter

	
Title:           Vice President

	  
	
Chief Executive Office:

	  
	
3750 State Road

Bensalem, Pennsylvania 19020

 

 

 

 

 

 

 

 

 

[SIGNATURES CONTINUED ON NEXT PAGE]

 

 

 

 

	
 
	  	
[Signature page to Third Amended and Restated Loan and Security Agreement]

  

  

  

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

	
GUARANTORS

	  
	  
	
CSPE, LLC

	  
	
By:           Charming Shoppes of Delaware, Inc.

	
Its:           Sole Member

	  
	
By:           __________________________

	
Name:         Eric M. Specter

	
Title:           Vice President

	  
	  
	
CATHERINES PARTNERS-INDIANA, LLP

	  
	
By:           Catherines Stores of Indiana, Inc.

	
Its:           Managing Partner

	  
	
By:           __________________________

	
Name:         Eric M. Specter

	
Title:           President

	  
	  
	
CATHERINES PARTNERS-WASHINGTON, G.P.

	  
	
By:           Catherines, Inc.

	
Its:           Managing Partner

	  
	
By:           __________________________

	
Name:         Eric M. Specter

	
Title:           Vice President

	  
	  
	
FOR EACH ENTITY LISTED ON SCHEDULE 1.93A HERETO

	  
	
By:        ____________________________

	
Name:         Eric M. Specter

	
Title:           Authorized Officer in the capacity shown on

	
Schedule 1.93A hereto

[SIGNATURES CONTINUED ON NEXT PAGE]

 

	
 
	  	
[Signature page to Third Amended and Restated Loan and Security Agreement]

  

  

  

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

	
FASHION BUG #2421, LLC

	  
	
By:           CSGC, Inc.

	
Its:           Sole Member

	  
	
By:           __________________________

	
Name:         Colin D. Stern

	
Title:           Vice President

	  
	  
	
CATHERINES #5163, LLC

	  
	
By:           CSGC, Inc.

	
Its:           Sole Member

	  
	
By:           __________________________

	
Name:         Colin D. Stern

	
Title:           Vice President

	  
	  
	
LANE BRYANT #6898, LLC

	  
	
By:           CSGC, Inc.

	
Its:           Sole Member

	  
	
By:           __________________________

	
Name:         Colin D. Stern

	
Title:           Vice President

	  
	  
	
FOR EACH ENTITY LISTED ON SCHEDULE 1.93B HERETO

	  
	
By:           __________________________

	
Name:          Colin D. Stern

	
Title:           Authorized Officer in the capacity shown on

	
                    Schedule 1.93B hereto

[SIGNATURES CONTINUED ON NEXT PAGE]

	
 
	  	
[Signature page to Third Amended and Restated Loan and Security Agreement]

  

  

  

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

	
AGENT, LENDERS AND ISSUING BANKS

	  
	  
	
WELLS FARGO RETAIL FINANCE, LLC,

 as Agent and a Lender

	  
	
By: ________________________________

	
Name:

	
Title:

[SIGNATURES CONTINUED ON NEXT PAGE]

	
 
	  	
[Signature page to Third Amended and Restated Loan and Security Agreement]

  

  

  

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

	
BANK OF AMERICA, N.A.,

	
as a Lender and an Issuing Bank

	  
	
By: ________________________________

	
Name:

	
Title:

[SIGNATURES CONTINUED ON NEXT PAGE]

	
 
	  	
[Signature page to Third Amended and Restated Loan and Security Agreement]

  

  

  

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

	
GMAC COMMERCIAL FINANCE LLC, as a Lender

	  
	
By: ________________________________

	
Name:

	
Title:

[SIGNATURES CONTINUED ON NEXT PAGE]

	
 
	  	
[Signature page to Third Amended and Restated Loan and Security Agreement]

  

  

  

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

	
U.S. BANK NATIONAL ASSOCIATION, as a Lender

	  
	
By: ________________________________

	
Name:

	
Title:

[SIGNATURES CONTINUED ON NEXT PAGE]

	
 
	  	
[Signature page to Third Amended and Restated Loan and Security Agreement]

  

  

  

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

	
JPMORGAN CHASE BANK, N.A., as a Lender

	  
	
By: ________________________________

	
Name:

	
Title:

[SIGNATURES CONTINUED ON NEXT PAGE]

	
 
	  	
[Signature page to Third Amended and Restated Loan and Security Agreement]

  

  

  

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

	
BARCLAYS BANK PLC, as a Lender

	  
	
By: ________________________________

	
Name:

	
Title:

[SIGNATURES CONTINUED ON NEXT PAGE]

	
 
	  	
[Signature page to Third Amended and Restated Loan and Security Agreement]

  

  

  

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

	
WACHOVIA BANK, NATIONAL ASSOCIATION,

 as an Issuing Bank

	  
	
By: ________________________________

	
Name:

	
Title:

	
 
	  	
[Signature page to Third Amended and Restated Loan and Security Agreement]exhibit4-1_080609.htm

EXHIBIT 4.1

 

 

_______________________

 

Wendy’s/Arby’s Restaurants, LLC

as Issuer

 

the Guarantors party hereto

 

and

 

U.S. Bank National Association

as Trustee

 

_____________________________________________

 

Indenture

Dated as of Jne 23, 2009

 

_____________________________________________

 

10.00%

Senior Notes

Due 2016

 

_______________________

 

  

 

  

CROSS-REFERENCE TABLE

 

	
TIA Sections
	
Indenture Sections

	  	  	  	  
	
§
	
310
	
(a)
	
7.10

	  	  	
(b)
	
7.08

	
§
	
311
	  	
7.03

	
§
	
312
	  	
11.02

	
§
	
313
	  	
7.06

	
§
	
314
	
(a)
	
4, 4.02

	  	  	
(c)
	
11.04

	  	  	
(e)
	
11.05

	
§
	
315
	
(a)
	
7.01, 7.02

	  	  	
(b)
	
7.02, 7.05

	  	  	
(c)
	
7.01

	  	  	
(d)
	
7.02

	  	  	
(e)
	
6.12, 7.02

	
§
	
316
	
(a)
	
2.05, 6.02, 6.04, 6.05

	  	  	
(b)
	
6.06, 6.07

	  	  	
(c)
	
11.02

	
§
	
317
	
(a) (1)
	
6.08

	  	  	
(a) (2)
	
6.09

	  	  	
(b)
	
2.03

	
§
	
318
	  	
11.01

  

2

  

 

RECITALS

 

	
ARTICLE 1
	  
	
Definitions And Incorporation By Reference
	  
	  	  
	
Section 1.01.  Definitions.
	
2

	  	  
	
ARTICLE 2
	  
	
The Notes
	  
	  	  
	
Section 2.01.  Form, Dating and Denominations; Legends
	
36

	
Section 2.02.  Execution and Authentication; Exchange Notes; Additional Notes
	
37

	
Section 2.03.  Registrar, Paying Agent and Authenticating Agent; Paying Agent to Hold Money in Trust
	
39

	
Section 2.04.  Replacement Notes
	
39

	
Section 2.05.  Outstanding Notes
	
40

	
Section 2.06.  Temporary Notes
	
40

	
Section 2.07.  Cancellation
	
41

	
Section 2.08.  CUSIP and CINS Numbers
	
41

	
Section 2.09.  Registration, Transfer and Exchange
	
41

	
Section 2.10.  Restrictions on Transfer and Exchange
	
44

	
Section 2.11.  Temporary Offshore Global Notes
	
46

	  	  
	
ARTICLE 3
	  
	
Redemption; Offer to Purchase
	  
	  	  
	
Section 3.01.  Optional Redemption
	
47

	
Section 3.02.  Redemption with Proceeds of Equity Offering
	
48

	
Section 3.03.  Method and Effect of Redemption
	
48

	
Section 3.04.  Offer to Purchase
	
49

	  	  
	
ARTICLE 4
	  
	
Covenants
	  
	  	  
	
Section 4.01.  Payment of Notes
	
51

	
Section 4.02.  Maintenance of Office or Agency
	
52

	
Section 4.03.  Existence
	
53

	
Section 4.04.  Limitation on Debt
	
53

	
Section 4.05.  Limitation on Restricted Payments
	
58

	
Section 4.06.  Limitation on Liens
	
63

	
Section 4.07.  Limitation on Dividend and other Payment Restrictions Affecting Restricted Subsidiaries
	
63

	
Section 4.08.  Guarantees by Restricted Subsidiaries
	
66

	
Section 4.09.  Repurchase of Notes Upon a Change of Control
	
67

	
Section 4.10.  Limitation on Asset Sales
	
67

 

 

3

 

	
Section 4.11.  Limitation on Transactions with Affiliates
	
69

	
Section 4.12.  Designation of Restricted and Unrestricted Subsidiaries
	
71

	
Section 4.13.  Financial Reports
	
73

	
Section 4.14.  Reports to Trustee
	
74

	
Section 4.15.  Limitation of Applicability of Certain Covenants if Notes Rated Investment Grade
	
74

	  	  
	
ARTICLE 5
	  
	
Consolidation, Merger or Sale of Assets
	  
	  	  
	
Section 5.01.  Consolidation, Merger or Sale of Assets by the Company; No Lease of All or Substantially All Assets
	
75

	
Section 5.02.  Consolidation, Merger or Sale of Assets by a Guarantor
	
76

	  	  
	
ARTICLE 6
	  
	
Default and Remedies
	  
	  	  
	
Section 6.01.  Events of Default
	
77

	
Section 6.02.  Acceleration
	
79

	
Section 6.03.  Other Remedies
	
79

	
Section 6.04.  Waiver of Past Defaults
	
80

	
Section 6.05.  Control by Majority
	
80

	
Section 6.06.  Limitation on Suits
	
80

	
Section 6.07.  Rights of Holders to Receive Payment
	
80

	
Section 6.08.  Collection Suit by Trustee
	
81

	
Section 6.09.  Trustee May File Proofs of Claim
	
81

	
Section 6.10.  Priorities
	
81

	
Section 6.11.  Restoration of Rights and Remedies
	
82

	
Section 6.12.  Undertaking for Costs
	
82

	
Section 6.13.  Rights and Remedies Cumulative
	
82

	
Section 6.14.  Delay or Omission Not Waiver
	
82

	
Section 6.15.  Waiver of Stay, Extension or Usury Laws
	
82

	  	  
	
ARTICLE 7
	  
	
The Trustee
	  
	  	  
	
Section 7.01.  General
	
83

	
Section 7.02.  Certain Rights of Trustee
	
83

	
Section 7.03.  Individual Rights of Trustee
	
85

	
Section 7.04.  Trustee’s Disclaimer
	
85

	
Section 7.05.  Notice of Default
	
85

	
Section 7.06.  Reports by Trustee to Holders
	
85

	
Section 7.07.  Compensation and Indemnity
	
86

	
Section 7.08.  Replacement of Trustee
	
86

	
Section 7.09.  Successor Trustee by Merger
	
88

	
Section 7.10.  Eligibility
	
88

 

 

4

 

	
Section 7.11.  Money Held in Trust
	
88

	  	  
	
ARTICLE 8
	  
	
Defeasance and Discharge
	  
	  	  
	
Section 8.01.  Discharge of Company’s Obligations
	
88

	
Section 8.02.  Legal Defeasance
	
89

	
Section 8.03.  Covenant Defeasance
	
90

	
Section 8.04.  Application of Trust Money
	
90

	
Section 8.05.  Repayment to Company
	
91

	
Section 8.06.  Reinstatement
	
91

	  	  
	
ARTICLE 9
	  
	
Amendments, Supplements and Waivers
	  
	  	  
	
Section 9.01.  Amendments Without Consent of Holders
	
91

	
Section 9.02.  Amendments With Consent of Holders
	
92

	
Section 9.03.  Effect of Consent
	
93

	
Section 9.04.  Trustee’s Rights and Obligations
	
93

	
Section 9.05.  Conformity With Trust Indenture Act
	
94

	  	  
	
ARTICLE 10
	  
	
Guarantees
	  
	  	  
	
Section 10.01.  The Guarantees
	
94

	
Section 10.02.  Guarantee Unconditional
	
94

	
Section 10.03.  Discharge; Reinstatement
	
95

	
Section 10.04.  Waiver by the Guarantors
	
95

	
Section 10.05.  Subrogation and Contribution
	
95

	
Section 10.06.  Stay of Acceleration
	
95

	
Section 10.07.  Limitation on Amount of Guarantee
	
96

	
Section 10.08.  Execution and Delivery of Guarantee
	
96

	
Section 10.09.  Release of Guarantee
	
96

	  	  
	
ARTICLE 11
	  
	
Miscellaneous
	  
	  	  
	
Section 11.01.  Trust Indenture Act of 1939
	
97

	
Section 11.02.  Noteholder Communications; Noteholder Actions
	
97

	
Section 11.03.  Notices
	
98

	
Section 11.04.  Certificate and Opinion as to Conditions Precedent
	
99

	
Section 11.05.  Statements Required in Certificate or Opinion
	
99

	
Section 11.06.  Payment Date Other Than a Business Day
	
99

	
Section 11.07.  Governing Law
	
99

	
Section 11.08.  No Adverse Interpretation of Other Agreements
	
100

	
Section 11.09.  Successors
	
100

 

 

5

 

	
Section 11.10.  Duplicate Originals
	
100

	
Section 11.11.  Separability
	
100

	
Section 11.12.  Table of Contents and Headings
	
100

	
Section 11.13.  No Liability of Directors, Officers, Employees, Incorporators, Members and Stockholders
	
100

 

 

  

6

  

EXHIBITS

EXHIBIT A                      Form of Note

EXHIBIT B                      Form of Supplemental Indenture

EXHIBIT C                      Restricted Legend

EXHIBIT D                      DTC Legend

EXHIBIT E                      Regulation S Certificate

EXHIBIT F                      Rule 144A Certificate

EXHIBIT G                      Institutional Accredited Investor Certificate

EXHIBIT H                      Certificate of Beneficial Ownership

EXHIBIT I                      Temporary Offshore Global Note Legend

EXHIBIT J                      Original Issue Discount Legend

  

7

  

INDENTURE, dated as of June 23, 2009, between Wendy’s/Arby’s Restaurants, LLC, a Delaware limited liability company, as the Company, the Guarantors party hereto and U.S. Bank National Association, a national banking association, as Trustee. 

 

RECITALS

 

The Company has duly authorized the execution and delivery of the Indenture to provide for the issuance of up to $565,000,000 aggregate principal amount of the Company’s 10.00% Senior Notes Due 2016, and, if and when issued, any Additional Notes, together with any Exchange Notes issued therefor as provided herein
(the “Notes”).  All things necessary to make the Indenture a valid agreement of the Company, in accordance with its terms, have been done, and the Company has done all things necessary to make the Notes (in the case of the Additional Notes, when duly authorized), when executed by the Company and authenticated and delivered by the Trustee and duly issued by the Company, the valid obligations of the Company as hereinafter provided.

 

In addition, the Guarantors party hereto have duly authorized the execution and delivery of the Indenture as guarantors of the Notes.  All things necessary to make the Indenture a valid agreement of each Guarantor, in accordance with its terms, have been done, and each Guarantor has done all things necessary
to make the Note Guarantees, when the Notes are executed by the Company and authenticated and delivered by the Trustee and duly issued by the Company, the valid obligations of such Guarantor as hereinafter provided.

 

This Indenture is subject to, and will be governed by, the provisions of the Trust Indenture Act that are required to be a part of and govern indentures qualified under the Trust Indenture Act.

 

THIS INDENTURE WITNESSETH

 

For and in consideration of the premises and the purchase of the Notes by the Holders thereof, the parties hereto covenant and agree, for the equal and proportionate benefit of all Holders, as follows:

 

 

 

 

 

 

 

 

ARTICLE 1

Definitions And Incorporation By Reference

 

Section 1.01.  Definitions.

 

“Accounts Receivable”  means (1) accounts receivable, (2) franchise fee payments and other revenues related to franchise agreements, (3) royalty and other similar payments made related to the use of trade names and other intellectual property,
business support, training and other services and (4) revenues related to distribution and merchandising of the products of the Company and its Restricted Subsidiaries.

 

“Acquired Debt” means Debt, Disqualified Stock or Preferred Stock of the Company, any Guarantor or any Restricted Subsidiary (provided that any such Restricted Subsidiary that is not a Guarantor
will be merged with or into, or be the direct or indirect parent of, the acquired person) Incurred to finance an acquisition or other business combination or Debt, Disqualified Stock or Preferred Stock of a Person existing at the time the Person merges with or into or becomes a Restricted Subsidiary, whether or not Incurred in connection with, or in contemplation of, the Person merging with or into or becoming a Restricted Subsidiary.

 

“Additional Interest” means additional interest owed to the Holders pursuant to a Registration Rights Agreement.

 

“Additional Notes” means any notes issued under the Indenture in addition to the Original Notes including any Exchange Notes issued in exchange for such Additional Notes, having the same terms in all respects as the Original Notes except that the issue
price may be different and interest will accrue on the Additional Notes from their date of issuance.

 

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person.  For purposes of this definition, “control” (including,
with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”) with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

 

“Agent” means any Registrar, Paying Agent or Authenticating Agent.

 

“Agent Member” means a member of, or a participant in, the Depositary.

 

“Applicable Premium” means, with respect to any Note on any redemption date, the greater of:

 

(1)           1.0% of the principal amount of such Note; and

 

  

2

  

(2)           the excess, if any, of (a) the present value at such redemption date of (i) the redemption price of such Note on July 15, 2012 (as stated in the table in Section 3.01), plus (ii) all required interest
payments due on such Note through July 15, 2012 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over (b) the principal amount of such Note.

 

Calculation of the Applicable Premium will be made by the Company or on behalf of the Company by such person as the Company shall designate; provided, however, that such calculation shall not be a duty or obligation of the Trustee.

 

“Asset Sale” means any sale, lease, transfer or other disposition of any assets by the Company or any Restricted Subsidiary outside the ordinary course of business, including by means of a merger, consolidation or similar transaction and including any
sale or issuance of the Equity Interests of any Restricted Subsidiary (each of the above referred to as a “disposition”), provided that the following are not included in the definition of “Asset Sale:”

 

(1)         a disposition to the Company or a Restricted Subsidiary, including the sale or issuance by the Company or any Restricted Subsidiary of any Equity Interests of any Restricted Subsidiary to the Company or any Restricted Subsidiary;

 

(2)         the disposition by the Company or any Restricted Subsidiary in the ordinary course of business of (i) cash and Cash Equivalents, (ii) inventory and other assets acquired and held for resale in the ordinary course of business, (iii) damaged, worn out or obsolete
assets or assets that, in the Company’s reasonable judgment, are no longer used or useful in the business of the Company or its Restricted Subsidiaries, or (iv) rights granted to others pursuant to leases or licenses;

 

(3)         the sale or discount of accounts receivable arising in the ordinary course of business in connection with the compromise or collection thereof;

 

(4)         a transaction covered by Section 5.01;

 

(5)         a Restricted Payment permitted under Section 4.05 or a Permitted Investment;

 

(6)         any disposition in a transaction or series of related transactions of assets with a fair market value of less than $35.0 million;

 

 

  

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(7)         any exchange of assets (including a combination of assets and Cash Equivalents) for assets used or useful in a Permitted Business (or Equity Interests in a Person that will be a Restricted Subsidiary following such transaction) of comparable or greater market value, as determined
in good faith by the Company; 

 

(8)         any sale of Equity Interests in, or Debt or other securities of, an Unrestricted Subsidiary;

 

(9)         any financing transaction, including a sale and leaseback transaction, with respect to property built or acquired by the Company or any Restricted Subsidiary after the Issue Date;

 

(10)         any disposition of Capital Stock of a Restricted Subsidiary pursuant to an agreement or other obligation with or to a Person (other than the Company or a Restricted Subsidiary) from whom such Restricted Subsidiary was acquired or from whom such Restricted Subsidiary
acquired its business and assets (having been newly formed in connection with such acquisition), made as part of such acquisition and in each case comprising all or a portion of the consideration in respect of such sale or acquisition;

 

(11)         any surrender or waiver of contract rights  pursuant to a settlement, release, recovery on or surrender of contract, tort or other claims of any kind;

 

(12)         sales of Accounts Receivable, or participations therein, and any related assets, in connection with any Permitted Receivables Financing;

 

(13)         foreclosure or any similar action with respect to any property or other asset of the Company or any of its Restricted Subsidiaries; and

 

(14)         dispositions in connection with Permitted Liens.

 

“Authenticating Agent” refers to a Person engaged to authenticate the Notes in the stead of the Trustee.

 

“Average Life” means, with respect to any Debt, Disqualified Stock or Preferred Stocks the quotient obtained by dividing (i) the sum of the products of (x) the number of years from the date of determination to the dates of each successive scheduled principal
payment of such Debt or redemption or similar payment with respect to such Disqualified Stock or Preferred Stock and (y) the amount of such payment by (ii) the sum of all such payments.

 

“bankruptcy default” has the meaning assigned to such term in Section 6.01.

 

  

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“Board of Directors” means the board of directors or managers of the Company or, except for purposes of “Change of Control,” any committee thereof.  For purposes of Section 4.11, the “Board of Directors” also means the
board of directors of Parent except where otherwise specified.

 

“Board Resolution” means a resolution duly adopted by the Board of Directors which is certified by the Secretary or an Assistant Secretary of the Company (or Parent, as applicable) and remains in full force and effect as of the date of its certification.

 

“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in New York City or in the city where the Corporate Trust Office of the Trustee is located are authorized by law to close.

 

“Capital Lease” means, with respect to any Person, any lease of any property which, in conformity with GAAP, is required to be capitalized on the balance sheet of such Person.

 

“Capital Stock” means, with respect to any Person, any and all shares of stock of a corporation, partnership interests or other equivalent interests (however designated, whether voting or non-voting) in such Person’s equity, entitling the holder
to receive a share of the profits and losses, and a distribution of assets, after liabilities, of such Person.

 

“Cash Equivalents” means

 

(1)         United States dollars, or money in other currencies received in the ordinary course of business,

 

(2)         U.S. Government Obligations or certificates representing an ownership interest in U.S. Government Obligations with maturities not exceeding one year from the date of acquisition ,

 

(3)         (i) demand deposits, (ii) time deposits and certificates of deposit with maturities of one year or less from the date of acquisition, (iii) bankers’ acceptances with maturities not exceeding one year from the date of acquisition, and (iv) overnight bank deposits,
in each case with any bank or trust company organized or licensed under the laws of the United States or any state thereof or the District of Columbia whose short-term debt is rated “A-2” or higher by S&P or “P-2” or higher by Moody’s,

 

(4)         repurchase obligations with a term of not more than seven days for underlying securities of the type described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above,

 

  

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(5)         commercial paper rated at least P-1 by Moody’s or A-1 by S&P and maturing within six months after the date of acquisition,

 

(6)         money market funds at least 95% of the assets of which consist of investments of the type described in clauses (1) through (5) above and

 

(7)         in case of a Foreign Restricted Subsidiary, substantially similar investments, of comparable credit quality, denominated in the currency of any jurisdiction in which such Person conducts business.

 

“Certificate of Beneficial Ownership” means a certificate substantially in the form of Exhibit H.

 

“Certificated Note” means a Note in registered individual form without interest coupons.

 

“Change of Control” means:

 

(1)         the sale, exchange or other transfer of all or substantially all the assets of the Company (in one or a series of related transactions) to another Person (in each case, unless such other Person is a Permitted Holder); or

 

(2)         any “person” or “group” (as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act), other than Permitted Holders), is or becomes the “beneficial owner” (as such term is used in Rules 13d-3 under the
Exchange Act), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company, provided that such event shall not be deemed a Change of Control so long as one or more of the Permitted Holders have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors of the Company; or

 

(3)         individuals who on the Issue Date constituted the board of directors or managers of the Company, together with any new directors or managers whose election by the board of directors or managers or whose nomination for election by the equity holders of the Company
was approved by a majority of the directors or managers then still in office who were either directors or managers or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the board of directors or managers of the Company then in office; or

 

(4)         the adoption of a plan relating to the liquidation or dissolution of the Company.

 

  

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For purposes of this definition, (i) any direct or indirect holding company of the Company (including Parent) shall not itself be considered a Person for purposes of clause (1) above or a “person” or “group” for purposes of clause (2) above, provided that
no “person” or “group” (other than the Permitted Holders or another such holding company) beneficially owns, directly or indirectly, more than 50% of the voting power of the Voting Stock of such company, (ii) no Change of Control pursuant to clause (1) above shall be deemed to have occurred solely as the result of a transfer of assets among the Company and its Wholly-Owned Restricted Subsidiaries, and (iii) a Person shall not be deemed to have beneficial ownership of securities subject
to a stock purchase agreement, merger agreement or similar agreement until the consummation of the transactions contemplated by such agreement.

 

“Code” means the Internal Revenue Code of 1986.

 

“Commission” means the Securities and Exchange Commission.

 

“Company” means the party named as such in the first paragraph of the Indenture or any successor obligor under the Indenture and the Notes pursuant to Section 5.01.

 

“Consolidated Net Income” means, for any period, the aggregate net income (or loss) of the Company and its Restricted Subsidiaries for such period determined on a consolidated basis in conformity with GAAP, provided that
the following (without duplication) will be excluded in computing Consolidated Net Income:

 

(1)         the net income (but not loss) of any Person that is not a Restricted Subsidiary, except to the extent of the dividends or other distributions actually paid in cash (or to the extent converted into cash) to the Company or any of its Restricted Subsidiaries (subject
to clause (3) below) by such Person during such period;

 

(2)         any net income (or loss) of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition;

 

(3)         for purposes of Section 4.05, the net income (but not loss) of any Restricted Subsidiary (other than any Regulated Subsidiary or any Guarantor) to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of
such net income would not have been permitted for the relevant period by charter or by any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Restricted Subsidiary;

 

(4)         any net after-tax gains or losses (less all fees and expenses or charges relating thereto) attributable to Asset Sales or to the early

 

  

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extinguishment of Debt or any net after-tax gains or losses associated with Hedging Agreements;

 

(5)         any net after-tax extraordinary or non-recurring gains or losses (less all fees and expenses or charges relating, thereto), any non-cash amortization or impairment expenses and any restructuring expenses, including any severance expenses, relocation expenses, curtailments
or modifications to pension and post-retirement employee benefit plans, any expenses related to any reconstruction, decommissioning, recommissioning or reconfiguration of fixed assets for alternate uses and fees, expenses or charges relating to facilities closing costs, acquisition integration costs, facilities opening costs, business optimization costs, signing, retention or completion bonuses;

 

(6)         the cumulative effect of a change in accounting principles;

 

(7)         any non-cash expense realized or resulting from stock option plans, employee benefit plans or post-employment benefit plans, or grants or sales of stock, stock appreciation or similar rights, stock options, restricted stock, preferred stock or other rights;

 

(8)         (a)(i) the non-cash portion of “straight-line” rent expense less (ii) the cash portion of “straight-line” rent expense which exceeds the amount expensed in respect of such rent expense and (b) non-cash gains, losses, income and expenses
resulting from fair value accounting required by the applicable standard under GAAP and related interpretations;

 

(9)         any currency translation gains and losses related to currency remeasurements of Debt, and any net loss or gain resulting from hedging transactions for currency exchange risk, until such gains or losses are actually realized (at which time they should be included);

 

(10)         to the extent covered by insurance and actually reimbursed, or, so long as such Person has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extent that such amount is (a) not
denied by the applicable carrier in writing within 180 days and (b) in fact reimbursed within 365 days of the date of such evidence (with a deduction for any amount so added back to the extent not so reimbursed within 365 days), expenses with respect to liability or casualty events or business interruption;

 

(11)         so long as the Company and its Restricted Subsidiaries file a consolidated tax return, or are part of a consolidated group for tax purposes, with Parent or any other holding company, the excess (or deficit) of (a) the consolidated income tax expense for such period
over (b) 

  

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all tax payments in respect of such period paid or payable by the Company and its Restricted Subsidiaries to Parent or such other holding company under a tax sharing agreement or arrangement;

 

(12)         any expenses or charges related to any issuance of Equity Interests, Investment, acquisition, disposition, recapitalization or issuance, repayment, refinancing, amendment or modification of Debt (including amortization or write offs of debt issuance or deferred
financing costs, premiums and prepayment penalties), in each case, whether or not successful, including any such expenses or charges attributable to the issuance and sale of the Notes and the consummation of the exchange offer pursuant to a Registration Rights Agreement; and

 

(13)         any expenses or reserves for liabilities to the extent that the Company or any Restricted Subsidiary is entitled to indemnification therefor under binding agreements; provided that any liabilities for which the Company or such Restricted Subsidiary is not actually
indemnified shall reduce Consolidated Net Income in the period in which it is determined that the Company or such Restricted Subsidiary will not be indemnified.

 

In calculating the aggregate net income (or loss) of the Company and its Restricted Subsidiaries on a consolidated basis, Unrestricted Subsidiaries will be treated as if accounted for under the equity method of accounting.

 

“Corporate Trust Office” means the office of the Trustee at which the corporate trust business of the Trustee is principally administered, which at the date of the Indenture is located at U.S. Bank National Association, 60 Livingston Avenue, EP-MN-WS3C,
St. Paul, MN 55107-2292.

 

“Contribution Debt”  means Debt, Disqualified Stock or Preferred Stock of the Company or any Guarantor in an aggregate principal amount or liquation preference not greater than twice the aggregate amount of cash received from the issuance and
sale of Qualified Equity Interests of the Company or a capital contribution to the common equity of the Company; provided that:

 

(1)         such cash contributions have not been used to make a Restricted Payment and shall thereafter be excluded from any calculation under Section 4.05(a)(3)(B) and may not counted as equity proceeds for purposes of any payment made under paragraph (b) of Section 4.05
or any Permitted Investment that is permitted to be made out of equity proceeds (it being understood that if any such Debt, Disqualified Stock or Preferred Stock Incurred as Contribution Debt is redesignated as Incurred under any provision other than Section 4.04(b)(12), the related issuance of Equity Interests may be included in any calculation under Section 4.05(a)(3)(B));

 

 

 

  

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(2)         if the aggregate principal amount of such Contribution Debt is greater than the aggregate amount of such cash contributions to the capital of such Company or such Note Guarantor, as the case may be, the amount in excess shall be Debt that is unsecured and with
a Stated Maturity later than the Stated Maturity of the Notes; and

 

(3)         such Contribution Debt (a) is Incurred within 180 days after the making of such cash contributions (other than with respect to any refinancing thereof) and (b) is so designated as Contribution Debt pursuant to an Officers’ Certificate on the Incurrence date
thereof.

 

“Credit Agreement” means the amended and restated credit agreement dated as of July 25, 2005 and amended and restated as of March 11, 2009 among the Company, the other borrowers party thereto, Triarc Restaurant Holdings, LLC, the lenders party thereto
and Citicorp North America, Inc., as agent, together with any related documents (including any security documents and guarantee agreements), as such agreement may be amended on or prior to the Issue Date and further amended, modified, supplemented, extended, renewed, refinanced or replaced or substituted from time to time.

 

“Credit Facilities” means (i) the Credit Agreement, as amended, restated, supplemented, waived, replaced (whether or not upon termination, and whether with the original lenders or otherwise), restructured, repaid, refunded, refinanced or otherwise modified
from time to time, including any agreement or indenture extending the maturity thereof, refinancing, replacing or otherwise restructuring all or any portion of the Debt under such agreement or agreements or indenture or indentures or any successor or replacement agreement or agreements or indenture or indentures or increasing the amount loaned or issued thereunder or altering the maturity thereof and (ii) whether or not the credit agreement referred to in clause (i) remains outstanding, if designated by the Company
to be included in the definition of “Credit Facilities,” one or more (A) debt facilities or commercial paper facilities, providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to lenders or to special purpose entities formed to borrow from lenders against such receivables) or letters of credit, (B) debt securities, indentures or other forms of debt financing (including convertible or exchangeable debt instruments or bank guarantees or bankers’
acceptances), or (C) instruments or agreements evidencing any other Debt, in each case, with the same or different borrowers or issuers and, in each case, as amended, supplemented, modified, extended, restructured, renewed, refinanced, restated, replaced or refunded in whole or in part from time to time.

 

“Debt” means, with respect to any Person, without duplication,

 

(1)         all indebtedness of such Person for borrowed money;

 

 

  

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(2)         all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(3)         all obligations of such Person in respect of letters of credit, bankers’ acceptances or other similar instruments, excluding obligations in respect of trade letters of credit or bankers’ acceptances issued in respect of trade payables to the extent
not drawn upon or presented, or, if drawn upon or presented, the resulting obligation of the Person is paid within 10 Business Days;

 

(4)         all obligations of such Person to pay the deferred and unpaid purchase price of property or services which are recorded as liabilities under GAAP, excluding trade payables or similar obligations arising in the ordinary course of business;

 

(5)         all obligations of such Person as lessee under Capital Leases (other than the interest component thereof);

 

(6)         the amount of all Permitted Receivables Financings of such Person;

 

(7)         all Debt of other Persons Guaranteed by such Person to the extent so Guaranteed;

 

(8)         all Debt of other Persons secured by a Lien on any asset of such Person, whether or not such Debt is assumed by such Person; and

 

(9)         all obligations of such Person under Hedging Agreements;

 

provided, however, that notwithstanding the foregoing, Debt shall be deemed not to include: (1) deferred or prepaid revenues; (2) redeemable Preferred Stock of such Person; or (3) any liability for federal,
state, local or other taxes owed or owing to any governmental entity; and provided further that for purposes of Section 4.04(e), Debt shall not include insurance and other liabilities (not for borrowed money) Incurred in the ordinary course of business consistent with past practice.

 

The amount of Debt of any Person will be deemed to be:

 

(A)         with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation;

 

(B)         with respect to Debt secured by a Lien on an asset of such Person but not otherwise the obligation, contingent or otherwise, of such Person, the lesser of (x) the fair market value of such asset on the date the Lien attached and (y) the amount of such Debt;

 

 

  

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(C)         with respect to any Debt issued with original issue discount, the face amount of such Debt less the remaining unamortized portion of the original issue discount of such Debt;

(D)         with respect to any Hedging Agreement, the net amount payable if such Hedging Agreement terminated at that time due to default by such Person; and

 

(E)         otherwise, the outstanding principal amount thereof.

 

“Default” means any event that is, or after notice or passage of time or both would be, an Event of Default.

 

“Depositary” means the depositary of each Global Note, which will initially be DTC.

 

“Designated Non-cash Consideration” means any non-cash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Sale that is designated as Designated Non-cash Consideration pursuant to an Officers’ Certificate executed
by an officer of the Company or such Restricted Subsidiary at the time of such Asset Sale. Any particular item of Designated Non-cash Consideration will cease to be considered to be outstanding once it has been sold for cash or Cash Equivalents (which shall be considered Net Cash Proceeds of an Asset Sale when received).

 

“Disqualified Equity Interests” means Equity Interests that by their terms or upon the happening of any event are

 

(1)         required to be redeemed or redeemable at the option of the holder prior to the Stated Maturity of the Notes for consideration other than Qualified Equity Interests, or

 

(2)         convertible at the option of the holder into Disqualified Equity Interests or exchangeable for Debt;

 

provided that (i) only the portion of the Equity Interests which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to the Stated Maturity
of the Notes shall be deemed to be Disqualified Equity Interests, (ii) if such Equity Interests are issued to any employee or to any plan for the benefit of employees of the Company or its Subsidiaries or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Equity Interests solely because they may be required to be repurchased by the Company in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability,
(iii) any class of Equity Interests of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of Equity 

 

  

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Interests that are not Disqualified Equity Interests shall not be deemed to be Disqualified Equity Interests, and (iv) that Equity Interests will not constitute Disqualified Equity Interests solely because of provisions giving holders thereof the right to require repurchase or redemption upon an “asset sale”
or “change of control” occurring prior to the Stated Maturity of the Notes if those provisions 

 

(A)    are no more favorable to the holders than Section 4.09 and Section 4.10, and

 

(B)    specifically state that repurchase or redemption pursuant thereto will not be required prior to the Company’s repurchase of the Notes as required by the Indenture.

 

“Disqualified Stock” means Capital Stock constituting Disqualified Equity Interests.

 

“DTC” means The Depository Trust Company, a New York corporation, and its successors.

 

“DTC Legend” means the legend set forth in Exhibit D.

 

“Domestic Restricted Subsidiary” means any Restricted Subsidiary formed under the laws of the United States of America or any jurisdiction thereof.

 

“EBITDA” means, for any period, the sum of

 

(1)         Consolidated Net Income, plus

 

(2)         Fixed Charges, to the extent deducted in calculating Consolidated Net Income including the amount of loss on sale of Accounts Receivables and related assets to a Securitization Subsidiary in connection with a Permitted Receivables Financing; plus

 

(3)         to the extent deducted in calculating Consolidated Net Income and as determined on a consolidated basis for the Company and its Restricted Subsidiaries in conformity with GAAP:

 

(A)         income taxes and any dividend or distribution to any direct or indirect parent of the Company pursuant to Section 4.05(b)(9)(a)(i); and

 

(B)         depreciation, amortization and all other non-cash items reducing Consolidated Net Income (not including non-cash charges in a period which reflect cash expenses paid or to be paid in another period), less all non-cash items increasing Consolidated Net Income;

 

 

  

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provided that, with respect to any Restricted Subsidiary, such items will be added only to the extent and in the same proportion that the relevant Restricted Subsidiary’s net income was included in calculating Consolidated Net Income, plus

 

(4)         without duplication and to the extent deducted in calculating Consolidated Net Income, any expenses or charges related to any issuance of Equity Interests, acquisition or disposition
of division or line of business, recapitalization or the Incurrence or repayment of Debt permitted to be Incurred by the Indenture (whether or not successful), plus

 

(5)         any costs or expense Incurred pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, to the extent that such cost or expenses are funded with
cash proceeds contributed to the capital of the Company or a Guarantor or net cash proceeds of an issuance of Equity Interests of the Company (other than Disqualified Stock) solely to the extent that such net cash proceeds are excluded from the calculation in Section 4.05(a)(3)(B) and are not an Excluded Contribution.

 

For purposes of calculating EBITDA, the net income of any Person and its Restricted Subsidiaries shall be calculated without deducting the income attributable to, or adding the losses attributable to, the minority equity interests of third parties in any non-Wholly Owned Restricted Subsidiary except to the extent of dividends
declared or paid in respect of such period or any prior period on the shares of Capital Stock of such Restricted Subsidiary held by such third parties.

 

“Equity Interests” means all Capital Stock and all warrants or options with respect to, or other rights to purchase, Capital Stock, but excluding Debt convertible into, or exchangeable for, equity.

 

“Equity Offering” means an offering for cash, after the Issue Date, of Qualified Stock of the Company or of any direct or indirect parent of the Company (to the extent the proceeds thereof are contributed to the common equity of the Company).

 

“Event of Default” has the meaning assigned to such term in Section 6.01.

 

“Excess Proceeds” has the meaning assigned to such term in Section 4.10.

 

“Exchange Act” means the Securities Exchange Act of 1934.

 

“Exchange Notes” means the Notes of the Company issued pursuant to the Indenture in exchange for, and in an aggregate principal amount equal to, the 

  

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Initial Notes or any Initial Additional Notes in compliance with the terms of a Registration Rights Agreement and containing terms substantially identical to the Initial Notes or any Initial Additional Notes (except that (i) such Exchange Notes will be registered under the Securities Act and will not be subject to transfer restrictions or bear the Restricted Legend, and (ii) the provisions relating to Additional Interest will be eliminated).

 

“Exchange Offer” means an offer by the Company to the Holders of the Initial Notes or any Initial Additional Notes to exchange outstanding Notes for Exchange Notes, as provided for in a Registration Rights Agreement.

 

“Exchange Offer Registration Statement” means the Exchange Offer Registration Statement as defined in a Registration Rights Agreement.

 

“Excluded Contributions” means the Cash Equivalents or other assets (valued at their fair market value as determined in good faith by senior management or the Board of Directors of the Company) received by the Company after the Issue Date from:

 

(1)         contributions to its common equity capital, and

 

(2)         the sale (other than to a Subsidiary of the Company or to any Subsidiary management equity plan or stock option plan or any other management or employee benefit plan or agreement) of Capital Stock (other than Disqualified Stock) of the Company,

 

in each case designated as Excluded Contributions pursuant to an Officer’s Certificate executed by an officer of the Company on or promptly after the date such capital contributions are made or the date such Capital Stock is sold, as the case may be.  Any Excluded Contribution shall be not be used to fund
Contribution Debt or counted pursuant to Section 4.05(a)(3)(B).

 

“fair market value” means, with respect to any asset or property, the sale value that would be obtained in an arm’s-length free market transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer
under no compulsion to buy, as determined in good faith by the Company’s Board of Directors.

 

“Fixed Charge Coverage Ratio” means, on any date (the “transaction date”), the ratio of

 

(x)         the aggregate amount of EBITDA for the four fiscal quarters immediately prior to the transaction date for which internal financial statements are available (the “reference period”) to

 

(y)         the aggregate Fixed Charges during such reference period.

 

 

  

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In making the foregoing calculation,

 

(1)         pro forma effect will be given to any Debt, Disqualified Stock or Preferred Stock Incurred during or after the reference period to the extent the Debt, Disqualified Stock or Preferred Stock is outstanding or is to be Incurred on the transaction date as if the Debt,
Disqualified Stock or Preferred Stock had been Incurred on the first day of the reference period;

 

(2)         pro forma calculations of interest on Debt bearing a floating interest rate will be made as if the rate in effect on the transaction date (taking into account any Hedging Agreement applicable to the Debt if the Hedging Agreement has a remaining term of at least
12 months) had been the applicable rate for the entire reference period;

 

(3)         Fixed Charges related to any Debt, Disqualified Stock or Preferred Stock no longer outstanding or to be repaid or redeemed on the transaction date will be excluded;

 

(4)         pro forma effect will be given to

 

(A)         the creation, designation or redesignation of Restricted and Unrestricted Subsidiaries,

 

(B)         any acquisition or disposition of companies, divisions, lines of businesses or operations by the Company and its Restricted Subsidiaries, including any acquisition or disposition of a company, division or line of business since the beginning of the reference period
by a Person that became a Restricted Subsidiary after the beginning of the reference period, and

 

(C)         the discontinuation of any discontinued operations but, in the case of Fixed Charges, only to the extent that the obligations giving rise to Fixed Charges will not be obligations of the Company or any Restricted Subsidiary following the transaction date

 

that have occurred since the beginning of the reference period as if such events had occurred, and, in the case of any disposition, the proceeds thereof applied, on the first day of the reference period.  To the extent that pro forma effect is to be given to an acquisition, disposition or discontinuation of
a company, division, line of business or operation, the pro forma calculation will be based upon the most recent four full fiscal quarters for which the relevant financial information is available.  For purposes of this definition, whenever pro forma effect is to be given to any event, the pro forma calculations shall be made in good faith by a 

  

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responsible financial or accounting officer of the Company. Any such pro forma calculation may include adjustments appropriate, in the reasonable good faith determination of the Company as set forth in an Officer’s Certificate, to reflect (1) operating expense reductions and other operating improvements or synergies
reasonably expected to result from the applicable event, and (2) all adjustments of the nature used in connection with the calculation of “Adjusted EBITDA” (as presented in the Offering Circular).

 

For purposes of making the computation referred to above, interest on any Debt under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Debt during the applicable period.  Interest on Debt that
may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Company may designate.

 

For purposes of this definition, any amount in a currency than U.S. dollars will be converted to U.S. dollars in accordance with GAAP, in a manner consistent with that used in preparing the Company’s financial statements.

 

“Fixed Charges” means, for any period, the sum of

 

(1)         Interest Expense for such period; and

 

(2)         the product of

 

(x)         cash dividends paid on any Preferred Stock and cash and non-cash dividends paid, declared, accrued or accumulated on any Disqualified Stock of the Company or a Restricted Subsidiary, except for dividends payable in the Company’s Qualified Stock or paid to
the Company or to a Restricted Subsidiary, and

 

(y)         a fraction, the numerator of which is one and the denominator of which is one minus the sum of the currently effective combined Federal, state, local and foreign tax rate applicable to the Company and its Restricted Subsidiaries.

 

“Foreign Restricted Subsidiary” means any Restricted Subsidiary that is not a Domestic Restricted Subsidiary.

 

“GAAP” means generally accepted accounting principles in the United States of America as in effect as of the Issue Date.

 

 

  

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“Global Note” means a Note in registered global form without interest coupons.

 

“Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Debt of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise,
of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the obligee of such Debt of the payment thereof or to protect such obligee against loss in respect
thereof, in whole or in part; provided that the term “Guarantee” does not include endorsements for collection or deposit in the ordinary course of business.  The term “Guarantee” used as a verb has a corresponding meaning. 

 

“Guarantor” means (i) each Domestic Restricted Subsidiary of the Company in existence on the Issue Date that is a guarantor under the Credit Agreement (other than any Regulated Subsidiary) and (ii) each Domestic Restricted Subsidiary that executes a supplemental
indenture in the form of Exhibit B to the Indenture providing for the guaranty of the payment of the Notes, or any successor obligor under its Note Guaranty pursuant to Article 5, in each case unless and until such Guarantor is released from its Note Guaranty pursuant to the Indenture.

 

“Hedging Agreement” means (i) any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other agreement designed to manage interest rates or (ii) any foreign exchange forward contract, currency swap agreement or
other agreement designed to manage foreign exchange rates or (iii) any commodity swap agreement, commodity cap agreement, commodity collar agreement, commodity or raw material futures contract or any other agreement designed to manage raw material prices.

 

“Holder” or “Noteholder” means the registered holder of any Note.

 

“Incur” means, with respect to any Debt or Capital Stock, to incur, create, issue, assume or Guarantee such Debt or Capital Stock.  If any Person becomes a Restricted Subsidiary on any date after the date of the Indenture (including by redesignation
of an Unrestricted Subsidiary or failure of an Unrestricted Subsidiary to meet the qualifications necessary to remain an Unrestricted Subsidiary), the Debt and Capital Stock of such Person outstanding on such date will be deemed to have been Incurred by such Person on such date for purposes of Section 4.04, but will not be considered the sale or issuance of Equity Interests for purposes of Section 4.10.  The accrual of interest, accretion of original issue discount or payment of interest in kind or
the accretion or accumulation of 

  

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dividends on any Equity Interests will not be considered an Incurrence of Debt or Capital Stock.
 

“Indenture” means this indenture, as amended or supplemented from time to time.

 

“Initial Additional Notes” means Additional Notes issued in an offering not registered under the Securities Act and any Notes issued in replacement thereof, but not including any Exchange Notes issued in exchange therefor.

 

“Initial Notes” means the Notes issued on the Issue Date and any Notes issued in replacement thereof, but not including any Exchange Notes issued in exchange therefor.

 

“Initial Purchasers” means the initial purchasers party to a purchase agreement with the Company relating to the sale of the Initial Notes or Initial Additional Notes by the Company.

 

“Institutional Accredited Investor Certificate” means a certificate substantially in the form of Exhibit G hereto.

 

“interest,” in respect of the Notes, unless the context otherwise requires, refers to interest and Additional Interest, if any.

 

“Interest Expense” means, for any period, the consolidated interest expense of the Company and its Restricted Subsidiaries, plus, to the extent not included in such consolidated interest expense, and to the extent incurred, accrued or payable by the Company
or its Restricted Subsidiaries, without duplication, (i) the interest component of Capital Lease Obligations determined in accordance with GAAP, (ii) amortization of debt discount, (iii) capitalized interest, (iv) non-cash interest expense, (v) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing, (vi) net costs associated with Hedging Agreements (including the amortization of fees but excluding unrealized gains or losses with respect
thereto), (vii) any premiums, fees, discounts, expenses and losses on the sale of accounts receivable (and any amortization thereof) payable by the Company or any Restricted Subsidiary in connection with a Permitted Receivables Financing and (viii) dividends to Parent pursuant to Section 4.05(b)(9)(a)(iii) and (iv) to pay interest, as determined on a consolidated basis and in accordance with GAAP and excluding amortization of deferred financing fees and debt issuance costs.

 

“Interest Payment Date” means each January 15 and July 15 of each year, commencing January 15, 2010.

 

“Investment” means

 

 

  

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(1)         any direct or indirect advance, loan or other extension of credit to another Person,

 

(2)         any capital contribution to another Person, by means of any transfer of cash or other property or in any other form,

(3)         any purchase or acquisition of Equity Interests, bonds, notes or other Debt, or other instruments or securities issued by another Person, including the receipt of any of the above as consideration for the disposition of assets or rendering of services, or

 

(4)         any Guarantee of any Debt of another Person.

 

If the Company or any Restricted Subsidiary (x) sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary so that, after giving effect to that sale or disposition, such Person is no longer a Subsidiary of the Company, or (y) designates any Restricted Subsidiary as an Unrestricted
Subsidiary in accordance with the provisions of the Indenture, all remaining Investments of the Company and the Restricted Subsidiaries in such Person shall be deemed to have been made at such time.

 

“Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P, or an equivalent rating by any other Rating Agency.

 

“Issue Date” means June 23, 2009.

 

“Leverage Ratio” means, on any date (the “transaction date”), the ratio of

 

(x)         the aggregate amount of, without duplication, Debt of the Company and its Restricted Subsidiaries on a consolidated basis, to

 

(y)         the aggregate amount of EBITDA for the four fiscal quarters immediately prior to the transaction date for which internal financial statements are available (the “reference period”).

 

In making the foregoing calculation,

 

(1)         any Debt, Disqualified Stock or Preferred Stock to be repaid or redeemed on the transaction date will be excluded; and

 

(2)         pro forma effect will be given to

 

(A)         the creation, designation or redesignation of Restricted and Unrestricted Subsidiaries,

 

 

  

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(B)         the acquisition or disposition of companies, divisions, lines of businesses or operations by the Company and its Restricted Subsidiaries, including any acquisition or disposition of a
company, division or line of business since the beginning of the reference period by a Person thatecame a Restricted Subsidiary after the beginning of the reference period, and

 

(C)         the discontinuation of any discontinued operations

 

that have occurred since the beginning of the reference period as if such events had occurred, and, in the case of any disposition, the proceeds thereof applied, on the first day of the reference period.  To the extent that pro forma effect is to be given to an acquisition, disposition or discontinuation of a
company, division, line of business or operation, the pro forma calculation will be based upon the most recent four full fiscal quarters for which the relevant financial information is available.  For purposes of this definition, whenever pro forma effect is to be given to any event, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Company. Any such pro forma calculation may include adjustments appropriate, in the reasonable good faith determination
of the Company as set forth in an Officer’s Certificate, to reflect (1) operating expense reductions and other operating improvements or synergies reasonably expected to result from the applicable event, and (2) all adjustments of the nature used in connection with the calculation of “Adjusted EBITDA” (as presented in the Offering Circular).

 

For purposes of this definition, any amount in a currency than U.S. dollars will be converted to U.S. dollars in accordance with GAAP, in a manner consistent with that used in preparing the Company’s financial statements.

 

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or Capital Lease); provided that
in no event shall an operating lease be deemed to constitute a Lien.

 

“Moody’s” means Moody’s Investors Service, Inc. and its successors.

 

“Net Cash Proceeds” means (x) with respect to any Asset Sale, the proceeds of such Asset Sale in the form of cash (including (i) payments in respect of deferred payment obligations to the extent corresponding to, principal, but not interest, but only
when received in the form of cash, and (ii) proceeds from the conversion of other consideration received but only when converted to cash or Cash Equivalents) net of

 

 

  

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(1)         brokerage commissions and other fees and expenses related to such Asset Sale, including fees and expenses of counsel, accountants, investment bankers, consultants and placement agents;

 

(2)         provisions for taxes as a result of such Asset Sale taking into account the consolidated results of operations of the Company and its Restricted Subsidiaries;

(3)         payments required to be made to any Person (other than the Company or a Subsidiary) owning a beneficial interest in the assets subject to such Asset Sale or to repay Debt outstanding at the time of such Asset Sale that is secured by a Lien on the property or assets
sold;

 

(4)         appropriate amounts to be provided as a reserve against liabilities associated with such Asset Sale, including pension and other post-employment benefit liabilities, liabilities related to environmental matters and indemnification obligations associated with such
Asset Sale, with any subsequent reduction of the reserve other than by payments made and charged against the reserved amount to be deemed a receipt of cash; and

 

(5)         payments of unassumed liabilities (not constituting Debt and not owed to the Company or any Subsidiary) relating to the assets sold at the time of, or within 30 days after the date of, such Asset Sale; and

 

(y) with respect to any issuance and sale of Qualified Equity Interests as referred to in Section 4.05, the proceeds of such issuance or sale in the form of cash or Cash Equivalents or other assets used or useful in the business (valued at the fair market value thereof), net of attorney’s fees, accountant’s
fees and brokerage, consultation, underwriting and other fees and expenses actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result of thereof.

 

“Non-Recourse Debt” means Debt as to which (i) neither the Company nor any Restricted Subsidiary provides any Guarantee or is directly or indirectly liable and (ii) no default thereunder would, as such, constitute a default under any Debt of the Company
or any Restricted Subsidiary.

 

“Non-U.S. Person” means a Person that is not a U.S. person, as defined in Regulation S.

 

“Notes” has the meaning assigned to such term in the Recitals.

 

“Note Guaranty” means the guaranty of the Notes by a Guarantor pursuant to the Indenture.

 

 

  

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“Obligations” means, with respect to any Debt, all obligations (whether in existence on the Issue Date or arising afterwards, absolute or contingent, direct or indirect) for or in respect of principal (when due, upon acceleration, upon redemption, upon
mandatory repayment or repurchase pursuant to a mandatory offer to purchase, or otherwise), premium, interest, penalties, fees, indemnification, reimbursement and other amounts payable and liabilities and obligations (including performance obligations) with respect to such Debt, including all interest accrued or accruing after the commencement of any bankruptcy, insolvency or reorganization or similar case or proceeding at the contract rate (including, without limitation, any contract rate applicable upon
default) specified in the relevant documentation, whether or not the claim for such interest is allowed as a claim in such case or proceeding. 

 

“Offer to Purchase” has the meaning assigned to such term in Section 3.04.

 

“Offering Circular” means the Offering Circular dated June 18, 2009 relating to the sale of the Initial Notes.

 

“Officer” means the chairman of the Board of Directors, the president or chief executive officer, any vice president, the chief financial officer, the treasurer or any assistant treasurer, or the secretary or any assistant secretary, of the Company.

 

“Officers’ Certificate” means a certificate signed by two Officers.

 

“Offshore Global Note” means a Global Note representing Notes issued and sold pursuant to Regulation S.

 

“Opinion of Counsel” means a written opinion signed by legal counsel, who may be an employee of or counsel to the Company, reasonably satisfactory to the Trustee.

 

“Original Issue Discount Legend” means the legend set forth in Exhibit J.

 

“Original Notes” means the Initial Notes and any Exchange Notes issued in exchange therefor.

 

“Parent” means Wendy’s/Arby’s Group, Inc., and its successors, but only so long as the Company continues to be a Subsidiary of Parent.

 

“Paying Agent” refers to a Person engaged to perform the obligations of the Trustee in respect of payments made or funds held hereunder in respect of the Notes.

 

 

  

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“Permanent Offshore Global Note” means an Offshore Global Note that does not bear the Temporary Offshore Global Note Legend.

 

“Permitted Bank Debt” has the meaning assigned to such term in Section 4.04.

 

“Permitted Debt” has the meaning assigned to such term in Section 4.04.

“Permitted Business” means any of the businesses in which the Company and its Restricted Subsidiaries are engaged on the Issue Date, and any business reasonably related, incidental, complementary or ancillary thereto and any unrelated business to the
extent that it is not material in size as compared to the business of the Company and its Restricted Subsidiaries taken as a whole.

 

“Permitted Holders” means any or all of the following:

 

(1) Messrs. Nelson Peltz, Peter May and Edward P. Garden and Trian Fund Management L.P. and any fund, account or other investment vehicle managed by any of the foregoing persons or by an Affiliate thereof;

 

(2) any Affiliate or Related Party of any Person specified in clause (1), other than another portfolio company thereof (which means a company actively engaged in providing goods and services to unaffiliated customers) or a company controlled by a “portfolio company;”

 

(3) any Person both the Capital Stock and the Voting Stock of which (or in the case of a trust, the beneficial interests in which) are owned 50% or more by Persons specified in clauses (1) and (2); and

 

(4) any Person that forms a group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) with any Permitted Holder referred to in clause (1); provided that the Permitted Holders referred to in clause (1), together
with any Related Parties of such Permitted Holders, own at least 35% of the voting power of the Company and no such other Person in the group owns more of the voting power of the Company than such Permitted Holders referred to in clause (1), together with any Related Parties of such Permitted Holders.

 

“Permitted Investments” means:

 

(1)         any Investment in the Company or in a Restricted Subsidiary;

 

(2)         any Investment in cash and Cash Equivalents;

 

 

  

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(3)         any Investment by the Company or any Subsidiary of the Company in a Person, if as a result of such Investment,

 

(A)         such Person becomes a Restricted Subsidiary of the Company, or

(B)         such Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, or is liquidated into, the Company or a Restricted Subsidiary;

 

(4)         Investments received as non-cash consideration in an Asset Sale made pursuant to and in compliance with Section 4.10 or in any disposition of assets not constituting an Asset Sale;

 

(5)         any Investment acquired solely in exchange for Equity Interests (other than Disqualified Stock) of the Company or any direct or indirect parent of the Company;

 

(6)           any Investment pursuant to a Hedging Agreements otherwise permitted under the Indenture;

 

(7)         (i) receivables owing to the Company or any Restricted Subsidiary if created or acquired in the ordinary course of business, (ii) endorsements for collection or deposit in the ordinary course of business, and (iii) securities, instruments or other obligations received
in compromise or settlement of debts created in the ordinary course of business, or by reason of a composition or readjustment of debts or bankruptcy, workout or reorganization of another Person, or in satisfaction of claims or judgments;

 

(8)         Investments in Unrestricted Subsidiaries and joint ventures in an aggregate amount, taken together with all other Investments made in reliance on this clause that are at the time outstanding, not to exceed the greater of $150.0 million and 4.0% of Total Assets
of the Company at the time of Investment (net of, with respect to the Investment in any particular Person, the cash return thereon received after the Issue Date as a result of any sale for cash, repayment, redemption, liquidating distribution or other cash realization (not included in Consolidated Net Income), not to exceed the amount of Investments in such Person made after the Issue Date in reliance on this clause); provided, however,
that if any Investment pursuant to this clause is made in any Person that is not a Restricted Subsidiary of the Company at the date of the making of such Investment and such Person becomes a Restricted Subsidiary of the Company after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have been made pursuant to 

  

25

  

this clause for so long as such Person continues to be a Restricted Subsidiary;
 

(9)         payroll, travel, moving and other loans or advances to, or Guarantees issued to support the obligations of, officers and employees, in each case in the ordinary course of business;

(10)         extensions of credit to customers, suppliers, licensees and franchisees in the ordinary course of business consistent with past practice;

 

(11)         in addition to Investments listed above, Investments in Persons engaged in Permitted Businesses in an aggregate amount, taken together with all other Investments made in reliance on this clause that are at the time outstanding, not to exceed the greater of $150.0
million and 4.0% of Total Assets of the Company at the time of Investment (net of, with respect to the Investment in any particular Person made pursuant to this clause, the cash return thereon received after the Issue Date as a result of any sale for cash, repayment, redemption, liquidating distribution or other cash realization (not included in Consolidated Net Income) not to exceed the amount of such Investments in such Person made after the Issue Date in reliance on this clause) provided, however, that if
any Investment pursuant to this clause is made in any Person that is not a Restricted Subsidiary of the Company at the date of the making of such Investment and such Person becomes a Restricted Subsidiary of the Company after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have been made pursuant to this clause for so long as such Person continues to be a Restricted Subsidiary;

 

(12)         any Investment existing on, or made pursuant to binding commitments existing on, the Issue Date or an Investment consisting of any extension, modification or renewal of any Investment existing on the Issue Date; provided that
the amount of any such Investment may be increased as required by the terms of such Investment as in existence on the Issue Date;

 

(13)          any Investment acquired by the Company or any of its Restricted Subsidiaries  as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured
Investment in default;

 

(14)         Investments consisting of the licensing or contribution of intellectual property pursuant to joint marketing arrangements with other Persons;

 

 

  

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(15)         Investments of a Restricted Subsidiary of the Company acquired after the Issue Date or of an entity merged into, amalgamated with or consolidated with the Company or a Restricted Subsidiary of the Company in a transaction that is not prohibited by Article 5 after
the Issue Date to the extent that such Investments were not made in contemplation of such acquisition, merger, amalgamation or consolidation, represent less than 20% of the Total Assets of such acquired entity and were in existence on the date of such acquisition, merger, amalgamation or consolidation;

(16)         any Investment in any Subsidiary of the Company or any joint venture in connection with intercompany cash management arrangements or related activities arising in the ordinary course of business consistent with past practice; and

 

(17)         Investments arising as a result of any Permitted Receivables Financing.

 

“Permitted Liens” means

 

(1)         Liens existing on the Issue Date;

 

(2)         Liens securing the Notes or any Note Guarantees;

 

(3)         Liens securing Obligations under or with respect to any Permitted Bank Debt (including, without limitations, the “Obligations” as defined in the Credit Agreement) or any Debt of a Restricted Subsidiary
that is not a Guarantor;

 

(4)         pledges or deposits under worker’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts or leases, or to secure public or statutory obligations, surety bonds, customs duties
and the like, or for the payment of rent, in each case incurred in the ordinary course of business and not securing Debt;

 

(5)         Liens imposed by law, such as carriers’, vendors’, warehousemen’s, landlords’ and mechanics’ liens, in each case for sums not yet due or being contested in good faith and by appropriate proceedings;

 

(6)         Liens in respect of taxes and other governmental assessments and charges which are not yet due or which are being contested in good faith and by appropriate proceedings;

 

(7)         Liens securing reimbursement obligations with respect to letters of credit that encumber documents and other property relating to such letters of credit and the proceeds thereof;

 

 

  

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(8)         minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real
property, not interfering in any material respect with the conduct of the business of the Company and its Restricted Subsidiaries;

(9)         licenses or leases or subleases as licensor, lessor or sublessor of any of its property, including intellectual property, in the ordinary course of business;

 

(10)         customary Liens in favor of trustees and escrow agents, and netting and setoff rights, banker’s liens, margins liens and the like in favor of financial institutions and counterparties to financial obligations and instruments, including any such Liens securing
Obligations under Hedging Agreements;

 

(11)         Liens on assets pursuant to merger agreements, stock or asset purchase agreements and similar agreements in respect of the disposition of such assets;

 

(12)         options, put and call arrangements, rights of first refusal and similar rights relating to Investments in joint ventures, partnerships and the like;

 

(13)         judgment liens, and Liens securing appeal bonds or letters of credit issued in support of or in lieu of appeal bonds, so long as no Event of Default then exists as a result thereof;

 

(14)         (a) Liens incurred in the ordinary course of business not securing Debt and not in the aggregate materially detracting from the value of the properties or their use in the operation of the business of the Company and its Restricted Subsidiaries and (b) Liens arising
out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into in the ordinary course of business in accordance with past practices;

 

(15)         Liens (including the interest of a lessor under a Capital Lease) on property that secure Debt Incurred pursuant to Section 4.04(b)(9) for the purpose of financing all or any part of the purchase price or cost of acquisition, construction or improvement of such
property and which attach within 365 days of the date of such purchase or the completion of acquisition, construction or improvement;

 

(16)         Liens on property or Equity Interests of a Person at the time such Person becomes a Restricted Subsidiary of the Company, provided 

  

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such Liens were not created in contemplation thereof and do not extend to any other property of the Company or any Restricted Subsidiary;
 

(17)         Liens on property at the time the Company or any of the Restricted Subsidiaries acquires such property, including any acquisition by means of a merger or consolidation with or into the Company or a Restricted Subsidiary of such Person, provided such Liens were
not

created in contemplation thereof and do not extend to any other property of the Company or any Restricted Subsidiary;

 

(18)         Liens securing Debt or other obligations of the Company or a Restricted Subsidiary to the Company or a Restricted Subsidiary that is a Guarantor;

 

(19)         (a) Liens securing Hedging Agreements so long as such Hedging Agreements are with the lenders party to the Credit Agreement or their affiliates, and (b) customary margin requirements and the like securing Hedging Agreements;

 

(20)         Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of
such inventory or other goods;

 

(21)         deposits made in the ordinary course of business to secure liability to insurance carriers;

 

(22)         Liens on the Equity Interests of Unrestricted Subsidiaries;

 

(23)         extensions, renewals or replacements of any Liens referred to in clauses (1), (2), (15), (16), (17) or (24) in connection with the refinancing of the obligations secured thereby, provided that such Lien does not extend to any other property and, except as contemplated
by the definition of “Permitted Refinancing Debt”, the amount secured by such Lien is not increased;

 

(24)         other Liens securing Debt; provided that, after giving effect to the incurrence of such Debt on a pro forma basis, the Secured Debt Ratio would be no greater than 2.5 to 1.0 (and Liens on the same assets securing obligations in respect of such Debt);

 

(25)         Liens arising under any Permitted Receivables Financing;

 

(26)         Liens on equipment of the Company or any Restricted Subsidiary granted in the ordinary course of business to the Company’s or 

  

29

  

 

such Restricted Subsidiary’s client at which such equipment is located; and
 

(27)         other Liens securing obligations not to exceed $15 million at any one time outstanding.

 

“Permitted Receivables Financing” means any receivables financing facility or arrangement pursuant to which a Securitization Subsidiary purchases or otherwise acquires
Accounts Receivable of the Company or any Restricted Subsidiaries and enters into a third party financing thereof on terms that the Board of Directors has concluded are customary and market terms fair to the Company and its Restricted Subsidiaries.

 

“Permitted Refinancing Debt” has the meaning assigned to such term in Section 4.04.

 

“Person” means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity, including a government or political subdivision or an agency or instrumentality thereof.

 

“Preferred Stock” means, with respect to any Person, any and all Capital Stock which is preferred as to the payment of dividends or distributions, upon liquidation or otherwise, over another class of Capital Stock of such Person.

 

“principal” of any Debt means the principal amount of such Debt (or if such Debt was issued with original issue discount, the face amount of such Debt less the remaining unamortized portion of the original issue discount of such Debt), together with,
unless the context otherwise indicates, any premium then payable on such Debt.

 

“Qualified Equity Interests” means all Equity Interests of a Person other than Disqualified Equity Interests.

 

“Qualified Stock” means all Capital Stock of a Person other than Disqualified Stock.

 

“Rating Agencies” means Moody’s and S&P or if either Moody’s or S&P or both shall not make a rating on the Notes publicly available for reasons outside the Company’s control, a nationally recognized statistical rating agency
or agencies, as the case may be, selected by the Company that shall be substituted for Moody’s or S&P or both, as the case may be.

 

“refinance” has the meaning assigned to such term in Section 4.04.

 

“Register” has the meaning assigned to such term in Section 2.09.

 

“Registrar” means a Person engaged to maintain the Register.

 

 

 

  

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“Registration Rights Agreement” means (i) the Registration Rights Agreement dated on or about the Issue Date between the Company and the Initial Purchasers party thereto with respect to the Initial Notes, and (ii) with respect to any Additional Notes, any registration rights agreements between the Company and the Initial Purchasers party thereto relating to rights given by the Company to the
purchasers of Additional Notes to register such Additional Notes or exchange them for Notes registered under the Securities Act.

“Regular Record Date” for the interest payable on any Interest Payment Date means the January 1 or July 1 (whether or not a Business Day) next preceding such Interest Payment Date.

 

“Regulated Subsidiaries” means Scioto Insurance Company and Oldemark LLC.

 

“Regulation S” means Regulation S under the Securities Act.

 

“Regulation S Certificate” means a certificate substantially in the form of Exhibit E hereto.

 

“Related Party” means, with respect to any Person, (1) any Subsidiary, spouse, descendant or other immediate family member (which includes any child, stepchild, parent, stepparent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law
or sister-in-law) (in the case of an individual), of such Person, (2) any estate, trust, corporation, partnership or other entity, the beneficiaries and stockholders, partners or owners of which consist solely of one or more Permitted Holders referred to in clause (1) of the definition thereof and/or such other Persons referred to in the immediately preceding clause (1), or (3) any executor, administrator, trustee, manager, director or other similar fiduciary of any Person referred to in the immediately preceding
clause (2), acting solely in such capacity.

 

“Restricted Legend” means the legend set forth in Exhibit C.

 

“Restricted Payment” has the meaning assigned to such term in Section 4.05.

 

“Restricted Period” means the relevant 40-day distribution compliance period as defined in Regulation S.

 

“Restricted Subsidiary” means any Subsidiary of the Company other than an Unrestricted Subsidiary.

 

“Rule 144A” means Rule 144A under the Securities Act.

 

“Rule 144A Certificate” means (i) a certificate substantially in the form of Exhibit F hereto or (ii) a written certification addressed to the Company and the 

 

  

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Trustee to the effect that the Person making such certification (x) is acquiring such Note (or beneficial interest) for its own account or one or more accounts with respect to which it exercises sole investment discretion and that it and each such account is a qualified institutional buyer within the meaning of Rule 144A, (y) is aware
that the transfer to it or exchange, as applicable, is being made in reliance upon the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A, and (z) acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A(d)(4) or has determined not to request such information.

 

“S&P” means Standard & Poor’s Ratings Group, a division of McGraw Hill, Inc. and its successors.

 

“Secured Debt Ratio” means, on any date (the “transaction date”), the ratio of

 

(x)           (i) the aggregate amount of, without duplication, (A) Debt of the Company and the Guarantors that is secured by Liens on any assets of the Company or any Guarantor, plus (B) any Debt of the Company’s Restricted Subsidiaries that are not Guarantors
minus (ii) the aggregate amount of unrestricted cash and Cash Equivalents of the Company and its Restricted Subsidiaries, to

 

(y)           the aggregate amount of EBITDA for the four fiscal quarters immediately prior to the transaction date for which internal financial statements are available (the “reference period”).

 

In making the foregoing calculation,

 

(1)           any Debt, Disqualified Stock or Preferred Stock to be repaid or redeemed on the transaction date will be excluded; and

 

(2)           pro forma effect will be given to

 

(A)           the creation, designation or redesignation of Restricted and Unrestricted Subsidiaries,

 

(B)           the acquisition or disposition of companies, divisions, lines of businesses or operations by Company and its Restricted Subsidiaries, including any acquisition or disposition of a company, division or line of business since the beginning of the reference
period by a Person that became a Restricted Subsidiary after the beginning of the reference period, and

 

(C)           the discontinuation of any discontinued operations

 

 

  

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that have occurred since the beginning of the reference period as if such events had occurred, and, in the case of any disposition, the proceeds thereof applied, on the first day of the reference period.  To the extent that pro forma effect is to be given to an acquisition, disposition or discontinuation of a
company, division, line of business or operation, the pro forma calculation will be based upon the most recent four full fiscal quarters for which the relevant financial information is available.  For purposes of this definition, whenever pro forma effect is to be given to any event, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Company. Any such pro forma calculation may include adjustments appropriate, in the reasonable good faith determination
of the Company as set forth in an Officer’s Certificate, to reflect (1) operating expense reductions and other operating improvements or synergies reasonably expected to result from the applicable event, and (2) all adjustments of the nature used in connection with the calculation of “Adjusted EBITDA” (as presented in the Offering Circular). 

 

For purposes of this definition, any amount in a currency than U.S. dollars will be converted to U.S. dollars in accordance with GAAP, in a manner consistent with that used in preparing the Company’s financial statements.

 

“Securities Act” means the Securities Act of 1933.

 

“Securitization Subsidiary” means a Subsidiary of the Company

 

(1)         that is designated a “Securitization Subsidiary” by the Board of Directors,

 

(2)         that does not engage in, and whose charter prohibits it from engaging in, any activities other than Permitted Receivables Financings and any activity necessary, incidental or related thereto,

 

(3)         no portion of the Debt or any other obligation, contingent or otherwise, of which

 

(A)         is Guaranteed by the Company or any Restricted Subsidiary of the Company,

 

(B)         is recourse to or obligates the Company or any Restricted Subsidiary of the Company in any way, or

 

(C)         subjects any property or asset of the Company or any Restricted Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, and

 

(4)         with respect to which neither the Company nor any Restricted Subsidiary of the Company has any obligation to maintain or

  

33

  

 

preserve its financial condition or cause it to achieve certain levels of operating results,
 

other than, in respect of clauses (3) and (4), pursuant to customary representations, warranties, covenants and indemnities entered into in connection with a Permitted Receivables Financing.

 

“Shelf Registration Statement” means the Shelf Registration Statement as defined in a Registration Rights Agreement.

 

“Significant Restricted Subsidiary” means any Restricted Subsidiary, or group of Restricted Subsidiaries, that would, taken together, be a “significant subsidiary” as defined in Article 1, Rule 1-02 (w)(1) or (2) of Regulation S-X promulgated
under the Securities Act, as such regulation is in effect on the date of the Indenture.

 

“Stated Maturity” means (i) with respect to any Debt, the date specified as the fixed date on which the final installment of principal of such Debt is due and payable or (ii) with respect to any scheduled installment of principal of or interest on any
Debt, the date specified as the fixed date on which such installment is due and payable as set forth in the documentation governing such Debt, not including any contingent obligation to repay, redeem or repurchase prior to the regularly scheduled date for payment.

 

“Subordinated Debt” means any Debt of the Company or any Guarantor which is subordinated in right of payment to the Notes or the Note Guaranty, as applicable, pursuant to a written agreement to that effect.

 

“Subsidiary” means with respect to any Person, any corporation, association or other business entity of which more than 50% of the outstanding Voting Stock is owned, directly or indirectly, by such Person and one or more Subsidiaries of such Person (or
a combination thereof). Unless otherwise specified, “Subsidiary” means a Subsidiary of the Company.

 

 “Temporary Offshore Global Note” means an Offshore Global Note that bears the Temporary Offshore Global Note Legend.

 

“Temporary Offshore Global Note Legend” means the legend set forth in Exhibit I.

 

“Total Assets” means the total consolidated assets of the Company and its Restricted Subsidiaries, as shown on the most recent balance sheet of the Company provided to the Trustee pursuant to Section 4.13 (or required to be provided thereunder), calculated
on a pro forma basis to give effect to any acquisition or disposition of companies, divisions, lines of businesses or 

  

34

  

operations by Company and its Restricted Subsidiaries subsequent to such date and on or prior to the date of determination.
 

“Treasury Rate” means, as of any redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519)
that has become publicly available at least two Business Days prior to the redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to July 15, 2012; provided, however, that if the period from the redemption date to July 15, 2012 is less than one year, the weekly average
yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used. 

 

“Trustee” means the party named as such in the first paragraph of the Indenture or any successor trustee under the Indenture pursuant to Article 7.

 

“Trust Indenture Act” means the Trust Indenture Act of 1939.

 

“U.S. Global Note” means a Global Note that bears the Restricted Legend representing Notes issued and sold pursuant to Rule 144A.

 

“U.S. Government Obligations” means obligations issued or directly and fully guaranteed or insured by the United States of America or by any agency or instrumentality thereof, provided that the full faith and credit of the United States of America is
pledged in support thereof.

 

“Unrestricted Subsidiary” means any (1) Securitization Subsidiary, and (2) Subsidiary of the Company that at the time of determination has previously been designated, and continues to be, an Unrestricted Subsidiary in accordance with Section 4.12.

 

“Voting Stock” means, with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote for the election of directors, managers or other voting members of the governing body of such Person.

 

“Wholly Owned” means, with respect to any Restricted Subsidiary, a Restricted Subsidiary all of the outstanding Capital Stock of which (other than any director’s qualifying shares) is owned by the Company and one or more Wholly Owned Restricted
Subsidiaries (or a combination thereof).

 

Section 1.02. Rules of Construction. Unless
the context otherwise requires or except as otherwise expressly provided,

 

(1)         an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

 

 

  

35

  

 

(2)         “herein,” “hereof” and other words of similar import refer to the Indenture as a whole and not to any particular Section, Article or other subdivision;

 

(3)         all references to Sections or Articles or Exhibits refer to Sections or Articles or Exhibits of or to the Indenture unless otherwise indicated;

 

(4)         references to agreements or instruments, or to statutes or regulations, are to such agreements or instruments, or statutes or regulations, as amended from time to time (or to successor
statutes and regulations);

 

(5)         in the event that a transaction meets the criteria of more than one category of permitted transactions or listed exceptions the Company may classify such transaction as it, in its sole discretion, determines;

 

(6)         “or” is not exclusive; and

 

(7)         words in the singular include the plural, and words in the plural include the singular.

 

 

ARTICLE 2

The Notes

 

Section 2.01.  Form, Dating and Denominations; Legends.  (a)  The Notes and the Trustee’s certificate of authentication will be substantially in the form attached as Exhibit A.  The terms and provisions contained in the form
of the Notes annexed as Exhibit A constitute, and are hereby expressly made, a part of the Indenture.  The Notes may have notations, legends or endorsements required by law, rules of or agreements with national securities exchanges to which the Company is subject, or usage.  Each Note will be dated the date of its authentication.  The Notes will be issuable in denominations of $2,000 in principal amount and any multiple of $1,000 in excess thereof.

 

	
 (b) (1)   
	
Except as otherwise provided in paragraph (c), Section 2.10(b)(3), (b)(5), or (c) or Section 2.09(b)(4), each Initial Note or Initial Additional Note (other than a Permanent Offshore Note) will bear the Restricted Legend.

 

(2)         Each Global Note, whether or not an Initial Note or Additional Note, will bear the DTC Legend.

 

(3)         Each Temporary Offshore Global Note will bear the Temporary Offshore Global Note Legend.

 

 

  

36

  

 

(4)         Initial Notes and Initial Additional Notes offered and sold in reliance on Regulation S will be issued as provided in Section 2.11(a).

 

(5)         Initial Notes and Initial Additional Notes offered and sold in reliance on any exception under the Securities Act other than Regulation S and Rule 144A will be issued, and upon the request of the Company to the Trustee, Initial Notes offered and sold in reliance
on Rule 144A may be issued, in the form of Certificated Notes.

 

(6)         Exchange Notes will be issued, subject to Section 2.09(b), in the form of one or more Global Notes.

(7)         Any Notes issued with original issue discount will bear the Original Issue Discount Legend.

 

(c)  (1) If the Company determines (upon the advice of counsel and such other certifications and evidence as the Company may reasonably require) that a Note is eligible for resale, pursuant to Rule 144 under the Securities Act (or a successor provision) without compliance with any limits thereunder and that
the Restricted Legend is no longer necessary or appropriate in order to ensure that subsequent transfers of the Note (or a beneficial interest therein) are effected in compliance with the Securities Act, or

 

(2)         after an Initial Note or any Initial Additional Note is

 

(x)         sold pursuant to an effective registration statement under the Securities Act, pursuant to the Registration Rights Agreement or otherwise, or (y) is validly tendered for exchange into an Exchange Note pursuant to an Exchange Offer

 

the Company may instruct the Trustee to cancel the Note and issue to the Holder thereof (or to its transferee) a new Note of like tenor and amount, registered in the name of the Holder thereof (or its transferee), that does not bear the Restricted Legend, and the Trustee will comply with such instruction.

 

(d)           By its acceptance of any Note bearing the Restricted Legend (or any beneficial interest in such a Note), each Holder thereof and each owner of a beneficial interest therein acknowledges the restrictions on transfer of such Note (and any such beneficial
interest) set forth in this Indenture and in the Restricted Legend and agrees that it will transfer such Note (and any such beneficial interest) only in accordance with the Indenture and such legend.

 

Section 2.02.  Execution and Authentication; Exchange Notes; Additional Notes.  (a) An Officer shall execute the Notes for the Company by facsimile or manual signature in the name and on behalf of the Company.  If an Officer whose 

  

37

  

 

signature is on a Note no longer holds that office at the time the Note is authenticated, the Note will still be valid.
 

(b)           A Note will not be valid until the Trustee manually signs the certificate of authentication on the Note, with the signature conclusive evidence that the Note has been authenticated under the Indenture. 

 

(c)           At any time and from time to time after the execution and delivery of the Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication.  The Trustee will authenticate and deliver

 

(i)         Initial Notes for original issue in the aggregate principal amount not to exceed $565,000,000,

 

(ii)         Initial Additional Notes and Additional Notes from time to time for original issue in aggregate principal amounts specified by the Company, and

 

(iii)        Exchange Notes from time to time for issue in exchange for a like principal amount of Initial Notes or Initial Additional Notes

 

after the following conditions have been met:

 

(1)         Receipt by the Trustee of an Officers’ Certificate specifying

 

(A)         the amount of Notes to be authenticated and the date on which the Notes are to be authenticated,

 

(B)         whether the Notes are to be Initial Notes or, Additional Notes or Exchange Notes,

 

(C)         in the case of Initial Additional Notes, that the issuance of such Notes does not contravene any provision of Article 4,

 

(D)         whether the Notes are to be issued as one or more Global Notes or Certificated Notes, and

 

(E)         other information the Company may determine to include.

 

(2)              In the case of Exchange Notes, effectiveness of an Exchange Offer Registration Statement and consummation of the exchange offer thereunder (and receipt by the Trustee of an Officers’ Certificate to that effect).  Initial
Notes or Initial Additional Notes exchanged for Exchange Notes will be cancelled by the Trustee.

 

 

  

38

  

 

(d)           All Notes issues under this Indenture shall be treated as a single class for all purposes under this Indenture, and shall vote together as one class on all matters with respect to the Notes.

 

Section 2.03.  Registrar, Paying Agent and Authenticating Agent; Paying Agent to Hold Money in Trust.  (a) The Company may appoint one or more Registrars and one or more Paying Agents, and the Trustee may appoint an Authenticating Agent, in which
case each reference in the Indenture to the Trustee in respect of the obligations of the Trustee to be performed by that Agent will be deemed to be references to the Agent.  The Company may act as Registrar or (except for purposes of Article 8) Paying Agent.  In each case the Company and the Trustee will enter into an appropriate agreement with the Agent implementing the provisions of the Indenture relating to the obligations of the Trustee to be performed
by the Agent and the related rights.  The Company initially appoints the Trustee as Registrar and Paying Agent.

 

(b)           The Company will require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of the Holders or the Trustee all money held by the Paying Agent for the payment of principal of and interest
on the Notes and will promptly notify the Trustee of any default by the Company in making any such payment.  The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and account for any funds disbursed, and the Trustee may at any time during the continuance of any payment default, upon written request to a Paying Agent, require the Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed.  Upon doing so, the Paying
Agent will have no further liability for the money so paid over to the Trustee.

 

(c)           The Company may remove any Registrar or Paying Agent upon written notice to such Registrar or Paying Agent and to the Trustee, provided, however, that no such removal shall become effective until
(i) if applicable, acceptance of an appointment by a successor as evidenced by an appropriate agreement entered into by the Company and such successor Registrar or Paying Agent, as the case may be, and delivered to the Trustee or (ii) notification to the Trustee that the Trustee shall serve as Registrar or Paying Agent until the appointment of a successor in accordance with the clause (i) above.

 

Section 2.04.  Replacement Notes.  If a mutilated Note is surrendered to the Trustee or if a Holder claims that its Note has been lost, destroyed or wrongfully taken, the Company will issue and the Trustee will authenticate a replacement Note
of like tenor and principal amount and bearing a number not contemporaneously outstanding.  Every replacement Note is an additional obligation of the Company and entitled to the benefits of the Indenture.  If required by the Trustee or the Company, such Holder must furnish an indemnity that is sufficient in the judgment of both the Trustee and the Company to protect the Company and the Trustee from any loss they may suffer if a Note is replaced.  

 

 

  

39

  

 

The Company may charge the Holder for the expenses of the Company and the Trustee in replacing a Note (including without limitation, attorney’s fees and disbursements in replacing such Note).  In case the mutilated, lost, destroyed or wrongfully taken Note has become or is about to become due and payable, the Company in its discretion may pay the Note instead of issuing a replacement Note.
 

The provisions of this Section 2.04 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, lost, destroyed or wrongfully taken Notes.

 

Section 2.05.  Outstanding Notes.  (a)  Notes outstanding at any time are all Notes that have been authenticated by the Trustee except for

 

(1)           Notes cancelled by the Trustee or delivered to it for cancellation;

 

(2)         any Note which has been replaced pursuant to Section 2.04 unless and until the Trustee and the Company receive proof satisfactory to them that the replaced Note is held by a bona fide purchaser;
and

 

(3)         on or after the maturity date or any redemption date or date for purchase of the Notes pursuant to an Offer to Purchase, those Notes payable or to be redeemed or purchased on that date for which the Trustee (or Paying Agent, other than the Company or an Affiliate
of the Company) holds money sufficient to pay all amounts then due.

 

(b)           A Note does not cease to be outstanding because the Company or one of its Affiliates holds the Note, provided that in determining whether the Holders of the requisite principal amount of the outstanding
Notes have given or taken any request, demand,  authorization, direction, notice, consent, waiver or other action hereunder, Notes owned by the Company or any Affiliate of the Company will be disregarded and deemed not to be outstanding (it being understood that in determining whether the Trustee is protected in relying upon any such request, demand, authorization, direction, notice, consent, waiver or other action, only Notes which the Trustee knows to be so owned will be so disregarded).  Notes
so owned which have been pledged in good faith may be regarded as outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Notes and that the pledgee is not the Company or any Affiliate of the Company.

 

Section 2.06.  Temporary Notes.  Until definitive Notes are ready for delivery, the Company may prepare and the Trustee will authenticate temporary Notes.  Temporary Notes will be substantially in the form of definitive Notes but may
have insertions, substitutions, omissions and other variations determined to be appropriate by the Officer executing the temporary Notes, as evidenced by the 

 

  

40

  

 

execution of the temporary Notes.  If temporary Notes are issued, the Company will cause definitive Notes to be prepared  without unreasonable delay.  After the preparation of definitive Notes, the temporary Notes will be exchangeable for definitive Notes upon surrender of the temporary Notes at the office or agency of the Company designated for the purpose pursuant to Section 4.02, without charge to the Holder.  Upon surrender for cancellation
of any temporary Notes the Company will execute and the Trustee will authenticate and deliver in exchange therefor a like principal amount of definitive Notes of authorized denominations.  Until so exchanged, the temporary Notes will be entitled to the same benefits under the Indenture as definitive Notes.
 

Section 2.07.  Cancellation.  The Company at any time may deliver to the Trustee for cancellation any Notes previously authenticated and delivered   hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee for cancellation any Notes previously authenticated hereunder which the Company has not issued and sold.  Any Registrar or the Paying Agent will forward to the Trustee any Notes surrendered to it for transfer, exchange or payment.  The Trustee will cancel all Notes surrendered for transfer, exchange, payment or cancellation and dispose of them in accordance with its normal procedures
or  the written instructions of the Company.  The Company may not issue new Notes to replace Notes it has paid in full or delivered to the Trustee for cancellation.

 

Section 2.08.  CUSIP and CINS Numbers.  The Company in issuing the Notes may use “CUSIP” and “CINS” numbers, and the Trustee will use CUSIP numbers or CINS numbers in notices of redemption or exchange or in Offers to Purchase
as a convenience to Holders, the notice to state that no representation is made as to the correctness of such  numbers either as printed on the Notes or as contained  in any notice of redemption or exchange or Offer to Purchase.  The Company will promptly notify the Trustee of any change in the CUSIP or CINS numbers.

 

Section 2.09.  Registration, Transfer and Exchange.  (a)  The Notes will be issued in registered form only, without coupons, and the Company shall cause the Trustee to maintain a register (the “Register”)
of the Notes, for registering the record ownership of the Notes by the Holders and transfers and exchanges of the Notes.

 

(b) (1)              Each Global Note will be registered in the name of the  Depositary or its nominee and, so long as DTC is serving as the Depositary thereof, will bear the DTC Legend.

 

(2)         Each Global Note will be delivered to the Trustee as custodian for the Depositary.  Transfers of a Global Note (but not a beneficial interest therein) will be limited to transfers thereof in whole, but not in part, to the Depositary, its successors or
their respective nominees, 

  

41

  

 

except (1) as set forth in Section 2.09(b)(4) and (2) transfers of portions thereof in the form of Certificated Notes may be made upon request of an Agent Member (for itself or on behalf of a beneficial owner) by written notice given to the Trustee by or on behalf of the Depositary in accordance with customary procedures of the Depositary and in compliance with this Section and Section 2.10.

 

(3)         Agent Members will have no rights under the Indenture with respect to any Global Note held on their behalf by the Depositary, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner and Holder of such Global Note for all purposes whatsoever.  Notwithstanding
the foregoing, the Depositary or its nominee may grant proxies and otherwise authorize any Person (including any Agent Member and any Person that holds a beneficial interest in a Global Note through an Agent Member) to take any action which a Holder is entitled to take under the Indenture or the Notes, and nothing herein will impair, as between the Depositary and its Agent Members, the operation of customary practices governing
the exercise of the rights of a holder of any security.

 

(4)         If (x) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for a Global Note and a successor depositary is not appointed by the Company within 90 days of the notice or (y) an Event of Default has occurred and is continuing
and the Trustee has received a request from the Depositary, the Trustee will promptly exchange each beneficial interest in the Global Note for one or more Certificated Notes in authorized denominations having an equal aggregate principal amount registered in the name of the owner of such beneficial interest, as identified to the Trustee by the Depositary, and thereupon the Global Note will be deemed canceled.  If such Note does not bear the Restricted Legend, then the Certificated Notes issued in exchange
therefor will not bear the Restricted Legend.  If such Note bears the Restricted Legend, then the Certificated Notes issued in exchange therefor will bear the Restricted Legend, provided that any Holder of any such Certificated Note issued in exchange for a beneficial interest in a Temporary Offshore Global Note will have the right upon presentation to the Trustee of a duly completed Certificate of Beneficial Ownership after the Restricted Period
to exchange such Certificated Note for a Certificated Note of like tenor and amount that does not bear the Restricted Legend, registered in the name of such Holder.

 

(c)           Each Certificated Note will be registered in the name of the holder thereof or its nominee.

 

(d)           A Holder may transfer a Note (or a beneficial interest therein) to another Person or exchange a Note (or a beneficial interest therein) for another 

  

42

  

 

Note or Notes of any authorized denomination by presenting to the Trustee a written request therefor stating the name of the proposed transferee or requesting such an exchange, accompanied by any certification, opinion or other document required by Section 2.10.  The Trustee will promptly register any transfer or exchange that meets the requirements of this Section by noting the same in the register maintained by the Trustee for the purpose; provided that
 

(x)         no transfer or exchange will be effective until it is registered in such register and

 

(y)         the Trustee will not be required (i) to issue, register the transfer of or exchange any Note for a period of 15 days before a selection of Notes to be redeemed or purchased pursuant to an Offer to Purchase, (ii) to register the transfer of or exchange any Note
so selected for redemption or purchase in whole or in part, except, in the case of a partial redemption or purchase, that portion of any Note not being redeemed or purchased, or (iii) if a redemption or a purchase pursuant to an Offer to

 

Purchase is to occur after a Regular Record Date but on or before the corresponding Interest Payment Date, to register the transfer of or exchange any Note on or after the Regular Record Date and before the date of redemption or purchase.  Prior to the registration of any transfer, the Company, the Trustee
and their agents will treat the Person in whose name the Note is registered as the owner and Holder thereof for all purposes (whether or not the Note is overdue), and will not be affected by notice to the contrary.

 

From time to time the Company will execute and the Trustee will authenticate Additional Notes as necessary in order to permit the registration of a transfer or exchange in accordance with this Section.

 

No service charge will be imposed in connection with any transfer or exchange of any Note, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than a transfer tax or other similar governmental charge payable upon exchange
pursuant to subsection (b)(4)).

 

(e) (1)              Global Note to Global Note.  If a beneficial interest in a Global Note is transferred or exchanged for a beneficial interest in another Global Note, the Trustee
will (x) record a decrease in the principal amount of the Global Note being transferred or exchanged equal to the principal amount of such transfer or exchange and (y) record a like increase in the principal amount of the other Global Note.  Any beneficial interest in one Global Note that is transferred to a Person who takes delivery in the form of an interest in another Global Note, or exchanged for an interest in another Global Note, will, upon transfer or exchange, cease to be an interest
in such Global Note and become an interest in the other Global 

  

43

  

 

Note and, accordingly, will thereafter be subject to all transfer and exchange restrictions, if any, and other procedures applicable to beneficial interests in such other Global Note for as long as it remains such an interest.
 

(2)         Global Note to Certificated Note.  If a beneficial interest in a Global Note is transferred or exchanged for a Certificated Note, the Trustee will (x) record a decrease in the principal amount
of such Global Note equal to the principal amount of such transfer or exchange and (y) deliver one or more new Certificated Notes in authorized denominations having an equal aggregate principal amount to the transferee (in the case of a transfer) or the owner of such beneficial interest (in the case of an exchange), registered in the name of such transferee or owner, as applicable.

 

(3)         Certificated Note to Global Note.  If a Certificated Note is transferred or exchanged for a beneficial interest in a Global Note, the Trustee will (x) cancel such Certificated Note, (y) record an increase in the principal
amount of such Global Note equal to the principal amount of such transfer or exchange and (z) in the event that such transfer or exchange involves less than the entire principal amount of the canceled Certificated Note, deliver to the Holder thereof one or more new Certificated Notes in authorized denominations having an aggregate principal amount equal to the untransferred or unexchanged portion of the canceled Certificated Note, registered in the name of the Holder thereof.

 

(4)         Certificated Note to Certificated Note.  If a Certificated Note is transferred or exchanged for another Certificated Note, the Trustee will (x) cancel the Certificated Note being transferred or
exchanged, (y) deliver one or more new Certificated Notes in authorized denominations having an aggregate principal amount equal to the principal amount of such transfer or exchange to the transferee (in the case of a transfer) or the Holder of the canceled Certificated Note (in the case of an exchange), registered in the name of such transferee or Holder, as applicable, and (z) if such transfer or exchange involves less than the entire principal amount of the canceled Certificated Note, deliver to the Holder
thereof one or more Certificated Notes in authorized denominations having an aggregate principal amount equal to the untransferred or unexchanged portion of the canceled Certificated Note, registered in the name of the Holder thereof.

 

Section 2.10.  Restrictions on Transfer and Exchange.  (a) The transfer or exchange of any Note (or a beneficial interest therein) may only be made in accordance with this Section and Section 2.09 and, in the case of a Global Note (or a beneficial
interest therein), the applicable rules and procedures of the Depositary.  The Trustee shall refuse to register any requested transfer or exchange that does not comply with the preceding sentence.

 

  

44

  

 

(b)           Subject to paragraph (c), the transfer or exchange of any Note (or a beneficial interest therein) of the type set forth in column A below for a Note (or a beneficial interest therein) of the type set forth opposite in column B below may only be made
in compliance with the certification requirements (if any) described in the clause of this paragraph set forth opposite in column C below.

 

	
A
	
B
	
C

	
U.S. Global Note
	
U.S. Global Note
	
(1)

	
U.S. Global Note
	
Offshore Global Note
	
(2)

	
U.S. Global Note
	
Certificated Note
	
(3)

	
Offshore Global Note
	
U.S. Global Note
	
(4)

	
Offshore Global Note
	
Offshore Global Note
	
(1)

	
Offshore Global Note
	
Certificated Note
	
(5)

	
Certificated Note
	
U.S. Global Note
	
(4)

	
Certificated Note
	
Offshore Global Note
	
(2)

	
Certificated Note
	
Certificated Note
	
(3)

 

(1)           No certification is required.

 

(2)         The Person requesting the transfer or exchange must deliver or cause to be delivered to the Trustee a duly completed Regulation S Certificate; provided that if the requested transfer or exchange is made by
the Holder of a Certificated Note that does not bear the Restricted Legend, then no certification is required.

 

(3)         The Person requesting the transfer or exchange must deliver or cause to be delivered to the Trustee (x) a duly completed Rule 144A Certificate, (y) a duly completed Regulation S Certificate or (z) a duly completed  Institutional Accredited Investor Certificate,
and/or an Opinion of Counsel and such other certifications and evidence as the Company may reasonably require in order to determine that the proposed transfer or exchange is being made in compliance with the Securities Act and any applicable securities laws of any state of the United States; provided that if the requested transfer or exchange is made by the Holder of a Certificated Note that does not bear the Restricted Legend, then no certification is
required.  In the event that (i) the requested transfer or exchange takes place after the Restricted Period and a duly completed Regulation S Certificate is delivered to the Trustee or (ii) a Certificated Note that does not bear the Restricted Legend is surrendered for transfer or exchange, upon transfer or exchange the Trustee will deliver a Certificated Note that does not bear the Restricted Legend.

 

(4)         The Person requesting the transfer or exchange must deliver or cause to be delivered to the Trustee a duly completed Rule 144A Certificate.

 

 

  

45

  

 

(5)         Notwithstanding anything to the contrary contained herein, no such exchange is permitted if the requested exchange involves a beneficial interest in a Temporary Offshore Global Note.  If the requested transfer involves a beneficial interest in a Temporary
Offshore Global Note, the Person requesting the transfer must deliver or cause to be delivered to the Trustee (x) a duly completed Rule 144A Certificate or (y) a duly completed Institutional Accredited Investor Certificate and/or an Opinion of Counsel and such other certifications and evidence as the Company may reasonably require in order to determine that the proposed transfer is being made in compliance with the Securities Act and any applicable securities laws of any state of the United States.  If
the requested transfer or exchange involves a beneficial interest in a Permanent Offshore Global Note, no certification is required and the Trustee will deliver a Certificated Note that does not bear the Restricted Legend.

 

(c)           No certification is required in connection with any transfer or exchange of any Note (or a beneficial interest therein)

(1)           after such Note is eligible for resale, without limit, pursuant to Rule 144 under the Securities Act (or a successor provision); provided that the Company has provided the Trustee with an Officer’s
Certificate to that effect, and the Company may require from any Person requesting a transfer or exchange in reliance upon this clause (1) an opinion of counsel and any other reasonable certifications and evidence in order to support such certificate; or

 

(2)(x)           sold pursuant to an effective registration statement, pursuant to the Registration Rights Agreement or otherwise or (y) which is validly tendered for exchange into an Exchange Note pursuant to an Exchange Offer.

 

Any Certificated Note delivered in reliance upon this paragraph will not bear the Restricted Legend.

 

(d)           The Trustee will retain copies of all certificates, opinions and other documents received in connection with the transfer or exchange of a Note (or a beneficial interest therein), and the Company will have the right to inspect and make copies thereof
at any reasonable time upon written notice to the Trustee.

 

Section 2.11.  Temporary Offshore Global Notes.  (a) Each Note originally sold by the Initial Purchasers in reliance upon Regulation S will be evidenced by one or more Offshore Global Notes that bear the Temporary Offshore Global Note Legend.

 

 

  

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(b)           An owner of a beneficial interest in a Temporary Offshore Global Note (or a Person acting on behalf of such an owner) may provide to the Trustee (and the Trustee will accept) a duly completed Certificate of Beneficial Ownership at any time after the
Restricted Period (it being understood that the Trustee will not accept any such certificate during the Restricted Period).  Promptly after acceptance of a Certificate of Beneficial Ownership with respect to such a beneficial interest, the Trustee will cause such beneficial interest to be exchanged for an equivalent beneficial interest in a Permanent Offshore Global Note, and will (x) permanently reduce the principal amount of such Temporary Offshore Global Note by the amount of such beneficial interest
and (y) increase the principal amount of such Permanent Offshore Global Note by the amount of such beneficial interest.

 

(c)           Notwithstanding paragraph (b), if after the Restricted Period any Initial Purchaser owns a beneficial interest in a Temporary Offshore Global Note, such Initial Purchaser may, upon written request to the Trustee accompanied by a certification as to its
status as an Initial Purchaser, exchange such beneficial interest for an equivalent beneficial interest in a Permanent Offshore Global Note, and the Trustee will comply with such request and will (x) permanently reduce the principal amount of such Temporary Offshore Global Note by the amount of such beneficial interest and (y) increase the principal amount of such Permanent Offshore Global Note by the amount of such beneficial interest.

(d)           Notwithstanding anything to the contrary contained herein, any owner of a beneficial interest in a Temporary Offshore Global Note shall not be entitled to receive payment of principal or interest on such beneficial interest or other amounts in respect
of such beneficial interest until such beneficial interest is exchanged for an interest in a Permanent Offshore Global Note or transferred for an interest in another Global Note or a Certificated Note.

 

ARTICLE 3

Redemption; Offer to Purchase

 

Section 3.01.  Optional Redemption.  At any time and from time to time on or after July 15, 2012, the Company may redeem the Notes, in whole or in part, at a redemption price equal to the percentage of principal  amount
set forth below plus accrued and unpaid interest to the  redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date). 

 

  

47

  

 

 

 

	

12-month period

commencing

in Year

	

Percentage

	
2012
	
107.500%

	
2013
	
105.000%

	
2014
	
102.500%

	
2015 and thereafter
	
100.000%

In addition, prior to July 15, 2012, the Company may redeem the Notes at its option, in whole at any time or in part from time to time, at a redemption price equal to 100% of the principal amount of Notes redeemed plus the Applicable Premium as of, and accrued and unpaid
interest to, the applicable redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date).

Section 3.02.  Redemption with Proceeds of Equity Offering.  At any time and from time to time prior to July 15, 2012, the Company may redeem Notes with the net cash proceeds received by the Company
from any Equity Offering at a redemption price equal to 110.00% of the principal amount plus accrued and unpaid interest to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date), in an aggregate principal amount for all such redemptions not to exceed 35% of the aggregate principal amount of the Notes, including Additional Notes, provided that 

 

(1)           in each case the redemption takes place not later than 90 days after the closing of the related Equity Offering, and

(2)           not less than 50% of the original aggregate principal amount of the Notes remains outstanding immediately thereafter.

 

Section 3.03.  Method and Effect of Redemption.  (a) If the Company elects to redeem Notes, it must notify the Trustee of the redemption date and the principal amount of Notes to be redeemed by delivering an Officers’
Certificate at least 45 days before the redemption date (unless a shorter period is satisfactory to the Trustee).  If fewer than all of the Notes are being redeemed, the Officers’ Certificate must also specify a record date not less than 15 days after the date of the notice of redemption is given to the Trustee, and the Trustee will select the Notes to be redeemed pro rata, by lot or by any other method the Trustee in its sole discretion deems fair and appropriate, in denominations of $1,000 principal
amount and multiples thereof.  The Trustee will notify the Company promptly of the Notes or portions of Notes to be called for redemption.  Notice of redemption will be mailed by first-class mail by the Company or at the Company’s request, by the Trustee in the name and at the expense of the Company, to Holders whose Notes are to be redeemed at least 30 and not more than 60 days before the date of redemption to each Holder’s registered address, except that redemption notices 

  

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may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a satisfaction and discharge of the Indenture.
 

(b)           The notice of redemption will identify the Notes to be redeemed and will include or state the following:

 

(1)         the redemption date;

 

(2)         the redemption price, including the portion thereof representing any accrued interest;

 

(3)         the place or places where Notes are to be surrendered for redemption;

 

(4)         Notes called for redemption must be so surrendered in order to collect the redemption price;

 

(5)         on the redemption date the redemption price will become due and payable on Notes called for redemption, and interest on Notes called for redemption will cease to accrue on and after the redemption date;

 

(6)         if any Note is redeemed in part, on and after the redemption date, upon surrender of such Note, new Notes equal in principal amount to the unredeemed portion will be issued; and

 

(7)         if any Note contains a CUSIP or CINS number, no representation is being made as to the correctness of the CUSIP or CINS number either as printed on the Notes or as contained in the notice of redemption
and that the Holder should rely only on the other identification numbers printed on the Notes.

 

(c)           Once notice of redemption is sent to the Holders, Notes called for redemption become due and payable at the redemption price on the redemption date, and upon surrender of the Notes called for redemption, the Company shall redeem such Notes at the redemption
price. Commencing on the redemption date, Notes redeemed will cease to accrue interest.  Upon surrender of any Note redeemed in part, the Holder will receive a new Note equal in principal amount to the unredeemed portion of the surrendered Note.

 

Section 3.04.  Offer to Purchase.  (a) An “Offer to Purchase” means an offer by the Company to purchase Notes as required by the Indenture.  An
Offer to Purchase must be made by written offer (the “offer”) sent to the Holders.  The Company will notify the Trustee at least 15 days (or such shorter period as is acceptable to the Trustee) prior to sending the offer to Holders of its obligation to make an Offer to Purchase, and the offer will be sent by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company. 

 

 

  

49

  

 

(b)           The offer must include or state the following as to the terms of the Offer to Purchase:

 

(1)         the provision of the Indenture pursuant to which the Offer to Purchase is being made;

 

(2)         the aggregate principal amount of the outstanding Notes offered to be purchased by the Company pursuant to the Offer to Purchase (including, if less than 100%, the manner by which such amount has been determined pursuant to the Indenture) (the “purchase
amount”);

 

(3)         the purchase price, including the portion thereof representing accrued interest;

 

(4)         an expiration date (the “expiration date”) not less than 30 days or more than 60 days after the date of the offer, and a settlement date for purchase (the “purchase
date”) not more than five Business Days after the expiration date;

 

(5)         a Holder may tender all or any portion of its Notes, subject to the requirement that any portion of a Note tendered must be in a minimum of $2,000 in principal amount and any multiple of $1,000 in excess thereof;

 

(6)         the place or places where Notes are to be surrendered for tender pursuant to the Offer to Purchase;

(7)         each Holder electing to tender a Note pursuant to the offer will be required to surrender such Note at the place or places specified in the offer prior to the close of business on the expiration date (such Note being, if the Company or the Trustee so requires,
duly endorsed or accompanied by a duly executed written instrument of transfer);

 

(8)         interest on any Note not tendered, or tendered but not purchased by the Company pursuant to the Offer to Purchase, will continue to accrue;

 

(9)         on the purchase date the purchase price will become due and payable on each Note accepted for purchase, and interest on Notes purchased will cease to accrue on and after the purchase date;

 

(10)         Holders are entitled to withdraw Notes tendered by giving notice, which must be received by the Company or the Trustee not later than the close of business on the expiration date, setting forth the name of the Holder, the principal amount of the tendered Notes,
the certificate number of the tendered Notes and a statement that the Holder is withdrawing all or a portion of the tender;

 

 

  

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(11)         (i) if Notes in an aggregate principal amount less than or equal to the purchase amount are duly tendered and not withdrawn pursuant to the Offer to Purchase, the Company will purchase all such Notes, and (ii) if the Offer to Purchase is for less than all
of the outstanding Notes and Notes in an aggregate principal amount in excess of the purchase amount are tendered and not withdrawn pursuant to the offer, the Company will purchase Notes having an aggregate principal amount equal to the purchase amount on a pro rata basis, with adjustments so that only Notes in multiples of $1,000 principal amount will be purchased;

 

(12)         if any Note is purchased in part, new Notes equal in principal amount to the unpurchased portion of the Note will be issued; and

 

(13)         if any Note contains a CUSIP or CINS number, no representation is being made as to the correctness of the CUSIP or CINS number either as printed on the Notes or as contained in the offer and that the Holder should rely only on the other identification numbers
printed on the Notes.

 

(c)           Prior to the purchase date, the Company will accept tendered Notes for purchase as required by the Offer to Purchase and deliver to the Trustee all Notes so accepted together with an Officers’ Certificate specifying which Notes have been accepted
for purchase.  On the purchase date the purchase price will become due and payable on each Note accepted for purchase, and interest on Notes purchased will cease to accrue on and after the purchase date.  The Trustee will promptly return to Holders any Notes not accepted for purchase and send to Holders new Notes equal in principal amount to any unpurchased portion of any Notes accepted for purchase in part.

 

(d)           The Company will comply with Rule 14e-1 under the Exchange Act and all other applicable laws in making any Offer to Purchase, and the above procedures will be deemed modified as necessary to permit such compliance.

 

(e)           The Company will timely repay Debt or obtain consents as necessary under, or terminate, any agreements or instruments that would otherwise prohibit an Offer to Purchase required to be made pursuant to the Indenture.

 

 

ARTICLE 4

Covenants

 

Section 4.01.  Payment of Notes.  (a)  The Company agrees to pay the principal of and interest on the Notes on the dates and in the manner provided in the Notes and the Indenture.  Not later
than 11:00 A.M. (New York City time) on the due date of any principal of or interest on any Notes, or any redemption or 

 

  

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purchase price of the Notes, the Company will deposit with the Trustee (or Paying Agent) money in immediately available funds sufficient to pay such amounts, provided that if the Company or any Affiliate of the Company is acting as Paying Agent, it will, on or before each due date, segregate and hold in a separate trust fund for the benefit of the Holders a sum of money sufficient to pay such amounts until paid to such Holders
or otherwise disposed of as provided in the Indenture.  In each case the Company will promptly notify the Trustee of its compliance with this paragraph.
 

(b)           An installment of principal or interest will be considered paid on the date due if the Trustee (or Paying Agent, other than the Company or any Affiliate of the Company) holds on that date money designated for and sufficient to pay the installment.  If
the Company or any Affiliate of the Company acts as Paying Agent, an installment of principal or interest will be considered paid on the due date only if paid to the Holders.

 

(c)           The Company agrees to pay interest on overdue principal, and, to the extent lawful, overdue installments of interest at the same rate per annum borne by the Notes.

 

(d)           Payments in respect of the Notes represented by the Global Notes are to be made by wire transfer of immediately available funds to the accounts specified by the Holders of the Global Notes. With respect to Certificated Notes, the Company will make all
payments by wire transfer of immediately available funds to the accounts specified by the Holders thereof or, if no such account is specified, by mailing a check to each Holder’s registered address.

 

Section 4.02.  Maintenance of Office or Agency.  The Company will maintain in the Borough of Manhattan, the City of New York, an office or agency where Notes may be surrendered for registration of transfer
or exchange or for presentation for payment and where notices and demands to or upon the Company in respect of the Notes and the Indenture may be served.  The Company hereby initially designates the Corporate Trust Office of the Trustee as such office of the Company.  The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency.  If at any time the Company fails to maintain any such required office or agency
or fails to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served to the Trustee. 

 

The Company may also from time to time designate one or more other offices or agencies where the Notes may be surrendered or presented for any of such purposes and may from time to time rescind such designations.  The Company will give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.

 

 

  

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Section 4.03.  Existence.  The Company will do or cause to be done all things necessary to preserve and keep in full force and effect its existence and the existence of each of its Restricted Subsidiaries in accordance with their
respective organizational documents (as the same may be amended from time to time), and the material rights, licenses and franchises of the Company and each Restricted Subsidiary necessary in the normal amount of its business, provided that the Company is not required to preserve any such right, license or franchise, or the existence of any Restricted Subsidiary, if the maintenance or preservation thereof is no longer desirable in the conduct of the business
of the Company and its Restricted Subsidiaries taken as a whole or would not have a material adverse effect on the Company and its Restricted Subsidiaries taken as a whole; and provided further that this Section does not prohibit any transaction otherwise permitted by Section 4.10 or Article 5. 

 

Section 4.04.  Limitation on Debt.  (a)  The Company will not, and will not permit any of its Restricted Subsidiaries to, Incur any Debt or Disqualified Stock, and will
not permit any of its Restricted Subsidiaries that are not Guarantors to Incur any Preferred Stock (other than Disqualified or Preferred Stock of Restricted Subsidiaries held by the Company or a Restricted Subsidiary, so long as it is so held); provided that the Company or any Restricted Subsidiary may Incur Debt, Disqualified Stock or Preferred Stock if, on the date of the Incurrence, after giving effect to the Incurrence and the receipt and application
of the proceeds therefrom, (x) the Fixed Charge Coverage Ratio is not less than 2.0 to 1.0 (the “Fixed Charge Coverage Test”) or (y) the Leverage Ratio is not greater than 4.0 to 1.0; provided further that the maximum aggregate principal amount of Debt, Disqualified Stock or Preferred Stock that non-Guarantors may incur under this paragraph (a) is $100.0 million outstanding at any time. 

 

(b)           Notwithstanding the foregoing, the Company and, to the extent provided below, any Restricted Subsidiary may Incur the following (“Permitted Debt”):

 

(1)         Debt (“Permitted Bank Debt”) of the Company or any Restricted Subsidiary pursuant to Credit Facilities (and, without duplication, Guarantees of such Debt by the Company or any Restricted Subsidiary); provided that
the aggregate principal amount at any time outstanding does not exceed the greater of (x) $800.0 million and (y) an amount such that, on a pro forma basis after giving effect to the Incurrence of such Debt (and application of the net proceeds therefrom), the Secured Debt Ratio (with all Debt Incurred under this clause (1) deemed to be secured for this purpose) would be no greater than 2.5 to 1.0, less (i) any amount of such Debt permanently repaid as provided
under Section 4.10 and (ii) the outstanding principal amount of any Permitted Receivables Financing;

 

 

  

53

  

 

(2)         Debt of the Company or any Restricted Subsidiary to the Company or any Restricted Subsidiary so long as such Debt continues to be owed to the Company or a Restricted Subsidiary and which, if the obligor is the Company or a Guarantor and such Debt is owed to a non-Guarantor
(other than a Regulated Subsidiary), is subordinated in right of payment to the Notes;

 

(3)         Debt of the Company pursuant to the Notes (other than Additional Notes) and Debt of any Guarantor pursuant to a Note Guaranty of the Notes (including Additional Notes) and Exchange Notes (and Note Guarantees) in respect thereof;

 

(4)         Debt, Disqualified Stock or Preferred Stock (“Permitted Refinancing Debt”) of the Company or any Restricted Subsidiary constituting an extension or renewal of, replacement of, or substitution for,
or issued in exchange for, or the net proceeds of which are used (or will be used within 90 days) to repay, redeem, repurchase, refinance or refund, including by way of defeasance (all of the above, for purposes of this clause, “refinance”) then outstanding Debt, Disqualified Stock or Preferred Stock in an amount not to exceed the principal amount or liquidation value of the Debt, Disqualified Stock or Preferred Stock so refinanced, plus premiums,
fees and expenses; provided that

 

(A)         in case Debt to be refinanced is subordinated in right of payment to the Notes, the new Debt, by its terms or by the terms of any agreement or instrument pursuant to which it is outstanding, is expressly made subordinate in right of payment to the Notes at least
to the extent that the Debt to be refinanced is subordinated in right of payment to the Notes;

(B)         the new Debt, Disqualified Stock or Preferred Stock does not have a Stated Maturity prior to the earlier of (i) the Stated Maturity of the Debt, Disqualified Stock or Preferred Stock to be refinanced and (ii) one year after the Stated Maturity of the Notes, and
the new Debt, Disqualified Stock or Preferred Stock has an Average Life at the time at the time of Incurrence that is not less than the shorter of (x) the remaining Average Life of the Debt, Disqualified Stock or Preferred Stock being refinanced and (y) the Average Life that would result if all payments of principal on the Debt, Disqualified Stock and Preferred Stock being refinanced that were due on or after the date that is one year following the last Stated Maturity of the Notes then outstanding were instead
due on such date;

 

(C)         in no event may Debt, Disqualified Stock or Preferred Stock of the Company or any Guarantor be refinanced 

  

54

  

 

pursuant to this clause by means of any Debt of any Restricted Subsidiary that is not a Guarantor;
 

(D)         Debt, Disqualified Stock or Preferred Stock Incurred pursuant to clauses (1), (2), (5), (6) and (10) through (17) may not be refinanced pursuant to this clause (4); and

 

(E)         no Debt may be issued to refinance Disqualified Stock or Preferred Stock;

 

(5)         Hedging Agreements of the Company or any Restricted Subsidiary not entered into for speculation;

 

(6)         Debt of the Company or any Restricted Subsidiary with respect to (A) letters of credit and bankers’ acceptances issued in the ordinary course of business and not supporting other Debt, including letters of credit supporting performance, surety or appeal bonds,
workers’ compensation claims, health, disability or other benefits to employees or former employees or their families or property, casualty or liability insurance or self-insurance, and letters of credit in connection with the maintenance of, or pursuant to the requirements of, environmental or other permits or licenses from governmental authorities, or other Debt with respect to reimbursement type obligations regarding workers’ compensation claims; (B) indemnification, adjustment of purchase price,
earn-out or obligations incurred in connection with the acquisition or disposition of any business or assets and (C) Guarantees of Debt of (i) suppliers, licensees, franchisees or customers in the ordinary course of business or (ii) joint ventures, in an aggregate amount at any time outstanding under this clause (C) not to exceed the greater of $150.0 million and 4.0% of Total Assets;

(7)         Acquired Debt, provided, that after giving effect to the Incurrence thereof, (i) the Company could Incur at least $1.00 of Debt under the Fixed Charge Coverage Test or (ii) the Fixed Charge Coverage Ratio
would be greater than the Fixed Charge Coverage Ratio immediately prior to such Incurrence;

 

(8)         Debt of the Company or any Restricted Subsidiary outstanding on the Issue Date (and, for purposes of clause (4) (D), not otherwise constituting Permitted Debt);

 

(9)         Debt, Disqualified Stock or Preferred Stock of the Company or any Restricted Subsidiary, which may include Capital Leases, Incurred on or after the Issue Date no later than 365 days after the date of purchase or completion of construction, improvement, repair or
replacement of property (real or personal) or equipment (whether through the direct 

  

55

  

 

purchase of assets or the Capital Stock of any Person owning such assets) for the purpose of financing all or any part of the purchase price or cost thereof and any related taxes or transaction costs, provided that the principal amount of any Debt Incurred pursuant to this clause may not exceed at any time outstanding (a) the greater of $150.0 million and 4.0% of the Total Assets of the Company (measured at the time of Incurrence of any such
Debt) less (b) the aggregate outstanding amount of Permitted Refinancing Debt Incurred to refinance Debt Incurred pursuant to this clause;

 

(10)         Debt of Foreign Restricted Subsidiaries Incurred on or after the Issue Date (a) in an aggregate principal amount not to exceed the greater of $50.0 million and 5.0% of Total Assets of the Foreign Subsidiaries at any one time outstanding or (b) if after giving
effect to the Incurrence thereof on a pro forma basis (including the receipt and the application of the proceeds thereof) the Fixed Charge Coverage Ratio would be not less than 3.25 to 1.0; provided that the amount Incurred pursuant to this clause (b) may not exceed $250.0 million outstanding at any time;

 

(11)         Debt of the Company or any Guarantor consisting of co-issuances or Guarantees of Debt of the Company or any Restricted Subsidiary Incurred under any other clause of this Section 4.04;

 

(12)         Contribution Debt;

 

(13)         Debt, Disqualified Stock or Preferred Stock of the Company or any Restricted Subsidiary Incurred on or after the Issue Date not otherwise permitted in an aggregate principal amount at any time outstanding not to exceed the greater of $200.0 million and 5.0% of
the Total Assets of the Company, measured at the time of Incurrence of any such Debt, Disqualified Stock or Preferred Stock;

(14)         Debt arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided that such Debt
is extinguished within five Business Days of Incurrence;

 

(15)         Debt of the Company or any Restricted Subsidiary consisting of (A) the financing of insurance premiums or (B) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;

 

(16)         Debt of the Company or any Restricted Subsidiary supported by a letter of credit or bank guarantee issued pursuant to Credit Facilities (which letter of credit or bank guarantee is Incurred pursuant to clause (1) 

  

56

  

 

above) in a principal amount not in excess of the stated amount of such letter of credit;

 

(17)         any Permitted Receivables Financing in an aggregate principal amount at any time outstanding not to exceed (A) the maximum amount of Debt permitted to be Incurred under clause (1) at such time, less (B)
the amount of Debt incurred under clause (1) outstanding at such time; and

 

(18)         Debt issued by the Company or a Restricted Subsidiary to current or former officers, directors or employees thereof or any direct or indirect parent thereof (or their spouses or former spouses or estates or beneficiaries under their estates) to finance the purchase
or redemption of Equity Interests of any direct or indirect parent of the Company to the extent permitted by Section 4.05(b)(7).

 

(c)           For purposes of determining compliance with this covenant:

 

(1)         in the event that an item of Debt, Disqualified Stock or Preferred Stock (or any portion thereof) meets the criteria of more than one of the categories of Permitted Debt or is entitled to be Incurred pursuant to paragraph (a) of this covenant, the Company, in its
sole discretion, will classify and may reclassify (based on circumstances at the time of any such reclassification) such item of Debt, Disqualified Stock or Preferred Stock (or any portion thereof) and will only be required to include the amount and type of such Indebtedness, Disqualified Stock or Preferred Stock in one of the above clauses; and

 

(2)         at the time of Incurrence, classification or reclassification, the Company will be entitled to divide, classify and reclassify an item of Debt in more than one of the types of Debt described in paragraphs (a) and (b) above;

provided that all Debt outstanding under the Credit Agreement on the Issue Date will be treated as Incurred on the Issue Date under clause (1) of paragraph (b).   If any Contribution Debt is redesignated as Incurred under any provision other than
clause (12) of paragraph (b), the related issuance of Equity Interests may be included in any calculation under Section 4.05(a)(3)(B).

 

(d)           Neither the Company nor any Guarantor may Incur Debt that is subordinate in right of payment to any Debt of the Company or the Guarantor unless such Debt is subordinated in right of payment to, the Notes or the relevant Note Guaranty.  This
does not apply to distinctions between categories of Debt that exist by reason of any Liens, any customary provisions of any inter-creditor  arrangements related to subordination of any such Liens or Guarantees securing or in favor of some but not all of such Debt.

 

  

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(e)           Until such time as the Regulated Subsidiaries Guarantee the Notes, the Regulated Subsidiaries will not be permitted to Incur any Debt (other than Guarantees of Debt under the Credit Agreement) and the Company and its Restricted Subsidiaries will not
be permitted to grant Liens secured by the Equity Interests of the Regulated Subsidiaries, other than Liens securing Permitted Bank Debt.

 

Section 4.05.  Limitation on Restricted Payments.  (a) The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly (the payments and other
actions described in the following clauses being collectively “Restricted Payments”): 

 

(i)         declare or pay any dividend or make any distribution on its Equity Interests (other than dividends or distributions paid in the Company’s Qualified Equity Interests) held by Persons other than the Company or any of its Restricted Subsidiaries;

 

(ii)         purchase, redeem or otherwise acquire or retire for value any Equity Interests of the Company or any direct or indirect parent of the Company held by Persons other than the Company or any of its Restricted Subsidiaries;

 

(iii)         repay, redeem, repurchase, defease or otherwise acquire or retire for value, or make any payment on or with respect to, any Subordinated Debt except a payment of interest or principal at Stated Maturity (other than the payment, redemption, repurchase, defeasance,
acquisition or retirement of (A) Subordinated Debt in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such payment, redemption, repurchase, defeasance, acquisition or retirement and (B) Debt permitted under Section 4.04(b)(2)); or

 

(iv)         make any Investment other than a Permitted Investment;

 

unless, after giving effect to, the proposed Restricted Payment:

 

(1)         no Default has occurred and is continuing,

 

(2)         the Company could Incur at least $1.00 of Debt under the Fixed Charge Coverage Test, and

 

(3)         the aggregate amount expended for all Restricted Payments made on or after the Issue Date would not, subject to paragraph (c), exceed the sum of

 

(A)         50% of the aggregate amount of the Consolidated Net Income (or, if the Consolidated Net Income is a loss, minus 100% 

  

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of the amount of the loss) accrued on a cumulative basis during the period, taken as one accounting period, beginning on March 29, 2009 and ending on the last day of the Company’s most recently completed fiscal quarter for which financial statements have been provided (or if not timely provided, required to be provided) pursuant to the Indenture, plus

 

(B)         subject to paragraph (c), the aggregate Net Cash Proceeds received by the Company (other than from a Subsidiary) after the Issue Date from (i) the issuance and sale of Qualified Equity Interests, including by way of issuance of Disqualified Equity Interests or
Debt to the extent such Disqualified Equity Interest or Debt has been converted into Qualified Equity Interests of the Company or any direct or indirect parent of the Company (and contributed to the Company as a contribution to its common equity), and (ii) other contributions to the common equity capital of the Company, other than Excluded Contributions, plus

 

(C)         an amount equal to the sum, for all Unrestricted Subsidiaries, of the following:

 

(x)         the cash return, and the fair market value of assets or property received, after the Issue Date, on Investments in an Unrestricted Subsidiary made after the Issue Date pursuant to this paragraph (a) as a result of any sale, repayment, redemption, liquidating distribution
or other realization (not included in Consolidated Net Income), plus

 

(y)         all distributions or dividends to the Company or a Restricted Subsidiary from Unrestricted Subsidiaries (provided that such distributions or dividends shall be

excluded in calculating Consolidated Net Income for purposes of clause (3)(A)), plus

 

(z)         the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the assets less liabilities of an Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary, plus

 

(D)         the cash return, and the fair market value of property received, after the Issue Date, on any other Investment made after the Issue Date pursuant to this paragraph (a), as a result of any sale, repayment, redemption, liquidating distribution or other realization
(not included in Consolidated Net Income).

 

  

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The amount expended in any Restricted Payment, if other than in cash, will be deemed to be the fair market value of the relevant non-cash assets or property, as determined in good faith by the Board of Directors, whose determination will be conclusive and evidenced by a Board Resolution.

 

(b)           The foregoing will not prohibit:

 

(1)         the payment of any dividend within 60 days after the date of declaration thereof if, at the date of declaration, such payment would comply with paragraph (a);

 

(2)         dividends or distributions by a Restricted Subsidiary payable, on a pro rata basis or on a basis more favorable to the Company, to all holders of any class of Capital Stock of such Restricted Subsidiary a majority of which is held, directly or indirectly through
Restricted Subsidiaries, by the Company;

 

(3)         the repayment, redemption, repurchase, defeasance or other acquisition or retirement for value of Subordinated Debt with the proceeds of, or in exchange for, Permitted Refinancing Debt;

 

(4)         the purchase, redemption or other acquisition or retirement for value of Equity Interests of the Company, any direct or indirect parent of the Company or any Restricted Subsidiary in exchange for, or out of the proceeds of (i) an offering (occurring within 60 days
of such purchase, redemption or other acquisition or retirement for value) of, Qualified Equity Interests of the Company or of Qualified Equity Interests of any direct or indirect parent of Company to the extent contributed to the common equity of the Company or (ii) a contribution to the common equity capital of the Company;

(5)         the repayment, redemption, repurchase, defeasance or other acquisition or retirement of Subordinated Debt of the Company or any Guarantor in exchange for, or out of the proceeds of, an offering (occurring within 60 days of such repayment, redemption, repurchase,
defeasance or other acquisition or retirement for value) of, (i) Qualified Equity Interests of the Company or of Qualified Equity Interests of any direct or indirect parent of Company to the extent contributed to the common equity of the Company or (ii) a contribution to the common equity capital of the Company;

 

(6)         any Investment made in exchange for, or out of the net cash proceeds of, a substantially concurrent offering of (i) Qualified Equity Interests of the Company or of Qualified Equity Interests of any direct or indirect parent of Company to the extent contributed
to the common 

 

  

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equity of the Company or (ii) a contribution to the common equity capital of the Company;

 

(7)         amounts paid to any direct or indirect parent of Company for the purchase, redemption or other acquisition or retirement for value of Equity Interests of such parent held by officers, directors or employees or former officers, directors or employees of the Company,
any Restricted Subsidiary or any such parent (or their spouses or former spouses or estates or beneficiaries under their estates), upon death, disability, retirement, severance or termination of employment or pursuant to any agreement under which the Equity Interests were issued; provided that the aggregate cash consideration paid therefor does not exceed an amount equal to (A) $5.0 million in any twelve-month period (with unused amounts being available to be used in subsequent periods) plus (B) the amount of
any net cash proceeds received by or contributed to the Company from the issuance and sale after the Issue Date of Qualified Equity Interests of the Company or any direct or indirect parent of Company to its officers, directors or employees that have not previously been applied to the payment of Restricted Payments pursuant to this covenant, applied to the incurrence of Contribution Debt or considered an Excluded Contribution, plus (C) the net cash proceeds of any “key-man” life insurance policies
that have not been applied to the payment of Restricted Payments pursuant to this Section 4.05, applied to the incurrence of Contribution Debt or considered an Excluded Contribution;

 

(8)         the repurchase of any Subordinated Debt at a purchase price not greater than 101% of the principal amount thereof in the event of (x) a change of control pursuant to a provision no more favorable to the holders thereof than pursuant to Section 4.09 or (y) an Asset
Sale pursuant to a provision no more favorable to the holders thereof than pursuant to Section 4.10, provided that, in each case, prior to the repurchase the Company has made an Offer to Purchase and repurchased all Notes issued under the Indenture that were validly tendered for payment in connection with the Offer to Purchase;

 

(9)         (a) payments to any direct or indirect parent of Company of (i) amounts relating to taxes, in an amount not to exceed the amount of taxes the Company and its Subsidiaries would pay on a stand-alone basis, plus (ii) amounts necessary to pay expenses required to
maintain its corporate existence, customary salary, bonus and other benefits payable to, and indemnities provided on behalf of, its officers and employees and corporate overhead expenses, plus (iii) amounts necessary to make interest and principal payments on Debt of the Parent outstanding on the Issue Date as in effect on the Issue Date and any Permitted Refinancing Debt in respect thereof, plus (iv) amounts necessary to make interest and principal payments on Debt of any direct or indirect parent of the Company
the  

 

  

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proceeds of which have been contributed to the Company or any Restricted Subsidiary and that has been Guaranteed by, or is otherwise considered Debt of, the Company Incurred in accordance with Section 4.04, plus (v) amounts necessary to pay customary and reasonable costs and expenses of financings, acquisitions or offerings of securities of any direct or indirect parent of the Company that are not consummated or (b) any “deemed dividend”
resulting under the tax laws from, or in connection with, the filing of a consolidated or combined tax return by such direct or indirect parent of the Company (and not involving any cash distribution from the Company except as permitted by clause (a)(i) above);

 

(10)         repurchases of Equity Interests deemed to occur upon the exercise of stock options if the Equity Interests represent all or a portion of the exercise price thereof (or related withholding taxes), and Restricted Payments by the Company to allow the payment of cash
in lieu of the issuance of fractional shares upon the exercise of options or warrants or upon the conversion or exchange of Capital Stock of the Company;

 

(11)         Restricted Payments that are made with Excluded Contributions;

 

(12)         the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company or any Restricted Subsidiary or Preferred Stock of any Restricted Subsidiary issued in accordance with Section 4.04 to the extent such dividends are
included in the definition of Fixed Charges and payment of any redemption price or liquidation value of any such Disqualified Stock or Preferred Stock when due in accordance with its terms;

 

(13)         a Restricted Payment to Parent to fund (a) the payment of dividends on Parent’s common stock of up to $0.10 per share of common stock per annum,  appropriately adjusted to give effect to any stock splits, reverse stock splits or similar transactions
(with unused amounts carried

over and available for use until the end of the following fiscal year of the Company) or (b) in lieu  of all or a portion of dividends permitted by sub-clause (a), repurchases of Parent’s common stock for aggregate consideration that, when taken together with dividends permitted under clause (13)(a),
does not exceed the amount contemplated by sub-clause (a) above;

 

(14)         other Restricted Payments in an aggregate amount not to exceed the greater of $100.0 million; provided that after giving effect to any such Restricted Payment on a pro forma basis, the Leverage Ratio is
not greater than 4.0 to 1.0; and

 

  

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(15)         distributions or dividends of the proceeds of the offering of the Initial Notes to Parent as described under “Use of Proceeds” in the Offering Circular;

 

provided that, in the case of clauses (7), (9)(iii), (9)(v) and (13) no Default has occurred and is continuing or would occur as a result thereof.

 

(c)           Proceeds of the issuance of Qualified Equity Interests will be included under clause (3) of paragraph (a) only to the extent they are not applied as described in clause (4), (5), (6) or (7) of paragraph (b).  Restricted Payments permitted pursuant
to paragraph (b) (other than Restricted Payments permitted by clauses (1) and (7) of paragraph (b)) will not be included in making the calculations under clause (3) of paragraph (a).

 

(d)           For purposes of determining compliance with this Section 4.05, in the event that a proposed Restricted Payment (or portion thereof) meets the criteria of more than one of the categories of Restricted Payments described in clauses (1) through (15) of
paragraph (b), or is entitled to be Incurred pursuant to paragraph (a) of this Section 4.05, the Company will be entitled to classify or re-classify such Restricted Payment (or portion thereof) in any manner that complies with this covenant and such Restricted Payment will be treated as having been made pursuant to only such clause or clauses or paragraph (a) of this Section 4.05.

 

Section 4.06.  Limitation on Liens.  The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur or permit to exist any Lien to secure Debt on any of its properties
or assets, whether owned at the Issue Date or thereafter acquired, other than Permitted Liens, without effectively providing that the Notes are secured equally and ratably with (or, if the obligation to be secured by the Lien is subordinated in right of payment to the Notes or any Note Guaranty, prior to) the obligations so secured for so long as such obligations are so secured. 

 

Section 4.07.  Limitation on Dividend and other Payment Restrictions Affecting Restricted Subsidiaries.  (a) Except as provided in paragraph (b), the
Company will not, and will not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Restricted Subsidiary to

 

(1)         pay dividends or make any other distributions on any Equity Interests of the Restricted Subsidiary owned by the Company or any other Restricted Subsidiary,

 

(2)         pay any Debt or other obligation owed to the Company or any other Restricted Subsidiary,

 

  

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(3)         make loans or advances to the Company or any other Restricted Subsidiary, or

 

(4)         transfer any of its property or assets to the Company or any other Restricted Subsidiary.

 

(b)           The provisions of paragraph (a) do not apply to any encumbrances or restrictions

 

(1)         existing on the Issue Date in the Credit Agreement, the Indenture or any other agreements in effect on the Issue Date, and any amendments, modifications, extensions, renewals, replacements or refinancings of any of the foregoing; provided that the encumbrances
and restrictions in the amendment, modification, extension, renewal, replacement or refinancing are, taken as a whole, no less favorable in any material respect to the noteholders than the encumbrances or restrictions being extended, renewed, replaced or refinanced;

 

(2)         existing under or by reason of applicable law, rule, regulation or order;

 

(3)         existing

 

(A)         with respect to any Person, or to the property or assets of any Person, at the time the Person is acquired by the Company or any Restricted Subsidiary, or

 

(B)         with respect to any Unrestricted Subsidiary at the time it is designated or is deemed to become a Restricted Subsidiary,

 

which encumbrances or restrictions (i) are not applicable to any other Person or the property or assets of any other Person and (ii) were not put in place in anticipation of such event, and any extensions, renewals, replacements or refinancings of any of the foregoing, provided the
encumbrances and restrictions in the extension, renewal, replacement or

refinancing are, taken as a whole, no less favorable in any material respect to the Noteholders than the encumbrances or restrictions being extended, renewed, replaced or refinanced;

 

(4)         of the type described in clause (a)(4) arising or agreed to in the ordinary course of business (i) that restrict in a customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease or license or (ii) by virtue of any
Lien on, or agreement to transfer, option or similar right (including any asset sale or stock sale agreement) 

 

  

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with respect to, any property or assets of, the Company or any Restricted Subsidiary;
 

(5)         with respect to a Restricted Subsidiary and imposed pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock of, or property and assets of, the Restricted Subsidiary that is permitted by Section
4.10;

 

(6)         required pursuant to the Indenture;

 

(7)         existing pursuant to customary provisions in partnership agreements, limited liability company organizational governance documents, joint venture and other similar agreements entered into in the ordinary course of business that restrict the transfer of ownership
interests in such partnership, limited liability company, joint venture or similar Person;

 

(8)         consisting of restrictions on cash or other deposits or net worth imposed by customers, suppliers or landlords under contracts entered into in the ordinary course of business;

 

(9)         any instrument governing any Debt or Capital Stock of a Person that is an Unrestricted Subsidiary as in effect on the date that such Person becomes a Restricted Subsidiary, which encumbrance or restriction is not applicable to any Person, or the properties or assets
of any Person, other than the Person who became a Restricted Subsidiary, or the property or assets of the Person who became a Restricted Subsidiary; provided that, in the case of Debt, the incurrence of such Debt as a result of such Person becoming a Restricted Subsidiary was permitted by the terms of the Indenture;

 

(10)         consisting of customary restrictions pursuant to any Permitted Receivables Financing;

 

(11)         existing pursuant to provisions in instruments governing other Debt, Disqualified Stock or Preferred Stock of Restricted Subsidiaries permitted to be Incurred after the Issue Date pursuant to Section 4.04; provided  that
(i) such provisions are customary for

instruments of such type (as determined in good faith by the Company’s Board of Directors) and (ii) the Company’s Board of Directors determines in good faith that such restrictions will not materially adversely impact the ability of the Company to make required principal and interest payments on the Notes;

 

(12)         existing pursuant to purchase money obligations for property acquired in the ordinary course of business and Capital Lease obligations 

  

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that impose restrictions of the nature discussed in Section 4.07(a)(4) on the property so acquired;
 

(13)         restrictions or conditions contained in any trading, netting, operating, construction, service, supply, purchase or other agreement to which the Company or any of its Restricted Subsidiaries is a party entered into in the ordinary course of business; provided
that such agreement prohibits the encumbrance of solely the property or assets of the Company or such Restricted Subsidiary that are the subject of such agreement, the payment rights arising thereunder or the proceeds thereof and does not extend to any other asset or property of the Company or such Restricted Subsidiary or the assets or property of any other Restricted Subsidiary; and

 

(14)         any encumbrances or restrictions of the type referred to in paragraph (a) above imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred
to in clauses (1) through (13) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Company, no more restrictive with respect to such dividend restrictions and other encumbrances than those contained prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

 

For purposes of determining compliance with this covenant, (i) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock shall not be deemed a restriction on the ability to make distributions on Capital Stock and (ii)
the subordination of loans or advances made to the Company or a Restricted Subsidiary of the Company to other Debt Incurred by the Company or any such Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances.

 

Section 4.08.  Guarantees by Restricted Subsidiaries.  If and for so long as any Restricted Subsidiary (other than a Regulated Subsidiary), Guarantees
or is a borrower under the Credit Agreement, such Restricted Subsidiary shall provide a Note Guaranty, and, if the guaranteed Debt of the Company is Subordinated Debt, the Guarantee of such guaranteed Debt must be subordinated in right of payment to the Note Guaranty to at least the extent that the guaranteed Debt is subordinated to the Notes.

 

The Regulated Subsidiaries will provide Note Guarantees promptly (and in any event within 10 Business Days) after they cease to be subject to the regulatory restrictions imposed by the Vermont Department of Banking, 

 

  

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Insurance, Securities and Health Care Administration (or any successor thereto) on the ability of the Regulated Subsidiaries to Guarantee the Notes.
 

A Restricted Subsidiary required to provide a Note Guaranty shall execute a supplemental indenture in the form of Exhibit B, and deliver an Opinion of Counsel to the Trustee to the effect that the supplemental indenture has been duly authorized, executed and delivered by the Restricted Subsidiary and constitutes
a valid and binding obligation of the Restricted Subsidiary, enforceable against the Restricted Subsidiary in accordance with its terms (subject to customary exceptions).

 

Section 4.09.  Repurchase of Notes Upon a Change of Control.  (a) Not later than 30 days following a Change of Control, the Company will make an Offer to Purchase all outstanding Notes at a purchase
price equal to 101% of the principal amount plus accrued interest to the date of purchase.  The Company’s obligation to make an Offer to Purchase in connection with a Change of Control will be satisfied if a third party makes the Offer to Purchase in the manner and at the times and otherwise in compliance with the requirements applicable to an Offer to Purchase made by the Company and purchases all Notes properly tendered and not withdrawn under the Offer to Purchase. 

 

Section 4.10.  Limitation on Asset Sales.  (a)The Company will not, and will not permit any Restricted Subsidiary to, make any Asset Sale unless the following conditions are met: 

 

(1)         The Asset Sale is for fair market value, as determined in good faith by the Board of Directors.

 

(2)         At least 75% of the consideration consists of cash or Cash Equivalents received at closing. (For purposes of this clause (2) only, (A) the assumption by the purchaser of Debt or other obligations (other than Subordinated Debt) of the Company or a Restricted Subsidiary
pursuant to a customary novation agreement, (B) instruments or securities received from the purchaser that are promptly, but in any event within 365 days of the closing, converted by the Company to cash, to the extent of the cash actually so received, (C) any Designated Non-cash Consideration received by the Company or any of its Restricted Subsidiaries in such Asset Sale having an aggregate fair market value, taken together with all other Designated Non-cash Consideration received pursuant to this clause (C)
that is at that time outstanding, not to exceed the greater of $150.0 million and 3.0% of Total Assets at the time of the receipt of such Designated Non-cash Consideration (with the fair market value of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value), (D) the fair market value of any assets received by the Company or any Restricted Subsidiary
to be used by it in the Permitted Business and (E) the fair 

  

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market value of any Equity Interests in a Person that is a Restricted Subsidiary or in a Person engaged in a Permitted Business that shall become a Restricted Subsidiary immediately upon the acquisition of such Person by the Company, shall be considered cash received or Cash Equivalents at closing).

 

(3)         Within 15 months after the receipt of any Net Cash Proceeds from an Asset Sale, the Net Cash Proceeds may be used

 

(A)         to permanently repay secured Debt of the Company or a Guarantor or any Debt of a Restricted Subsidiary that is not a Guarantor (and in the case of a revolving credit, permanently reduce the commitment thereunder by such amount), in each case owing to a Person other
than the Company or any Restricted Subsidiary, or

 

(B)         to acquire all or substantially all of the assets of a Permitted Business, or a majority of the Voting Stock of another Person that thereupon becomes a Restricted Subsidiary engaged in a Permitted Business, or to make capital expenditures or otherwise acquire assets
that are to be used in a Permitted Business.

 

Following the entering into of a binding agreement with respect to an Asset Sale and prior to the consummation thereof, cash or Cash Equivalents (whether or not actual Net Cash Proceeds of such Asset Sale) used for the purposes described in subclauses (A) and (B) of this clause (3) that are designated as uses in accordance
with this clause (3), and not previously or subsequently so designated in respect of any other Asset Sale, shall be deemed to be Net Cash Proceeds applied in accordance with this clause (3).

 

(4)         The Net Cash Proceeds of an Asset Sale not applied pursuant to clause (3) within 15 months of the Asset Sale constitute “Excess Proceeds.”  Excess Proceeds of less than $100.0 million
will be carried forward and accumulated, provided that until the aggregate amount of Excess Proceeds equals or exceeds $100.0 million, all or any portion of such Excess Proceeds may be used or invested in the manner described in clause (3) above and such invested amount shall no longer be considered Excess Proceeds.  When accumulated Excess Proceeds equals or exceeds $100.0 million, the Company must, within 30 days, make an Offer to Purchase Notes
having a principal amount equal to

(A)         accumulated Excess Proceeds, multiplied by

 

(B)         a fraction (x) the numerator of which is equal to the outstanding principal amount of the Notes and (y) the denominator 

 

  

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of which is equal to the outstanding principal amount of the Notes and all pari passu Debt similarly required to be repaid, redeemed or tendered for in connection with the Asset Sale,

 

rounded down to the nearest $1,000.  The purchase price for the Notes will be 100% of the principal amount plus accrued interest to the date of purchase.  The Company may satisfy its obligation to make an Offer to Purchase with respect to any Net Cash Proceeds of any Asset Sale by making an Offer to
Purchase with respect to such Net Cash Proceeds prior to the expiration of the 15-month period.  Upon completion of the Offer to Purchase, Excess Proceeds will be reset at zero, and any Excess Proceeds remaining after consummation of the Offer to Purchase may be used for any purpose not otherwise prohibited by the Indenture.

 

Section 4.11.  Limitation on Transactions with Affiliates.  (a) The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, enter into, renew or extend any transaction
or arrangement including the purchase, sale, lease or exchange of property or assets, or the rendering of any service with any Affiliate of the Company or any Restricted Subsidiary (a “Related Party Transaction”), involving aggregate payment or consideration in excess of $15.0 million, except upon  terms no less favorable to the Company or the Restricted Subsidiary than could be obtained in a comparable arm’s-length transaction
with a Person that is not an Affiliate of the Company. 

 

(b)           Any Related Party Transaction or series of Related Party Transactions with an aggregate value in excess of $40.0 million must first be approved by a majority of the Board of Directors who are disinterested in the subject matter of the transaction pursuant
to a Board Resolution.

 

(c)           The foregoing paragraphs do not apply to

 

(1)         any transaction between or among the Company and/or any of its Restricted Subsidiaries;

 

(2)         the payment of reasonable and customary fees and reimbursement of expenses paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or any Restricted Subsidiary;

 

(3)         any Restricted Payments made in accordance with Section 4.05 and Permitted Investments;

 

(4)         transactions or payments, including grants of securities, stock options and similar rights, pursuant to any employee, officer or director compensation or benefit plans or arrangements entered into in the 

  

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ordinary course of business or approved by the Company’s Board of Directors in good faith;
 

(5)         transactions pursuant to any contract or agreement in effect on the Issue Date, as amended, modified or replaced from time to time so long as the amended, modified or new agreements, taken as a whole, are no less favorable to the Company and its Restricted Subsidiaries
than those in effect on the Issue Date;

 

(6)         any transaction in which the Company or any Restricted Subsidiary, as the case may be, obtains a favorable written opinion from a nationally recognized investment banking firm as to the fairness of the transaction to the Company and its Restricted Subsidiaries
from a financial point of view;

 

(7)          the entering into of a customary agreement providing registration rights to the direct or indirect shareholders of the Company and the performance of such agreements;

 

(8)         the issuance of Equity Interests (other than Disqualified Stock) of the Company to any Person or any transaction with an Affiliate where the only consideration paid by the Company or any Restricted Subsidiary is Equity Interests (other than Disqualified Stock)
or any contribution to the capital of the Company;

 

(9)         the entering into of any tax sharing agreement or arrangement or any other transactions undertaken in good faith, that is consistent with Section 4.05(b)(9)(a)(i);

 

(10)         pledges of Equity Interests of Unrestricted Subsidiaries;

 

(11)         any employment agreements entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business;

 

(12)         (A) transactions with customers, clients, suppliers or purchasers or sellers of goods or services, or transactions otherwise relating to the purchase or sale of goods or services, in each case in the ordinary course of business and otherwise in compliance with
the terms of the Indenture, (B) transactions with joint ventures or Unrestricted Subsidiaries entered into in the ordinary course of business and consistent with past practice or industry norm or (C) any management services or support agreement entered into on terms consistent with past practice and approved by a majority of the Company’s Board of Directors in good faith;

 

 

  

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(13)         payments or loans (or cancellation of loans) to officers, directors, employees or consultants which are approved by a majority of the Company’s Board of Directors in good faith;

 

(14)         sales of Accounts Receivable, or participations therein, or any related transaction, in connection with any Permitted Receivables Financing;

 

(15)         transactions permitted by, and complying with, the provisions of Article 5, or any merger, consolidation or reorganization of the Company with an Affiliate, solely for the purposes of (a) reorganizing to facilitate an initial public offering of securities of the
Company or any direct or indirect parent company, (b) forming a holding company or (c) reincorporating the Company in a new jurisdiction;

 

(16)         transactions between the Company or any of its Restricted Subsidiaries and any Person that is an Affiliate solely because one or more of its directors is also a director of the Company or any direct or indirect parent of the Company; provided that
such director abstains from voting as a director of the Company or such direct or indirect parent, as the case may be, on any matter involving such other Person; or

 

(17)         the formation and maintenance of any consolidated group or subgroup for tax, accounting or cash pooling or management purposes in the ordinary course of business; provided that the Board of Directors determines
in good faith that the formation and maintenance of such group or subgroup is in the best interests of the Company and will not materially adversely affect the Company’s ability to perform its obligations under the Indenture.

 

Section 4.12.  Designation of Restricted and Unrestricted Subsidiaries.  (a) The Board of Directors may designate any Subsidiary, including a newly acquired or created
Subsidiary, to be an Unrestricted Subsidiary if it meets the following qualifications and the designation would not cause a Default. 

 

(1)         Such Subsidiary does not own any Capital Stock of the Company (other than Qualified Equity Interests) or any Restricted Subsidiary that is not a Subsidiary of the Subsidiary to be so designated or hold any Lien on any property of the Company or any Restricted Subsidiary
that is not a Subsidiary of the Subsidiary to be so designated.

 

(2)         At the time of the designation, the designation would be permitted under Section 4.05 or as a Permitted Investment.

 

(3)         To the extent the Debt of  the Subsidiary is not Non-Recourse Debt, any Guarantee or other credit support thereof  by the 

 

  

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Company or any Restricted Subsidiary is permitted under Section 4.04 and Section 4.05.
 

(4)         Neither the Company nor any Restricted Subsidiary has any obligation to subscribe for additional Equity Interests of the Subsidiary or to maintain or preserve its financial condition or cause it to achieve specified levels of operating results except to the extent
permitted by Section 4.04 and Section 4.05.

 

Once so designated the Subsidiary will remain an Unrestricted Subsidiary, subject to paragraph (b).

 

(b)           (1) A Subsidiary previously designated an Unrestricted Subsidiary which fails to meet the qualifications set forth in paragraph (a) will be deemed to become at that time a Restricted Subsidiary, subject to the consequences set forth in paragraph (d).

 

(2)         The Board of Directors may designate an Unrestricted Subsidiary to be a Restricted Subsidiary if the designation would not cause a Default.

 

(c)           Upon a Restricted Subsidiary becoming an Unrestricted Subsidiary,

 

(1)         all existing Investments of the Company and the Restricted Subsidiaries therein (valued at the Company’s proportional share of the fair market value of its assets less liabilities) will be deemed made at that time;

 

(2)         all existing Capital Stock or Debt of the Company or a Restricted Subsidiary held by it will be deemed Incurred at that time, and all Liens on property of the Company or a Restricted Subsidiary held by it will be deemed incurred at that time;

 

(3)         all existing transactions between it and the Company or any Restricted Subsidiary will be deemed entered into at that time;

 

(4)         it is released at that time from its Note Guaranty, if any; and

 

(5)         it will cease to be subject to the provisions of the Indenture as a Restricted Subsidiary.

 

(d)           Upon an Unrestricted Subsidiary becoming, or being deemed to become, a Restricted Subsidiary,

 

(1)         all of its Debt and Disqualified or Preferred Stock will be deemed Incurred at that time for purposes of Section 4.04, but will not be

 

  

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considered the sale or issuance of Equity Interests for purposes of Section 4.10;

 

(2)         Investments therein previously charged under Section 4.05 will be credited thereunder;

 

(3)         to the extent required by Section 4.08, it shall issue a Note Guaranty of the Notes; and

 

(4)         it will thenceforward be subject to the provisions of the Indenture as a Restricted Subsidiary.

 

(e)           Any designation by the Board of Directors of a Subsidiary as a Restricted Subsidiary or Unrestricted Subsidiary will be evidenced to the Trustee by promptly filing with the Trustee a copy of the Board Resolution giving effect to the designation and an
Officer’s Certificate certifying that the designation complied with the foregoing provisions.

 

Section 4.13.  Financial Reports.  (a)  Whether or not the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company must provide the Trustee
and Noteholders, or file electronically with the Commission, within the time periods specified in the Commission rules and regulations for non-accelerated filers with 

 

(1)         all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such forms, including a “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and, with respect to annual information only, a report thereon by the Company’s certified independent accountants, and

 

(2)         all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports.

 

In addition, whether or not required by the Commission, the Company will, after the effectiveness of an Exchange Offer Registration Statement or Shelf Registration Statement, if the Commission will accept the filing, file a copy of all of the information and reports referred to in clauses (1) and (2) with the Commission
for public availability within the time periods specified in the Commission’s rules and regulations.  In addition, the Company will make the information and reports available to securities analysts and prospective investors upon request.

 

Notwithstanding the foregoing, if Parent or any other direct or indirect parent of the Company fully and unconditionally guarantees the Notes, the filing

  

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of such reports by such parent within the time periods specified above will satisfy such obligations of the Company; provided that, following effectiveness of an Exchange Offer Registration Statement or Shelf Registration Statement, such reports shall include the information required by Rule 3-10 of Regulation S-X with respect to the Company and
the Guarantors.
 

(b)           For so long as any of the Notes remain outstanding and constitute “restricted securities” under Rule 144 under the Securities Act, the Company will furnish to the Holders of the Notes and prospective
investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

 

(c)           All obligors on the Notes will comply with Section 314(a) of the Trust Indenture Act.

 

(d)           Delivery of these reports and information to the Trustee is for informational purposes only and the Trustee’s receipt of them will not constitute constructive notice of any information contained therein or determinable from information contained
therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

 

(e)           Notwithstanding the foregoing, the requirements of paragraph (a) above shall be deemed satisfied prior to the effective date of the Exchange Offer Registration Statement or the Shelf Registration Statement (as the case may be) by the filing with the
Commission of the Exchange Offer Registration Statement or the Shelf Registration Statement, and any amendments thereto, in accordance with the provisions of the Registration Rights Agreement containing the information substantially consistent with that required by paragraph (a) and filed within the time periods set forth above.

 

Section 4.14.  Reports to Trustee.  (a)  The Company will deliver to the Trustee within 120 days after the end of each fiscal year an Officers’ Certificate stating that the Company has fulfilled
its obligations hereunder or, if there has been a Default, specifying the Default and its nature and status. 

 

(b)           The Company will deliver to the Trustee as soon as possible and in any event within 30 days after the Company becomes aware of the occurrence of a Default, an Officers’ Certificate setting forth the details of the Default, and the action which
the Company proposes to take with respect thereto.

 

Section 4.15.  Limitation of Applicability of Certain Covenants if Notes Rated Investment Grade.  (a)  The obligation of the Company and its Restricted Subsidiaries to comply with Article 4 (except for Sections 4.01, 4.02, 4.03, 4.06,
4.09, 4.12, 4.13 and 4.14) and Section 5.01(a)(iii)(3) will be suspended (such suspended covenants, the “Suspended Covenants”) and cease to have any further 

  

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effect from and after the first date when the Notes have an Investment Grade Rating; provided, that if the Notes cease to have an Investment Grade Rating then, from and after such time, the obligation of the Company and its Restricted Subsidiaries to comply with the Suspended Covenants shall be reinstated.
 

(b)           Notwithstanding the foregoing, in the event of any such reinstatement, no action taken or omitted to be taken by the Company or any of its Subsidiaries prior to such reinstatement shall give rise to a Default or Event of Default under the Indenture upon
reinstatement; provided that (1) with respect to Restricted Payments made after any such reinstatement, the amount of Restricted Payments made on or after the Issue Date, for purposes of Section 4.05(a)(3), will be calculated as though such covenant had been in effect during the entire period after such date; (2) all Debt, Incurred, during the suspension period will be deemed to have been Incurred pursuant to Section 4.04(b)(8), and (3) promptly, and in
any event within 10 Business Days of such reinstatement, any Restricted Subsidiary that would have been required prior to such reinstatement by Section 4.08 to execute a supplemental indenture and Guarantee the Notes (but for the suspension of such covenant) will execute such supplemental indenture required by such covenant.

 

 

ARTICLE 5

 

 

Consolidation, Merger or Sale of Assets

 

Section 5.01.  Consolidation, Merger or Sale of Assets by the Company.  (a) The Company will not 

 

(i)         consolidate with or merge with or into any Person, or

 

(ii)         sell, convey, transfer, lease, or otherwise dispose of all or substantially all of its assets as an entirety or substantially an entirety, in one transaction or a series of related transactions, to any Person or

 

(iii)         permit any Person to merge with or into the Company

 

unless

 

(1)         either (x) the Company is the continuing Person or (y) the resulting, surviving or transferee Person is a Person organized and validly existing under the laws of the United States of America or any jurisdiction thereof and expressly assumes by supplemental indenture
all of the obligations of the Company under the Indenture and the Notes and the Registration Rights Agreement;

 

 

  

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(2)         immediately after giving effect to the transaction, no Default has occurred and is continuing;

(3)         in the case of a transaction involving the Company, immediately after giving effect to the transaction on a pro forma basis, (i) the Company or the resulting surviving or transferee Person could Incur at least $1.00 of Debt under the Fixed Charge Coverage Test
or (ii) the Fixed Charge Coverage Ratio is greater than immediately prior thereto; and

 

(4)         the Company delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that the consolidation, merger or transfer and the supplemental indenture (if any) comply with the Indenture;

 

provided that clauses (2) through (4) do not apply (i) to the consolidation or merger of the Company with or into, or the sale by the Company of all or substantially all its assets to, a Wholly Owned Restricted Subsidiary or the consolidation or merger of a Wholly
Owned Restricted Subsidiary with or into, or the sale by such Subsidiary of all or substantially all of its assets to, the Company or (ii) if, in the good faith determination of the Board of Directors of the Company, whose determination is evidenced by a Board Resolution, the sole purpose of the transaction is to change the jurisdiction of incorporation of the Company or to form a holding company for the Company (provided that such holding company becomes a Guarantor).

 

The foregoing shall not apply to (i) any transfer of assets by the Company to any Guarantor, (ii) any transfer of assets among Guarantors or (iii) any transfer of assets by a Restricted Subsidiary that is not a Guarantor to (x) another Restricted Subsidiary that is not a Guarantor or (y) the Company or any Guarantor.

 

(b)           Upon the consummation of any transaction effected in accordance with these provisions, if the Company is not the continuing Person, the resulting, surviving or transferee Person will succeed to, and be substituted for, and may exercise every right and
power of, the Company under the Indenture and the Notes with the same effect as if such successor Person had been named as the Company in the Indenture.  Upon such substitution, except in the case of a lease of all or substantially all of its assets, the Company will be released from its obligations under the Indenture and the Notes.

 

Section 5.02.  Consolidation, Merger or Sale of Assets by a Guarantor.  (a)  No Guarantor may

 

(i)         consolidate with or merge with or into any Person, or

 

 

 

  

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(ii)         sell, convey, transfer or dispose of, all or substantially all its assets as an entirety or substantially as an entirety, in one transaction or a series of related transactions, to any Person, or

 

(iii)         permit any Person to merge with or into the Guarantor

unless

 

(A)         the other Person is the Company or any Restricted Subsidiary that is Guarantor or becomes a Guarantor concurrently with the transaction; or

 

(B)           (1)           either (x) the Guarantor is the continuing Person or (y) the resulting, surviving or transferee Person  expressly assumes by supplemental Indenture all of the obligations
of the Guarantor under its Note Guaranty; and

 

(2)           immediately after giving effect to the transaction, no Default has occurred and is continuing; or

 

(C)         the transaction constitutes a sale or other disposition (including by way of consolidation or merger) of the Guarantor or the sale or disposition of all or substantially all the assets of the Guarantor (in each case other than to the Company or a Restricted Subsidiary)
otherwise permitted by the Indenture.

 

 

ARTICLE 6

Default and Remedies

 

 

Section 6.01.  Events of Default.  An “Event of Default” occurs if 

 

(1)           the Company defaults in the payment of the principal of any Note when the same becomes due and payable at maturity, upon acceleration or redemption, or otherwise (other than pursuant to an Offer to Purchase);

 

(2)           the Company defaults in the payment of interest (including any Additional Interest) on any Note when the same becomes due and payable, and the default continues for a period of 30 days;

 

(3)           the Company fails to accept and pay for Notes tendered when and as required pursuant to Section 4.09 or Section 4.10;

 

(4)           the Company defaults in the performance of or breaches any other covenant or agreement of the Company in the Indenture or under the Notes and the default or breach continues for a period of 60 consecutive days after written notice to the Company by the
Trustee or to the Company and the Trustee by the 

  

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Holders of 25% or more in aggregate principal amount of the Notes (except in the case of a default with respect to Article 5, which will constitute an Event of Default with such notice requirement but without such passage of time requirement);
 

(5)           the failure by the Company or any Significant Restricted Subsidiary to pay any Debt (other than Debt owing to the Company or a Restricted Subsidiary) within any applicable grace period after final maturity or the acceleration of any such Debt by the
holders thereof because of a default, in each case, if the total amount of such Debt unpaid or accelerated exceeds $75 million;

 

(6)           one or more final judgments or orders for the payment of money are rendered against the Company or any of its Significant Restricted Subsidiaries and are not paid or discharged, and there is a period of 60 consecutive days following entry of the final
judgment or order that causes the aggregate amount for all such final judgments or orders outstanding and not paid or discharged against all such Persons to exceed $ 75 million (in excess of amounts which the Company’s insurance carriers have agreed to pay under applicable policies) during which a stay of enforcement, by reason of a pending appeal or otherwise, is not in effect;

 

(7)           an involuntary case or other proceeding is commenced against the Company or any Significant Restricted Subsidiary with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect
seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding remains undismissed and unstayed for a period of 60 days; or an order for relief is entered against the Company or any Significant Restricted Subsidiary under the federal bankruptcy laws as now or hereafter in effect and the order remains in effect for a period of 60 days; 

 

(8)           the Company or any of its Significant Restricted Subsidiaries (i) commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary
case under any such law, (ii) consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Company or any of its Significant Restricted Subsidiaries or for all or substantially all of the property and assets of the Company or any of its Significant Restricted Subsidiaries or (iii) effects any general assignment for the benefit of creditors (an event of default specified in clause (7) or (8) a “bankruptcy
default”); or

 

(9)           any Note Guaranty of a significant Restricted Subsidiary ceases to be in full force and effect, other than in accordance the terms of the Indenture, or a Guarantor denies or disaffirms its obligations under its Note Guaranty.

 

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    Section 6.02.  Acceleration.   (a)  If an Event of Default, other than a bankruptcy default with respect to the Company, occurs and is continuing under the Indenture,
the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding, by written notice to the Company (and to the Trustee if the notice is given by the Holders), may, and the Trustee at the request of such Holders shall, declare the principal of and accrued interest on the Notes to be immediately due and payable.  Upon a declaration of acceleration, such principal and interest will
become immediately due and payable.  If a bankruptcy default occurs with respect to the Company, the principal of and accrued interest on the Notes then outstanding will become immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.

 

(b)           The Holders of a majority in principal amount of the outstanding Notes by written notice to the Company and to the Trustee may waive all past defaults and  rescind and annul a declaration of acceleration and its consequences if

 

(1)         all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and interest on the Notes that have become due solely by the declaration of acceleration, have been cured or waived, and

 

(2)         the rescission would not conflict with any judgment or decree of a court of competent jurisdiction.

 

(c)           In the event of a declaration of acceleration of the Notes because an Event of Default described in clause (5) of Section 6.01 has occurred and is continuing, the declaration of acceleration of the Notes shall be automatically annulled if the event of
default or payment default triggering such Event of Default pursuant to clause (5) shall be remedied or cured, or waived by the holders of the Debt, or the Debt that gave rise to such Event of Default shall have been discharged in full, within 30 days after the declaration of acceleration with respect thereto and if (1) the annulment of the acceleration of the Notes would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, except nonpayment of
principal, premium or interest on the Notes that became due solely because of the acceleration of the Notes, have been cured or waived.

 

Section 6.03.  Other Remedies.  If an Event of Default occurs and is continuing, the Trustee may pursue, in its own name or as trustee of an express trust, any available remedy by proceeding at law or in equity to collect
the payment of principal of and interest on the Notes or to enforce the performance of any provision of the Notes or the Indenture.  The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. 

 

 

  

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Section 6.04.  Waiver of Past Defaults.  Except as otherwise provided in Sections 6.02, 6.07 and 9.02, the Holders of a majority in principal amount of the outstanding Notes may, by
notice to the Trustee, waive an existing Default and its consequences.  Upon such waiver, the Default will cease to exist, and any Event of Default arising therefrom will be deemed to have been cured, but no such waiver will extend to any subsequent or other Default or impair any right consequent thereon. 

 

Section 6.05.  Control by Majority.  The Holders of a majority in aggregate principal amount of the outstanding Notes may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or the Indenture, that may involve the Trustee in personal liability, or that the Trustee determines in good faith may be unduly prejudicial to the rights of Holders of Notes not joining in the giving of such direction, and may take any other action it deems proper that is not inconsistent with any such direction received from Holders
of Notes. 

 

Section 6.06.  Limitation on Suits.  A Holder may not institute any proceeding, judicial or otherwise, with respect to the Indenture or the Notes, or for the appointment of a receiver
or trustee, or for any other remedy under the Indenture or the Notes, unless: 

 

(1)         the Holder has previously given to the Trustee written notice of a continuing Event of Default;

 

(2)         Holders of at least 25% in aggregate principal amount of outstanding Notes have made written request to the Trustee to institute proceedings in respect of the Event of Default in its own name as Trustee under the Indenture;

 

(3)         Holders have offered to the Trustee indemnity satisfactory to the Trustee against any costs, liabilities or expenses to be incurred in compliance with such request;

 

(4)         the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and

 

(5)         during such 60-day period, the Holders of a majority in aggregate principal amount of the outstanding Notes have not given the Trustee a direction that is inconsistent with such written request.

 

Section 6.07.  Rights of Holders to Receive Payment.  Notwithstanding anything to the contrary, the right of a Holder of a Note to receive payment of principal of or interest
on its Note on or after the Stated Maturities thereof, or to 

  

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bring suit for the enforcement of any such payment on or after such respective dates, may not be impaired or affected without the consent of that Holder.
 

Section 6.08.  Collection Suit by Trustee.  If an Event of Default in payment of principal or interest specified in clause (1) or (2) of Section 6.01 occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust for the whole amount of principal and accrued interest remaining unpaid, together with interest on overdue principal and, to the extent lawful, overdue installments of interest, in each case at the rate specified in the Notes, and such further amount as is sufficient to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee hereunder.

 

Section 6.09.  Trustee May File Proofs of Claim.  The Trustee may file proofs of claim and other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee hereunder) and the Holders allowed in any judicial proceedings relating to the Company or any Guarantor or their respective creditors or property, and is entitled and empowered to collect, receive and distribute any money, securities or other property payable or deliverable upon conversion or exchange of the Notes or upon any such claims.  Any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, if the Trustee consents to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agent and counsel, and any other amounts due the Trustee hereunder.  Nothing in the Indenture
will be deemed to empower the Trustee to authorize or consent to, or accept or adopt on behalf of any Holder, any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. 

 

Section 6.10.  Priorities.  If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order: 

 

First:  to the Trustee for all amounts due hereunder;

 

Second:  to Holders for amounts then due and unpaid for principal of and interest on the Notes, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal and interest; and

 

 

  

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Third:  to the Company or as a court of competent jurisdiction may direct.

 

The Trustee, upon written notice to the Company, may fix a record date and payment date for any payment to Holders pursuant to this Section.

 

Section 6.11.  Restoration of Rights and Remedies.  If the Trustee or any Holder has instituted a proceeding to enforce any right or remedy under the 
Indenture and the proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to the Holder, then, subject to any determination in the proceeding, the Company, any Guarantors, the Trustee and the Holders will be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Company, any Guarantors, the Trustee and the
Holders will continue as though no such proceeding had been instituted.

 

Section 6.12.  Undertaking for Costs.  In any suit for the enforcement of any right or remedy under the Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court may require any party litigant in such suit (other than the Trustee) to file an undertaking to pay the costs of the suit, and the court may assess reasonable costs, including reasonable attorneys fees, against any party litigant (other than the Trustee) in the suit having due regard to the merits and good faith of the claims or defenses made by the party litigant.  This Section does not apply to a suit by a Holder to enforce payment of principal of or interest on any Note on the
respective due dates, or a suit by Holders of more than 10% in principal amount of the outstanding Notes. 

 

Section 6.13.  Rights and Remedies Cumulative.  No right or remedy conferred or reserved to the Trustee or to the Holders under this Indenture is intended to be exclusive of
any other right or remedy, and all such rights and remedies are, to the extent permitted by law, cumulative and in addition to every other right and remedy hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or exercise of any right or remedy hereunder, or otherwise, will not prevent the concurrent assertion or exercise of any other right or remedy. 

 

Section 6.14.  Delay or Omission Not Waiver.  No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default will impair
any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.  Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. 

 

Section 6.15.  Waiver of Stay, Extension or Usury Laws.  The Company and each Guarantor covenants, to the extent that it may lawfully do so, that it will  

 

  

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not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Company or the Guarantor from paying all or any portion of the principal of, or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or that may affect the covenants or the performance of the Indenture.  The Company and each Guarantor hereby expressly waives, to the extent that it may lawfully do so, all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

 

 

ARTICLE 7 

The Trustee

 

Section 7.01.  General.  (a) The duties and responsibilities of the Trustee are as provided by the Trust Indenture Act and as set forth herein.  Whether or not expressly so provided, every provision of the Indenture
relating to the conduct or affecting the liability of or affording protection to the Trustee is subject to this Article. 

 

(b)           Except during the continuance of an Event of Default, the Trustee need perform only those duties that are specifically set forth in the Indenture and no others, and no implied covenants or obligations will be read into the Indenture against the Trustee.  In
case an Event of Default has occurred and is continuing, the Trustee shall exercise those rights and powers vested in it by the Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.

 

(c)           No provision of the Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct.

 

Section 7.02.  Certain Rights of Trustee.  Subject to Trust Indenture Act Sections 315(a) through (d): 

 

(1)         In the absence of bad faith on its part, the Trustee may rely, and will be protected in acting or refraining from acting, upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper Person.  The Trustee need not investigate any fact or matter stated in the document, but, in the case of any document which is specifically required to be furnished to the 

 

  

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Trustee pursuant to any provision hereof, the Trustee shall examine the document to determine whether it conforms to the requirements of the Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).  The Trustee, in its discretion, may make further inquiry or investigation into such facts or matters as it sees fit.
 

(2)         Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel conforming to

Section 11.05 and the Trustee will not be liable for any action it takes or omits to take in good faith in reliance on the certificate or opinion.

 

(3)         The Trustee may act through its attorneys and agents and will not be responsible for the misconduct or negligence of any agent (other than an agent who is an employee of the Trustee) appointed with due care.

 

(4)         The Trustee will be under no obligation to exercise any of the rights or powers vested in it by the Indenture at the request or direction of any of the Holders, unless such Holders have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that might be incurred by it in compliance with such request or direction.

 

(5)         The Trustee will not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within its rights or powers or for any action it takes or omits to take in accordance with the direction of the Holders in accordance with
Section 6.05 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under the Indenture.

 

(6)         The Trustee may consult with counsel, and the written advice of such counsel or any Opinion of Counsel will be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

 

(7)         No provision of the Indenture will require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties hereunder, or in the exercise of its rights or powers, unless it receives indemnity satisfactory to
it against any loss, liability or expense.

 

(8)         Except with respect to Section 4.01, the Trustee shall have no duty to inquire as to the performance of the Company with respect to the covenants contained in Article 4.  In addition, the Trustee shall not be deemed to have knowledge of an Event of Default
except (i) any Default 

  

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or Event of Default occurring pursuant to Sections 4.01, 6.01(1) or 6.01(2) or (ii) any Default or Event of Default of which Trustee shall have received written notification or obtained actual knowledge.

 

    Section 7.03.  Individual Rights of Trustee.  The Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were not the Trustee.  Any Agent may do the same with like rights.  However, the Trustee is subject to Trust Indenture Act Sections 310(b) and 311.  For purposes of Trust Indenture Act Section 311(b)(4) and (6): 

(a)           “cash transaction” means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks
or other orders drawn upon banks or bankers and payable upon demand; and

 

(b)         “self-liquidating paper” means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred for the purpose of financing the purchase, processing, manufacturing,
shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance
or obligation.

 

Section 7.04.  Trustee’s Disclaimer.  The Trustee (i) makes no representation as to the validity or adequacy of the Indenture or the Notes, (ii) is not accountable for the Company’s use or application
of the proceeds from the Notes and (iii) is not responsible for any statement in the Notes other than its certificate of authentication. 

 

Section 7.05.  Notice of Default.  If any Default occurs and is continuing and is known to the Trustee, the Trustee will send notice of the Default to each Holder within 90 days after it occurs,
unless the Default has been cured; provided that, except in the case of a default in the payment of the principal of or interest on any Note, the Trustee may withhold the notice if and so long as the board of directors, the executive committee or a committee of trust officers of the Trustee in good faith determines that withholding the notice is in the interest of the Holders.  Notice to Holders under this Section will be given in the manner and
to the extent provided in Trust Indenture Act Section 313(c). 

 

Section 7.06.  Reports by Trustee to Holders.  Within 60 days after each May 15, beginning with May 15, 2010, the Trustee will mail to each Holder, as 

  

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provided in Trust Indenture Act Section 313(c), a brief report dated as of such May 15, if required by Trust Indenture Act Section 313(a), mail such reports to the Company and file such reports with each stock exchange upon which its Notes are listed and with the Commission as required by Trust Indenture Act Section 313(d).
 

Section 7.07.  Compensation and Indemnity.  (a) The Company will pay the Trustee compensation as agreed upon in writing for its services.  The compensation of the Trustee is not limited by any law on compensation of a Trustee of an
express trust.  The Company will reimburse the Trustee upon request for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by the Trustee, including the reasonable compensation and expenses of the Trustee’s agents and counsel.

 

(b)           The Company will indemnify the Trustee for, and hold it harmless against, any loss or liability or expense incurred by it without negligence or bad faith on its part arising out of or in connection with the acceptance or administration of the Indenture
and its duties under the Indenture and the Notes, including the costs and expenses of defending itself against any claim or liability and of complying with any process served upon it or any of its officers in connection with the exercise or performance of any of its powers or duties under the Indenture and the Notes. The Trustee shall notify the Company promptly of any claim asserted against the Trustee or any of its agents for which it may seek indemnity.  The Company shall defend the claim and the
Trustee shall cooperate in the defense.  The Trustee and its agents subject to the claim may have separate counsel, and the Company shall pay the reasonable fees and expenses of such counsel; provided, however, that the Company will not be required to pay such fees and expenses if there is no conflict of interest between the Company and the Trustee and its agents subject to the claim in
connection with such defense as reasonably determined by the Trustee.  The Company need not pay for any settlement made without its written consent.  The Company need not reimburse any expense or indemnify against any loss or liability to the extent incurred by the Trustee through the Trustee’s negligence, bad faith or willful misconduct.

 

(c)           To secure the Company’s payment obligations in this Section, the Trustee will have a lien prior to the Notes on all money or property held or collected by the Trustee, in its capacity as Trustee, except money or property held in trust to pay principal
of, and interest on, particular Notes.

 

Section 7.08.  Replacement of Trustee.  (a) (1) The Trustee may resign at any time by written notice to the Company. 

 

(2)         The Holders of a majority in principal amount of the outstanding Notes may remove the Trustee by written notice to the Trustee.

 

 

  

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(3)         If the Trustee is no longer eligible under Section 7.10 or in the circumstances described in Trust Indenture Act Section 310(b), any Holder that satisfies the requirements of Trust Indenture Act Section 310(b) may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.

 

(4)         The Company may remove the Trustee if: (i) the Trustee is no longer eligible under Section 7.10; (ii) the Trustee is adjudged a bankrupt or an insolvent; (iii) a receiver or other public officer takes charge of the Trustee or its property; or (iv) the Trustee
becomes incapable of acting.

A resignation or removal of the Trustee and appointment of a successor Trustee will become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section.

 

(b)           If the Trustee has been removed by the Holders, Holders of a majority in principal amount of the Notes may appoint a successor Trustee with the consent of the Company.  Otherwise, if the Trustee resigns or is removed, or if a vacancy exists
in the office of Trustee for any reason, the Company will promptly appoint a successor Trustee.  If the successor Trustee does not deliver its written acceptance within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of a majority in principal amount of the outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.

 

(c)           Upon delivery by the successor Trustee of a written acceptance of its appointment to the retiring Trustee and to the Company, (i) the retiring Trustee will transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided
for in Section 7.07, (ii) the resignation or removal of the retiring Trustee will become effective, and (iii) the successor Trustee will have all the rights, powers and duties of the Trustee under the Indenture.  Upon request of any successor Trustee, the Company will execute any and all instruments for fully and vesting in and confirming to the successor Trustee all such rights, powers and trusts.  The Company will give notice of any resignation and any removal of the Trustee and each appointment
of a successor Trustee to all Holders, and include in the notice the name of the successor Trustee and the address of its Corporate Trust Office.

 

(d)           Notwithstanding replacement of the Trustee pursuant to this Section, the Company’s obligations under Section 7.07 will continue for the benefit of the retiring Trustee.

 

(e)           The Trustee agrees to give the notices provided for in, and otherwise comply with, Trust Indenture Act Section 310(b).

 

 

  

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Section 7.09.  Successor Trustee by Merger.  If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation or
national banking association, the resulting, surviving or transferee corporation or national banking association without any further act will be the successor Trustee with the same effect as if the successor Trustee had been named as the Trustee in the Indenture, provided that such corporation or national banking association shall be otherwise qualified and eligible under this Article Seven. 

 

Section 7.10.  Eligibility.  The Indenture must always have a Trustee that satisfies the requirements of Trust Indenture Act Section 310(a) and has a combined capital and surplus of at least $25,000,000 as set forth in its
most recent published annual report of condition. 

 

Section 7.11.  Money Held in Trust.  The Trustee will not be liable for interest on any money received by it except as it may agree with the Company.  Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law and except for money held in trust under Article 8. 

 

 

ARTICLE 8

Defeasance and Discharge

 

Section 8.01.  Discharge of Company’s Obligations.  (a) Subject to paragraph (b), the Company’s obligations under the Notes and the Indenture, and each Guarantor’s obligations under
its Note Guaranty, will terminate if: 

 

(1)         all Notes previously authenticated and delivered (other than (i) destroyed, lost or stolen Notes that have been replaced or (ii) Notes that are paid pursuant to Section 4.01 or (iii) Notes for whose payment money or U.S. Government Obligations have been held in
trust and then repaid to the Company pursuant to Section 8.05) have been delivered to the Trustee for cancellation and the Company has paid all sums payable by it hereunder; or

 

(2) (A)              the Notes mature within one year, or all of them are to be called for redemption within one year under arrangements reasonably satisfactory to the Trustee for giving the notice of redemption,

 

(B)         the Company irrevocably deposits in trust with the Trustee, as trust funds solely for the benefit of the Holders, money or U.S. Government Obligations or a combination thereof sufficient, without consideration of any reinvestment, to pay 

  

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principal of and interest on the Notes to maturity or redemption, as the case may be, and to pay all other sums payable by it hereunder,

 

(C)         no Default has occurred and is continuing on the date of the deposit or will occur as a result of the deposit, and

 

(D)         the Company delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel, in each case stating that all conditions precedent provided for herein relating to the satisfaction and discharge of the Indenture have been complied with.

 

(b)           After satisfying the conditions in clause (1), only the Company’s obligations under Section 7.07 will survive.  After satisfying the conditions in clause (2), only the Company’s obligations in Article 2 and Sections 4.01, 4.02,
7.07, 7.08, 8.05 and 8.06 will survive.  In either case, the Trustee upon request

will acknowledge in writing the discharge of the Company’s obligations under the Notes and the Indenture other than the surviving obligations.

 

(c)           For the avoidance of doubt, in the case of a discharge that occurs in connection with a redemption that is to occur pursuant to the second paragraph of Section 3.01, the amount to be deposited shall be the amount that, as of the date of such deposit,
is deemed reasonably sufficient to make such payment and discharge on the date of such redemption, in the good-faith determination of the Company, as evidenced by an Officer’s Certificate.

 

Section 8.02.  Legal Defeasance.  The Company will be deemed to have paid and will be discharged from its obligations in respect of the Notes and the Indenture, other than its obligations in Article
2 and Sections 4.01, 4.02, 7.07, 7.08, 8.05 and 8.06, and each Guarantor’s obligations under its Note Guarantees will terminate, provided the following conditions have been satisfied: 

 

(1)         The Company has irrevocably deposited in trust with the Trustee, as trust funds solely for the benefit of the Holders, money or U.S. Government Obligations or a combination thereof sufficient, in the opinion of a nationally recognized firm of independent public
accountants, without consideration of any reinvestment, to pay principal of and interest on the Notes to maturity or redemption, as the case may be, provided that any redemption before maturity has been irrevocably provided for under arrangements reasonably satisfactory to the Trustee.

 

(2)         No Default has occurred and is continuing on the date of the deposit.

 

(3)         The deposit will not result in a breach or violation of, or constitute a default under, the Indenture or any other material agreement or instrument to which the Company is a party or by which it is bound.

 

 

  

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(4)         The Company has delivered to the Trustee either (x) a ruling received from the Internal Revenue Service to the effect that the Holders will not recognize income, gain or loss for federal income tax purposes as a result of the defeasance and will be subject to federal
income tax on the same amount and in the same manner and at the same times as would otherwise have been the case or (y) an Opinion of Counsel, based on a change in law after the date of the Indenture, to the same effect as the ruling described in clause (x).

 

(5)         The Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, in each case stating that all conditions precedent provided for herein relating to the defeasance have been complied with.

After discharge of the Company’s obligations under the Indenture, the Trustee upon request will acknowledge in writing the discharge of the Company’s obligations under the Notes and the Indenture except for the surviving obligations specified above.

 

Section 8.03.  Covenant Defeasance.  The Company’s obligations set forth in Sections 4.04 through 4.15, inclusive and Section 5.01(a)(iii)(3), and each Guarantor’s obligations under its
Note Guarantees, will terminate, and Section 6.01(3), (4), (5), (6) and (9) will no longer constitute Events of Default, provided the following conditions have been satisfied: 

 

(1)         The Company has complied with clauses (1), (2), (3) and (5) of Section 8.02; and

 

(2)         the Company has delivered to the Trustee an Opinion of Counsel to the effect that the Holders will not recognize income, gain or loss for federal income tax purposes as a result of the defeasance and will be subject to federal income tax on the same amount and
in the same manner and at the same times as would otherwise have been the case.

 

Except as specifically stated above, none of the Company’s obligations under the Indenture will be discharged.

 

Section 8.04.  Application of Trust Money.  Subject to Section 8.05, the Trustee will hold in trust the money or U.S. Government Obligations deposited with it pursuant to Section 8.01, 8.02
or 8.03, and apply the deposited money and the proceeds from deposited U.S. Government Obligations to the payment of principal of and interest on the Notes in accordance with the Notes and the Indenture.   Such money and U.S. Government Obligations need not be segregated from other funds except to the extent required by law. 

 

 

 

  

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Section 8.05.  Repayment to Company.  Subject to Sections 7.07, 8.01, 8.02 and 8.03, the Trustee will promptly pay to the Company upon request any excess money held by the Trustee at any time and thereupon be relieved
from all liability with respect to such money.  The Trustee will pay to the Company upon request any money held for payment with respect to the Notes that remains unclaimed for two years, provided that before making such payment the Trustee may at the expense of the Company publish once in a newspaper of general circulation in New York City, or send to each Holder entitled to such money, notice that the money remains unclaimed and that after a
date specified in the notice (at least 30 days after the date of the publication or notice) any remaining unclaimed balance of money will be repaid to the Company.  After payment to the Company, Holders entitled to such money must look solely to the Company for payment, unless applicable law designates another Person, and all liability of the Trustee with respect to such money will cease.

 

Section 8.06  Reinstatement.  If and for so long as the Trustee is unable to apply any money or U.S. Government Obligations held in trust pursuant to Section 8.01, 8.02 or 8.03 by reason of any legal proceeding or by reason of any
order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s obligations under the Indenture and the Notes will be reinstated as though no such deposit in trust had been made.  If the Company makes any payment of principal of or interest on any Notes because of the reinstatement of its obligations, it will be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government
Obligations held in trust. 

 

 

ARTICLE 9 

Amendments, Supplements and Waivers

 

Section 9.01.  Amendments Without Consent of Holders.  The Company and the Trustee may amend or supplement the Indenture, the Notes or the Note Guarantees without notice to or the consent of any Noteholder 

 

(1)         to cure any ambiguity, omission, defect or inconsistency in the Indenture or the Notes;

 

(2)         to comply with Article 5;

 

(3)         to comply with any requirements of the Commission in connection with the qualification of the Indenture under the Trust Indenture Act;

 

(4)         to evidence and provide for the acceptance of an appointment hereunder by a successor Trustee;

 

 

 

  

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(5)         to provide for uncertificated Notes in addition to or in place of certificated Notes, provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in
a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code;

 

(6)         to provide for any Guarantee of the Notes, to secure the Notes or to confirm and evidence the release, termination or discharge of any Guarantee of or Lien securing the Notes when such release, termination or discharge is permitted by the Indenture;

 

(7)         to provide for or confirm the issuance of the Exchange Notes or Additional Notes;

 

(8)         to conform to the “Description of Notes” in the Offering Circular; or

 

(9)         to make any other change that does not materially and adversely affect the rights of any Holder.

 

Section 9.02.  Amendments With Consent of Holders.  (a) Except as otherwise provided in Sections 6.02, 6.04 and 6.07 or paragraph (b), the Company and the Trustee may amend the Indenture and the Notes with the
written consent of the Holders of a majority in principal amount of the outstanding Notes, and the Holders of a majority in principal amount of the outstanding Notes by written notice to the Trustee may waive any past default or future compliance by the Company with any provision of the Indenture or the Notes (which may include consents or waivers obtained in connection with a tender offer or exchange offer for Notes). 

 

(b)           Notwithstanding the provisions of paragraph (a), without the consent of each Holder affected, an amendment or waiver may not

 

(1)         reduce the principal amount of or change the Stated Maturity of any Note,

 

(2)         reduce the rate of or change the Stated Maturity of any interest payment on any Note,

 

(3)         reduce the amount payable upon the redemption of any Note or change the times at, or circumstances under, which any Note may be redeemed at the option of the Company,

 

(4)         after the time an Offer to Purchase is required to have been made, reduce the purchase amount or purchase price, or extend the latest purchase date thereunder,

 

  

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(5)         make any Note payable in money other than that stated in the Note,

 

(6)         impair the right of any Holder of Notes to receive any  principal payment or interest payment on such Holder’s Notes, on or after the Stated Maturity thereof, or to institute suit for the enforcement of any such payment, or

 

(7)         reduce the percentage of the principal amount of the Notes required for amendments or waivers.

 

(c)           It is not necessary for Noteholders to approve the particular form of any proposed amendment, supplement or waiver, but is sufficient if their consent approves the substance thereof.

 

(d)           An amendment, supplement or waiver under this Section will become effective on receipt by the Trustee of written consents from the Holders of the requisite percentage
in principal amount of the outstanding Notes.  After an amendment, supplement or waiver under this Section becomes effective, the Company will send to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver.  The Company will send supplemental indentures to Holders upon request.  Any failure of the Company to send such notice, or any defect therein, will not, however, in any way impair or affect the validity of any such supplemental indenture
or waiver.

 

Section 9.03.  Effect of Consent.  (a) After an amendment, supplement or waiver becomes effective, it will bind every Holder unless it is of the type requiring the consent of each Holder affected.  If
the amendment, supplement or waiver is of the type requiring the consent of each Holder affected, the amendment, supplement or waiver will bind each Holder that has consented to it and every subsequent Holder of a Note that evidences the same debt as the Note of the consenting Holder. 

 

(b)           If an amendment, supplement or waiver changes the terms of a Note, the Trustee may require the Holder to deliver it to the Trustee so that the Trustee may place an appropriate notation of the changed terms on the Note and return it to the Holder, or
exchange it for a new Note that reflects the changed terms.  The Trustee may also place an appropriate notation on any Note thereafter authenticated.  However, the effectiveness of the amendment, supplement or waiver is not affected by any failure to annotate or exchange Notes in this fashion.

 

Section 9.04.  Trustee’s Rights and Obligations.  The Trustee is entitled to receive, and will be fully protected in relying upon, an Opinion of Counsel stating that the execution of any amendment,
supplement or waiver authorized pursuant to this Article is authorized or permitted by the Indenture.  If the Trustee has received such an Opinion of Counsel, it shall sign the amendment, supplement or waiver so long as the same does not adversely affect the rights of the Trustee.  The Trustee may, but is not obligated to, execute any amendment, supplement or 

 

  

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waiver that affects the Trustee’s own rights, duties or immunities under the Indenture.
 

Section 9.05.  Conformity With Trust Indenture Act.  Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act. 

 

 

ARTICLE 10 

Guarantees

 

Section 10.01.  The Guarantees.  Subject to the provisions of this Article, each Guarantor hereby irrevocably and fully and unconditionally guarantees, jointly and severally, on an unsecured basis, the full and punctual
payment (whether at Stated Maturity, upon redemption, purchase pursuant to an Offer to Purchase or acceleration, or otherwise) of the principal of, premium, if any, and interest on, and all other amounts payable under, each Note, and the full and punctual payment of all other amounts payable by the Company under the Indenture.  Upon failure by the Company to pay
punctually any such amount, each Guarantor shall forthwith on demand pay the amount not so paid at the place and in the manner specified in the Indenture.

 

Section 10.02.  Guarantee Unconditional.  The obligations of each Guarantor hereunder are unconditional and absolute and, without limiting the generality of the foregoing, to the fullest extent permitted by applicable
law, will not be released, discharged or otherwise affected by 

 

(1)         any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of the Company under the Indenture or any Note, by operation of law or otherwise;

 

(2)         any modification or amendment of or supplement to the Indenture or any Note;

 

(3)         any change in the corporate existence, structure or ownership of the Company, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Company or its assets or any resulting release or discharge of any obligation of the Company contained
in the Indenture or any Note;

 

(4)         the existence of any claim, set-off or other rights which the Guarantor may have at any time against the Company, the Trustee or any other Person, whether in connection with the Indenture or any unrelated 

 

  

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transactions, provided that nothing herein prevents the assertion of any such claim by separate suit or compulsory counterclaim;

 

(5)         any invalidity or unenforceability relating to or against the Company for any reason of the Indenture or any Note, or any provision of applicable law or regulation purporting to prohibit the payment by the Company of the principal of or interest on any Note or
any other amount payable by the Company under the Indenture; or

 

(6)         any other act or omission to act or delay of any kind by the Company, the Trustee or any other Person or any other circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of or defense to such Guarantor’s
obligations hereunder.

 

Section 10.03.  Discharge; Reinstatement.  Each Guarantor’s obligations hereunder will remain in full force and effect until the principal of, premium, if any, and interest on the Notes and all other amounts payable by
the Company under the Indenture have been paid in full.  If at any time any payment of the principal of, premium, if any, or interest on any Note or any other amount payable by the Company under the Indenture is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Company or otherwise, each Guarantor’s obligations hereunder with respect to such payment
will be reinstated as though such payment had been due but not made at such time.

 

Section 10.04.  Waiver by the Guarantors.  To the fullest extent permitted by applicable law, each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided
for herein, as well as any requirement that at any time any action be taken by any Person against the Company or any other Person. 

 

Section 10.05.  Subrogation and Contribution.  Upon making any payment with respect to any obligation of the Company under this Article, the Guarantor making such payment will be subrogated to the rights of the payee against the Company with
respect to such obligation, provided that the Guarantor may not enforce either any right of subrogation, or any right to receive payment in the nature of contribution, or otherwise, from any other Guarantor, with respect to such payment so long as any amount payable by the Company hereunder or under the Notes remains unpaid.

 

Section 10.06.  Stay of Acceleration.  If acceleration of the time for payment of any amount payable by the Company under the Indenture or the Notes is stayed upon the insolvency, bankruptcy or reorganization of
the Company, all such amounts otherwise subject to acceleration under the terms of the Indenture 

  

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are nonetheless payable by the Guarantors hereunder forthwith on demand by the Trustee or the Holders.
 

Section 10.07.  Limitation on Amount of Guarantee.  Notwithstanding anything to the contrary in this Article, each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention
of all such parties that the Note Guaranty of such Guarantor not constitute a fraudulent  conveyance under applicable fraudulent conveyance provisions of the United States Bankruptcy Code or any comparable provision of state law.  To effectuate that intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that the obligations of each Guarantor under its Note Guaranty are limited to the maximum amount that would not render the Guarantor’s obligations subject to
avoidance under applicable fraudulent conveyance provisions of the United States Bankruptcy Code or any comparable provision of state law. 

 

Section 10.08.  Execution and Delivery of Guarantee.  The execution by each Guarantor of the Indenture (or a supplemental indenture in the form of Exhibit B)
evidences the Note Guaranty of such Guarantor, whether or not the person signing as an officer of the Guarantor still holds that office at the time of authentication of any Note.  The delivery of any Note by the Trustee after authentication constitutes due delivery of the Note Guaranty set forth in the Indenture on behalf of each Guarantor.

 

Section 10.09.  Release of Guarantee.  The Note Guaranty of a Guarantor will terminate upon 

 

(1)         a sale or other disposition (including by way of consolidation or merger) of the Guarantor or the sale or disposition of all or substantially all the assets of the Guarantor (in each case other than to the Company or a Restricted Subsidiary) otherwise permitted
by the Indenture,

 

(2)         the designation in accordance with the Indenture of the Guarantor as an Unrestricted Subsidiary or the Guarantor otherwise ceases to be a Restricted Subsidiary in accordance with the Indenture, or

 

(3)         defeasance or discharge of the Notes, as provided in Article 8.

 

Upon delivery by the Company to the Trustee of an Officers’ Certificate and an Opinion of Counsel to the foregoing effect, the Trustee will execute any documents reasonably required in order to evidence the release of the Guarantor from its obligations under its Note Guaranty.

 

 

  

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ARTICLE 11

Miscellaneous

 

Section 11.01.  Trust Indenture Act of 1939.  The Indenture shall incorporate and be governed by the provisions of the Trust Indenture Act that are required to be part of and to govern indentures qualified
under the Trust Indenture Act.  If any provision of this Indenture limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under the Trust Indenture Act to be part of and govern this Indenture, the provision of the Trust Indenture Act shall control. 

 

Section 11.02.  Noteholder Communications; Noteholder Actions.  (a) The rights of Holders to communicate with other Holders with respect to the Indenture or
the Notes are as provided by the Trust Indenture Act, and the Company and the Trustee shall comply with the requirements of Trust Indenture Act Sections 312(a) and 312(b).  Neither the Company nor the Trustee will be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the Trust Indenture Act. 

 

(b) (1)           Any request, demand, authorization, direction, notice, consent to amendment, supplement or waiver or other action provided by this Indenture to be given or taken by a Holder (an “act”)
may be evidenced by an instrument signed by the Holder delivered to the Trustee.

The fact and date of the execution of the instrument, or the authority of the person executing it, may be proved in any manner that the Trustee deems sufficient.

 

(2)         The Trustee may make reasonable rules for action by or at a meeting of Holders, which will be binding on all the Holders.

 

(c)           Any act by the Holder of any Note binds that Holder and every subsequent Holder of a Note that evidences the same debt as the Note of the acting Holder, even if no notation thereof appears on the Note.  Subject to paragraph (d), a Holder may
revoke an act as to its Notes, but only if the Trustee receives the notice of revocation before the date the amendment or waiver or other consequence of the act becomes effective.

 

(d)           The Company may, but is not obligated to, fix a record date (which need not be within the time limits otherwise prescribed by Trust Indenture Act Section 316(c)) for the purpose of determining the Holders entitled to act with respect to any amendment
or waiver or in any other regard, except that during the continuance of an Event of Default, only the Trustee may set a record date as to notices of default, any declaration or acceleration or any other remedies or other consequences of the Event of Default.   If a record date is fixed, those Persons that were Holders at such record date and only those Persons will be entitled to act, or to revoke any previous act, whether or not those Persons continue to be Holders 

  

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after the record date.  No act will be valid or effective for more than 90 days after the record date.
 

Section 11.03.  Notices.  (a) Any notice or communication to the Company will be deemed given if in writing (i) when delivered in person or (ii) five days after mailing when mailed by first
class mail, or (iii) when sent by facsimile transmission, with transmission confirmed.  Notices or communications to a Guarantor will be deemed given if given to the Company.  Any notice to the Trustee will be effective only upon receipt.  In each case the notice or communication should be addressed as follows: 

 

if to the Company:

 

Wendy’s/Arby’s Restaurants, LLC

1155 Perimeter Centre West

Atlanta, GA 30338

Attention:  Nils Okeson

678-514-6745

 

if to the Trustee:

 

U.S. Bank National Association

60 Livington Avenue

EP-MN-WS3C

St. Paul, MN 55107-2292

651-495-8097

The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

 

(b)           Except as otherwise expressly provided with respect to published notices, any notice or communication to a Holder will be deemed given when mailed to the Holder at its address as it appears on the Register by first class mail or, as to any Global Note
registered in the name of DTC or its nominee, as agreed by the Company, the Trustee and DTC.  Copies of any notice or communication to a Holder, if given by the Company, will be mailed to the Trustee at the same time.  Defect in mailing a notice or communication to any particular Holder will not affect its sufficiency with respect to other Holders.

 

(c)           Where the Indenture provides for notice, the notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and the waiver will be the equivalent of the notice.  Waivers of notice by Holders
must be filed with the Trustee, but such filing is not a condition precedent to the validity of any action taken in reliance upon such waivers.

 

 

  

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Section 11.04.  Certificate and Opinion as to Conditions Precedent.  Upon any request or application by the Company to the Trustee to take any action under the Indenture, the Company will furnish to the Trustee at the request
of the Trustee: 

 

(1)         an Officers’ Certificate stating that, in the opinion of the signers, all conditions precedent to be performed or effected by the Company, if any, provided for in the Indenture relating to the proposed action have been complied with; and

 

(2)         an Opinion of Counsel stating that all such conditions precedent have been complied with.

 

Section 11.05.  Statements Required in Certificate or Opinion.  Each certificate or opinion with respect to compliance with a condition or covenant provided for in the Indenture
must include: 

 

(1)         a statement that each person signing the certificate or opinion has read the covenant or condition and the related definitions;

 

(2)         a brief statement as to the nature and scope of the examination or investigation upon which the statement or opinion contained in the certificate or opinion is based;

 

(3)         a statement that, in the opinion of each such person, that person has made such examination or investigation as is necessary to

enable the person to express an informed opinion as to whether or not such covenant or condition has been complied with; and

 

(4)         a statement as to whether or not, in the opinion of each such person, such condition or covenant has been complied with, provided that an Opinion of Counsel may rely on an Officers’ Certificate or certificates
of public officials with respect to matters of fact.

 

Section 11.06.  Payment Date Other Than a Business Day.  If any payment with respect to a payment of any principal of, premium, if any, or interest on any
Note (including any payment to be made on any date fixed for redemption or purchase of any Note) is due on a day which is not a Business Day, then the payment need not be made on such date, but may be made on the next Business Day with the same force and effect as if made on such date, and no interest will accrue for the intervening period. 

 

Section 11.07.  Governing Law.  The Indenture, including any Note Guarantees, and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York. 

 

 

  

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Section 11.08.  No Adverse Interpretation of Other Agreements.  The Indenture may not be used to interpret another indenture or loan or debt agreement of the Company or any Subsidiary of the Company, and no such indenture or
loan or debt agreement may be used to interpret the Indenture. 

 

Section 11.09.  Successors.  All agreements of the Company or any Guarantor in the Indenture and the Notes will bind its successors.  All agreements of the Trustee in the Indenture
will bind its successor. 

 

Section 11.10.  Duplicate Originals.  The parties may sign any number of copies of the Indenture.  Each signed copy shall be an original, but all of them together represent
the same agreement. 

 

Section 11.11.  Separability.  In case any provision in the Indenture or in the Notes is invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions
will not in any way be affected or impaired thereby. 

 

Section 11.12.  Table of Contents and Headings.  The Table of Contents, Cross-Reference Table and headings of the Articles and Sections of the Indenture have been
inserted for convenience of reference only, are not to be considered a part of the Indenture and in no way modify or restrict any of the terms and provisions of the Indenture. 

 

Section 11.13.  No Liability of Directors, Officers, Employees, Incorporators, Members and Stockholders.  No director, officer, employee, incorporator, member
or stockholder of the Company or any Guarantor, as such,  will have any liability for any obligations of the Company or such Guarantor under the Notes, any Note Guaranty or the Indenture or for any claim based on, in respect of, or by reason of, such obligations.  Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for
issuance of the Notes.

 

Section 11.14  Benefits of Indenture.  Nothing in this Indenture, express or implied, shall give to any Person, other than the parties hereto and their successors thereunder, any Paying Agent and the Holders, any benefit or any legal or equitable
right, remedy or claim under this Indenture.

 

Section 11.15  Indenture Controls.  If and to the extent that any provision of the Notes limits, qualifies or conflicts with a provision of this Indenture, such provision of this Indenture shall control.

 

Section 11.16  Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or at a meeting of Holders.  The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its function.

 

  

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SIGNATURES

 

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

 

 

	 	
Wendy’s/Arby’s Restaurants, LLC

as Company

	 	
By:  /s/ STEPHEN E. HARE                                  

	 	
        Name: Stephen E. Hare

	 	
        Title:   Senior Vice President and

                    Chief Financial Officer

 

 

	 	
U.S. Bank National Association

as Trustee

	 	
By:  /s/ RICHARD PROKOSCH                            

	 	
        Name: Richard Prokosch

	 	
        Title:   Vice President

 

[Signature Page to the Indenture]

101

 

 

	 	
WENDY’S INTERNATIONAL, INC.

THE NEW BAKERY COMPANY OF OHIO, INC.

WENDY’S OF DENVER, INC.

WENDY’S OF N.E. FLORIDA, INC.

WENDY’S OLD FASHIONED HAMBURGERS

          OF NEW YORK, INC.

as Guarantors

	 	
By:  /s/ STEPHEN E. HARE                               

	 	
       Name:  Stephen E. Hare

	 	
       Title:    Senior Vice President and

                    Chief Financial Officer

	 	
BDJ 71112, LLC

as Guarantor

	 	
By:
	
/s/ Nils H. Okeson                                       

	 	
       Name:  Nils H. Okeson

	 	
       Title:    Senior Vice President,

                    General Counsel and Secretary

 

 

 

[Signature Page to the Indenture]

  

  

  

 

	 	
ARBY’S RESTAURANT HOLDINGS, LLC

TRIARC RESTAURANT HOLDINGS, LLC

ARBY’S RESTAURANT GROUP, INC.

ARBY’S RESTAURANT, LLC

ARBY’S, LLC

WENDY’S/ARBY’S SUPPORT CENTER, LLC

ARG SERVICES, INC.

SYBRA, LLC

ARBY’S IP HOLDER TRUST

RTM ACQUISITION COMPANY, LLC

RTM, LLC

RTM PARTNERS, LLC

RTM OPERATING COMPANY, LLC

RTM DEVELOPMENT COMPANY, LLC

RTMSC, LLC

RTM GEORGIA, LLC

RTM ALABAMA, LLC

RTM WEST, LLC

RTM SEA-TAC, LLC

RTM INDIANAPOLIS, LLC

FRANCHISE ASSOCIATES, LLC

RTM SAVANNAH, LLC

RTM GULF COAST, LLC

RTM PORTLAND, LLC

RTM MID-AMERICA, LLC

ARG RESOURCES, LLC

as Guarantors

	 	
By:  /s/ STEPHEN E. HARE                               

	 	
       Name:  Stephen E. Hare

	 	
       Title:    Senior Vice President and

                    Chief Financial Officer

 

 

[Signature Page to the Indenture]

  

  

  

EXHIBIT A

 

[FACE OF NOTE]

 

 

Wendy’s/Arby’s Restaurants, LLC

 

10.00% Senior Note Due 2016

 

[CUSIP]  [CINS] _______________

 

No.

 $_______________

 

Wendy’s/Arby’s Restaurants, LLC, a Delaware limited liability company (the “Company,” which term includes any successor under the Indenture hereinafter referred to), for value received, promises to pay to ____________________, or its registered
assigns, the principal sum of ____________ DOLLARS ($______) [or such other amount as indicated on the Schedule of Exchange of Notes attached hereto] on July 15, 2016.

 

[Initial]1 Interest Rate:                                           10.00%
per annum.

 

Interest Payment Dates:  January 15 and July 15, commencing January 15, 2010.

 

Regular Record Dates:  January 1 and July 1.

 

Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which will for all purposes have the same effect as if set forth at this place.

 

_______________________________

            1For Initial Notes or Initial Additional Notes only.
 

  

  A-1

  

IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers.

 

	
Date:
	
Wendy’s/Arby’s Restaurants, LLC

	  	
By:
	______________________________  
	  	  	
Name:
	  
	  	  	
Title:
	  

  

A-2  

  

(Form of Trustee’s Certificate of Authentication)

 

This is one of the 10.00% Senior Notes Due 2016 described in the Indenture referred to in this Note.

 

	 	
 U.S. Bank National Association, as Trustee

	 	
By:
	_____________________________________  
	 	  	
Authorized Signatory

  

A-3  

  

[REVERSE SIDE OF NOTE]

 

 

Wendy’s/Arby’s Restaurants, LLC

 

10.00% Senior Note Due 2016

 

1.           Principal and Interest.

 

The Company promises to pay the principal of this Note on July 15, 2016.

 

The Company promises to pay interest on the principal amount of this Note on each interest payment date, as set forth on the face of this Note, at the rate of 10.00% per annum [(subject to adjustment as provided below)].1

 

Interest will be payable semiannually (to the holders of record of the Notes at the close of business on the January 1 or July 1 immediately preceding the interest payment date) on each interest payment date, commencing January 15, 2010.

 

[The Holder of this Note is entitled to the benefits of the Registration Rights Agreement, dated [], [], between the Company, the Guarantors and the Initial Purchasers named therein (the “Registration
Rights Agreement”) including the right to receive Additional Interest (as defined in the Registration Rights Agreement), if any.]2

 

Interest on this Note will accrue from the most recent date to which interest has been paid on this Note [or the Note surrendered in exchange for this Note]3 (or, if there is no existing default in the payment of interest and if
this Note is authenticated between a regular record date and the next interest payment date, from such interest payment date) or, if no interest has been paid, from [the Issue Date].4  Interest will be computed in the basis of a 360-day year of twelve 30-day months.

 

The Company will pay interest on overdue principal, premium, if any, and overdue interest, at the rate otherwise applicable to the Notes.  Interest not paid when due and any interest on principal, premium, if any, or interest not paid when due will be paid to the Persons that are Holders on a special record
date, which will be the 15th day preceding the date fixed by the Company for the payment of 

________________________________

 
1Include only for Initial Note or Initial Additional Note.

  

2Include only for Initial Note or Initial Additional Note.

  

3Include only for Exchange Note.

  

4For Additional Notes, should be the date of their original issue.

 

  

A-4  

  

such interest, whether or not such day is a Business Day.  At least 15 days before a special record date, the Company will send to each Holder and to the Trustee a notice that sets forth the special record date, the payment date and the amount of interest to be paid.

 

2.           Indentures; Note Guaranty.

 

This is one of the Notes issued under an Indenture dated as of June 23, 2009 (as amended from time to time, the “Indenture”), among the Company, the Guarantors party thereto and U.S. Bank National Association, as Trustee.  Capitalized terms
used herein are used as defined in the Indenture unless otherwise indicated.  The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act.  The Notes are subject to all such terms, and Holders are referred to the Indenture and the Trust Indenture Act for a statement of all such terms.  To the extent permitted by applicable law, in the event of any inconsistency between the terms of this Note and the terms
of the Indenture, the terms of the Indenture will control.

 

The Notes are general unsecured obligations of the Company.  The Indenture limits the original aggregate principal amount of the Notes to $565,000,000, but Additional Notes may be issued pursuant to the Indenture, and the originally issued Notes and all such Additional Notes vote together for all purposes as
a single class.  This Note is guaranteed, as set forth in the Indenture.

 

3.           Redemption and Repurchase; Discharge Prior to Redemption or Maturity.

 

This Note is subject to optional redemption, and may be the subject of an Offer to Purchase, as further described in the Indenture.  There is no sinking fund or mandatory redemption applicable to this Note.

 

If the Company deposits with the Trustee money or U.S. Government Obligations sufficient to pay the then outstanding principal of, premium, if any, and accrued interest on the Notes to redemption or maturity, the Company may in certain circumstances be discharged from the Indenture and the Notes or may be discharged from
certain of its obligations under certain provisions of the Indenture.

 

4.           Registered Form; Denominations; Transfer; Exchange.

 

The Notes are in registered form without coupons in denominations of $2,000 principal amount and any multiple of $1,000 in excess thereof.  A Holder may register the transfer or exchange of Notes in accordance with the Indenture.  The Trustee may require a Holder to furnish appropriate endorsements
and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture.  Pursuant to the Indenture, there are certain periods during which 

 

  

A-5  

  

 

the Trustee will not be required to issue, register the transfer of or exchange any Note or certain portions of a Note.

 

5.           Defaults and Remedies.

 

If an Event of Default, as defined in the Indenture, occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Notes may declare all the Notes to be due and payable.  If a bankruptcy or insolvency default with respect to the Company occurs and is continuing, the Notes automatically
become due and payable.  Holders may not enforce the Indenture or the Notes except as provided in the Indenture.  The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Notes.  Subject to certain limitations, Holders of a majority in principal amount of the Notes then outstanding may direct the Trustee in its exercise of remedies.

 

6.           Amendment and Waiver.

 

Subject to certain exceptions, the Indenture and the Notes may be amended, or default may be waived, with the consent of the Holders of a majority in principal amount of the outstanding Notes.  Without notice to or the consent of any Holder, the Company and the Trustee may amend or supplement the Indenture or
the Notes to, among other things, cure any ambiguity, defect or inconsistency if such amendment or supplement does not adversely affect the interests of the Holders in any material respect.

 

7.           Authentication.

 

This Note is not valid until the Trustee (or Authenticating Agent) signs the certificate of authentication on the other side of this Note.

 

8.           Governing Law.

 

This Note shall be governed by, and construed in accordance with, the laws of the State of New York.

 

9.           Abbreviations.

 

Customary abbreviations may be used in the name of a Holder or an assignee, such as:  TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and U/G/M/A/ (= Uniform Gifts to Minors Act).

 

The Company will furnish a copy of the Indenture to any Holder upon written request and without charge.

 

  

A-6  

  

[FORM OF TRANSFER NOTICE]

 

FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto

 

	
Insert Taxpayer Identification No.

 

	  
	  
	
Please print or typewrite name and address including zip code of assignee

	
  

 

	
the within Note and all rights thereunder, hereby irrevocably constituting and appointing

	
  

 

 

attorney to transfer said Note on the books of the Company with full power of substitution in the premises.

 

 

A-7

 

 

[THE FOLLOWING PROVISION TO BE INCLUDED ON ALL CERTIFICATES BEARING A RESTRICTED LEGEND]

 

In connection with any transfer of this Note occurring prior to ______________1 the undersigned confirms that such transfer is made without utilizing any general solicitation or general advertising and further as follows:

 

Check One

 

    ___       (1) This Note is being transferred to a “qualified institutional buyer” in compliance with Rule 144A under the Securities Act of 1933, as amended and certification in the form of Exhibit F to the Indenture is being furnished
herewith. 

 

    ___       (2) This Note is being transferred to a Non-U.S. Person in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Regulation S thereunder, and certification in the form of Exhibit E to
the Indenture is being furnished herewith. 

 

or

 

    ___        (3) This Note is being transferred other than in accordance with (1) or (2) above and documents are being furnished which comply with the conditions of transfer set forth in this Note and the Indenture. 

 

If none of the foregoing boxes is checked, the Trustee is not obligated to register this Note in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in the Indenture have been satisfied.

 

	  	
Date:
	__________________________	  

 

	 	
_________________________________

Seller

	 	
By
	 ______________________________ 

NOTICE:  The signature to this assignment must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever.

________________________________

     2 One year after date of initial issuance or a later date when purchased from an affiliate.
 

  

A-8  

  

	
Signature Guarantee:5
	_______________________________________  

 

	 	
By
	____________________________________  
	 	
To be executed by an executive officer

____________________________________

 
5Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer
Association Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

  

A-9  

  

OPTION OF HOLDER TO ELECT PURCHASE

 

If you wish to have all of this Note purchased by the Company pursuant to Section 4.09 or Section 4.10 of the Indenture, check the box:

 

If you wish to have a portion of this Note purchased by the Company pursuant to Section 4.09 or Section 4.10 of the Indenture, state the amount (in original principal amount) below:

 

$_____________________.

 

Date:____________

 

Your Signature:__________________________

 

(Sign exactly as your name appears on the other side of this Note)

 

Signature Guarantee:1_____________________________

 

___________________________________

 
1Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Trustee, which requirements include membership or participation in the Securities Transfer
Association Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Trustee in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

 

  

A-10  

  

SCHEDULE OF EXCHANGES OF NOTES1

 

The following exchanges of a part of this Global Note for Certificated Notes or a part of another Global Note have been made:

 

	

Date of Exchange

	

Amount of decrease

in principal amount

of this Global Note

	

Amount of increase

in principal amount

of this Global Note

	

Principal amount of

this Global Note

following such

decrease (or

increase)

	

Signature of

authorized officer of

Trustee

	  	  	  	  	  
	  	  	  	  	  

___________________________________

               1For Global Notes
 

  

A-11  

  

EXHIBIT B

 

SUPPLEMENTAL INDENTURE

dated as of __________, ____

among

Wendy’s/Arby’s Restaurants, LLC,

The Guarantor(s) Party Hereto

and

U.S. Bank National Association,

as Trustee

10.00%

Senior Notes due

2016

  

  

  

THIS SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), entered into as of __________, ____, among Wendy’s/Arby’s Restaurants, LLC, a Delaware corporation (the “Company”),
[insert each Guarantor executing this Supplemental Indenture and its jurisdiction of incorporation] (each an “Undersigned”) and U.S. Bank National Association, as trustee (the “Trustee”).

 

RECITALS

 

WHEREAS, the Company, the Guarantors party thereto and the Trustee entered into the Indenture, dated as of June 23, 2009 (the “Indenture”), relating to the Company’s 10.00% Senior Notes due 2016 (the “Notes”);

 

WHEREAS, as a condition to the Trustee entering into the Indenture and the purchase of the Notes by the Holders, the Company agreed pursuant to the Indenture to cause any newly acquired or created Restricted Subsidiary (other than, except in certain circumstances, a Regulated Subsidiary) that guarantees or is a borrower
under the Credit Agreement to provide Guarantees in certain circumstances.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and intending to be legally bound, the parties to this Supplemental Indenture hereby agree as follows:

 

Section 1.  Capitalized terms used herein and not otherwise defined herein are used as defined in the Indenture.

 

Section 2.  Each Undersigned, by its execution of this Supplemental Indenture, agrees to be a Guarantor under the Indenture and to be bound by the terms of the Indenture applicable to Guarantors, including, but not limited to, Article 10 thereof.

 

Section 3.  This Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York.

 

Section 4.  This Supplemental Indenture may be signed in various counterparts which together will constitute one and the same instrument.

 

Section 5.  This Supplemental Indenture is an amendment supplemental to the Indenture and the Indenture and this Supplemental Indenture will henceforth be read together. 

 

  

B-1  

  

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

 

	 	
Wendy’s/Arby’s Restaurants, LLC, as Company

	 	
By:
	___________________________________  
	 	  	
Name:
	  
	 	  	
Title:
	  

 

	 	
[GUARANTOR]

	 	
By:
	___________________________________  
	 	  	
Name:
	  
	 	  	
Title:
	  

 

	 	
U.S. Bank National Association, as Trustee

	 	
By:
	___________________________________  
	 	  	
Name:
	  
	 	  	
Title:
	  

  

B-2  

  

EXHIBIT C

 

RESTRICTED LEGEND

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE.  BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER

 

(1)           REPRESENTS THAT

 

(A)         IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT,

 

(B)         IT IS AN INSTITUTIONAL “ACCREDITED INVESTOR” (WITHIN THE MEANING OF RULE 501(a) (1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN “INSTITUTIONAL ACCREDITED INVESTOR”) OR

 

(C)         IT IS NOT A U.S. PERSON (WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT) AND

 

(2)           AGREES FOR THE BENEFIT OF THE COMPANY THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN, EXCEPT IN ACCORDANCE WITH THE SECURITIES ACT AND ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
AND ONLY

 

(A)         TO WENDY’S/ARBY’S GROUP, INC., WENDY’S/ARBY’S RESTAURANTS, LLC OR ANY OF THEIR SUBSIDIARIES,

 

(B)         PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT,

 

(C)         TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,

 

(D)         IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT,

 

  

C-1  

  

(E)         IN A PRINCIPAL AMOUNT OF NOT LESS THAN $250,000, TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, DELIVERS TO THE TRUSTEE A DULY COMPLETED AND SIGNED CERTIFICATE (THE FORM OF WHICH MAY BE OBTAINED FROM THE TRUSTEE) RELATING TO THE RESTRICTIONS
ON TRANSFER OF THIS NOTE, OR

 

(F) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

 

PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(C) ABOVE OR (2)(D) ABOVE, A DULY COMPLETED AND SIGNED CERTIFICATE (THE FORM OF WHICH MAY BE OBTAINED FROM THE TRUSTEE) MUST BE DELIVERED TO THE TRUSTEE.  PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(E) OR (F) ABOVE, THE COMPANY
RESERVES THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.  NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY RULE 144 EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

 

Each purchaser of the Notes will be deemed to have represented and agreed as follows:

 

(1) Either: (A) the purchaser is not a Plan (which term includes (i) ”employee benefit plans” (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), (ii) plans, individual retirement accounts and
other arrangements that are subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), or to provisions under applicable Federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of ERISA or the Code (“Similar Laws”) and (iii) entities the underlying assets of which are considered to include “plan assets” of such plans, accounts and arrangements) and it is not purchasing the Notes on behalf of, or with the “plan
assets” of, any Plan; or (B) the purchaser’s purchase, holding and subsequent disposition of the Notes either (i) are not a prohibited transaction under ERISA or the Code and are otherwise permissible under all applicable Similar Laws or (ii) are entitled to exemptive relief from the prohibited transaction provisions of ERISA and the Code in accordance with one or more available statutory, class or individual prohibited transaction exemptions and are otherwise permissible under all applicable Similar
Laws; and

 

  

C-2  

  

(2) The purchaser will not transfer the Notes to any person or entity, unless such person or entity could itself truthfully make the foregoing representations and covenants.

 

  

C-3  

  

EXHIBIT D

 

DTC LEGEND

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS A BENEFICIAL INTEREST HEREIN.

 

TRANSFERS OF THIS GLOBAL NOTE ARE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE ARE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE TRANSFER PROVISIONS OF THE INDENTURE.

 

  

D-1  

  

EXHIBIT E

 

Regulation S Certificate

 

_________, ____

 

U.S. Bank National Association

60 Livington Avenue

EP-MN-WS3C

St. Paul, MN 55107-2292

Attention: Corporate Trust Administration

 

	
Re:
	

Wendy’s/Arby’s Restaurants, LLC (the “Company”)

10.00% Senior

Notes due 2016 (the “Notes”)

Issued under the Indenture (the “Indenture”) dated as

as of June 23, 2009 relating to the Notes                                        

Ladies and Gentlemen:

 

Terms are used in this Certificate as used in Regulation S (“Regulation S”) under the Securities Act of 1933, as amended (the “Securities Act”), except as otherwise stated herein.

 

[CHECK A OR B AS APPLICABLE.]

 

	
  ____
	
  A. 
	
This Certificate relates to our proposed transfer of $____ principal amount of Notes issued under the Indenture.  We hereby certify as follows:

 

	
  
	
1.
	
The offer and sale of the Notes was not and will not be made to a person in the United States (unless such person is excluded from the definition of “U.S. person” pursuant to Rule 902(k)(2)(vi) or the account held by it for which it is acting is excluded from the definition of “U.S. person” pursuant to Rule 902(k)(2)(i) under the circumstances described in Rule 902(h)(3)) and such offer and sale
was not and will not be specifically targeted at an identifiable group of U.S. citizens abroad.

 

	
  
	
2.
	
Unless the circumstances described in the parenthetical in paragraph 1 above are applicable, either (a) at the time the buy order was originated, the buyer was outside the United States or we and any person acting on our behalf reasonably believed that the buyer was outside the United States or (b)

 

  

E-1  

  

	
  
	
the transaction was executed in, on or through the facilities of a designated offshore securities market, and neither we nor any person acting on our behalf knows that the transaction was pre-arranged with a buyer in the United States.

 

	
  
	
3.
	
Neither we, any of our affiliates, nor any person acting on our or their behalf has made any directed selling efforts in the United States with respect to the Notes.

 

	
  
	
4.
	
The proposed transfer of Notes is not part of a plan or scheme to evade the registration requirements of the Securities Act.

 

	
  
	
5.
	
If we are a dealer or a person receiving a selling concession, fee or other remuneration in respect of the Notes, and the proposed transfer takes place during the Restricted Period (as defined in the Indenture), or we are an officer or director of the Company or an Initial Purchaser (as defined in the Indenture), we certify that the proposed transfer is being made in accordance with the provisions of Rule 904(b) of
Regulation S.

 

	
  ____
	
  B. 
	
This Certificate relates to our proposed exchange of $____ principal amount of Notes issued under the Indenture for an equal principal amount of Notes to be held by us.  We hereby certify as follows:

 

	
  
	
1.
	
At the time the offer and sale of the Notes was made to us, either (i) we were not in the United States or (ii) we were excluded from the definition of “U.S. person” pursuant to Rule 902(k)(2)(vi) or the account held by us for which we were acting was excluded from the definition of “U.S. person” pursuant to Rule 902(k)(2)(i) under the circumstances described in Rule 902(h)(3); and we were not
a member of an identifiable group of U.S. citizens abroad.

 

	
  
	
2.
	
Unless the circumstances described in paragraph 1(ii) above are applicable, either (a) at the time our buy order was originated, we were outside the United States or (b) the transaction was executed in, on or through the facilities of a designated offshore securities market and we did not pre-arrange the transaction in the United States.

 

	
  
	
3.
	
The proposed exchange of Notes is not part of a plan or scheme to evade the registration requirements of the Securities Act.

 

  

E-2  

  

You and the Company are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

 

                          
Very truly yours,

 

	 	
[NAME OF SELLER (FOR TRANSFERS) OR OWNER (FOR EXCHANGES)]

	 	
By:
	______________________________________________________   
	 	  	
Name:
	  
	 	  	
Title:
	  
	 	  	
Address:
	  

Date: _________________

  

E-3  

  

EXHIBIT F

 

Rule 144A Certificate

 

_________, ____

 

U.S. Bank National Association

60 Livington Avenue

EP-MN-WS3C

St. Paul, MN 55107-2292

Attention: Corporate Trust Administration

 

	
Re:
	

Wendy’s/Arby’s Restaurants, LLC (the “Company”)

10.00% Senior

Notes due 2016 (the “Notes”)

Issued under the Indenture (the “Indenture”) dated as

as of June 23, 2009 relating to the Notes                                               

Ladies and Gentlemen:

 

TO BE COMPLETED BY PURCHASER IF (1) ABOVE IS CHECKED.

 

This Certificate relates to:

 

[CHECK A OR B AS APPLICABLE.]

 

	
  ____
	
  A. 
	
Our proposed purchase of $____ principal amount of Notes issued under the Indenture.

 

	
  ____
	
  B. 
	
Our proposed exchange of $____ principal amount of Notes issued under the Indenture for an equal principal amount of Notes to be held by us.

 

We and, if applicable, each account for which we are acting in the aggregate owned and invested more than $100,000,000 in securities of issuers that are not affiliated with us (or such accounts, if applicable), as of _________, 200_, which is a date on or since close of our most recent fiscal year.   We
and, if applicable, each account for which we are acting, are a qualified institutional buyer within the meaning of Rule 144A (“Rule 144A”) under the Securities Act of 1933, as amended (the “Securities Act”).  If we are acting on behalf of an account, we exercise sole investment discretion with respect to such account. We are aware that the transfer of Notes to us, or such exchange, as applicable, is being made in reliance upon the exemption from the provisions of Section 5 of
the Securities Act provided by Rule 144A.  Prior to the date of this Certificate we

 

  

F-1  

  

have received such information regarding the Company as we have requested pursuant to Rule 144A(d)(4) or have determined not to request such information.

 

You and the Company are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

 

Very truly yours,

 

	 	
[NAME OF PURCHASER (FOR TRANSFERS) OR OWNER (FOR EXCHANGES)]

	 	
By:
	___________________________________________________________  
	 	  	
Name:
	  
	 	  	
Title:
	  
	 	  	
Address:
	  

Date: _________________

  

F-2  

  

EXHIBIT G

 

Institutional Accredited Investor Certificate

 

U.S. Bank National Association (the “Trustee”)

60 Livington Avenue

EP-MN-WS3C

St. Paul, MN 55107-2292

Attention: Corporate Trust Administration

 

	
Re:
	

Wendy’s/Arby’s Restaurants, LLC (the “Company”)

10.00% Senior

Notes due 2016 (the “Notes”)

Issued under the Indenture (the “Indenture”) dated as

as of June 23, 2009 relating to the Notes                                         

Ladies and Gentlemen:

 

This Certificate relates to:

 

[CHECK A OR B AS APPLICABLE.]

 

	
  ____
	
  A. 
	
Our proposed purchase of $____ principal amount of Notes issued under the Indenture.

 

	
  ____
	
  B. 
	
Our proposed exchange of $____ principal amount of Notes issued under the Indenture for an equal principal amount of Notes to be held by us.

 

We hereby confirm that:

 

	
  
	
1.
	
We are an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the “Securities Act”) (an “Institutional Accredited Investor”).

 

	
  
	
2.
	
Any acquisition of Notes by us will be for our own account or for the account of one or more other Institutional Accredited Investors as to which we exercise sole investment discretion.

 

	
  
	
3.
	
We have such knowledge and experience in financial and business matters that we are capable of evaluating the merits and risks of an investment in the Notes and we and any accounts for which we are acting are able to bear the economic risks of and an entire loss of our or their investment in the Notes.

 

  

G-1  

  

	
  
	
4.
	
We are not acquiring the Notes with a view to any distribution thereof in a transaction that would violate the Securities Act or the securities laws of any State of the United States or any other applicable jurisdiction; provided that the disposition of our property and the property of any accounts for which we are acting as fiduciary will remain at all times
within our and their control.

 

	
  
	
5.
	
We acknowledge that the Notes have not been registered under the Securities Act and that the Notes may not be offered or sold within the United States or to or for the benefit of U.S. persons except as set forth below.

 

	
  
	
6.
	
The principal amount of Notes to which this Certificate relates is at least equal to $250,000.

 

We agree for the benefit of the Company, on our own behalf and on behalf of each account for which we are acting, that such Notes may be offered, sold, pledged or otherwise transferred only in accordance with the Securities Act and any applicable securities laws of any State of the United States and only (a) to the Company,
Wendy’s/Arby’s Group, Inc. and their subsidiaries (b) pursuant to a registration statement which has become effective under the Securities Act, (c) to a qualified institutional buyer in compliance with Rule 144A under the Securities Act, (d) in an offshore transaction in compliance with Rule 904 of Regulation S under the Securities Act, (e) in a principal amount of not less than $250,000, to an Institutional Accredited Investor that, prior to such transfer, delivers to the Trustee a duly completed
and signed certificate (the form of which may be obtained from the Trustee) relating to the restrictions on transfer of the Notes or (f) pursuant to an exemption from registration provided by Rule 144 under the Securities Act or any other available exemption from the registration requirements of the Securities Act.

 

Prior to the registration of any transfer in accordance with (c) or (d) above, we acknowledge that a duly completed and signed certificate (the form of which may be obtained from the Trustee) must be delivered to the Trustee.  Prior to the registration of any transfer in accordance with (e) or (f) above, we
acknowledge that the Company reserves the right to require the delivery of such legal opinions, certifications or other evidence as may reasonably be required in order to determine that the proposed transfer is being made in compliance with the Securities Act and applicable state securities laws.  We acknowledge that no representation is made as to the availability of any Rule 144 exemption from the registration requirements of the Securities Act.

 

We understand that the Trustee will not be required to accept for registration of transfer any Notes acquired by us, except upon presentation of evidence satisfactory to the Company and the Trustee that the foregoing restrictions on transfer have been complied with.  We further understand that the 

 

  

G-2  

  

Notes acquired by us will be in the form of definitive physical certificates and thatsuch certificates will bear a legend reflecting the substance of the preceding paragraph.  We further agree to provide to any person acquiring any of the Notes from us a notice advising such person that resales of the Notes are restricted
as stated herein and that certificates representing the Notes will bear a legend to that effect.

 

We agree to notify you promptly in writing if any of our acknowledgments, representations or agreements herein ceases to be accurate and complete.

 

We represent to you that we have full power to make the foregoing acknowledgments, representations and agreements on our own behalf and on behalf of any account for which we are acting.

 

You and the Company are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

 

Very truly yours,

 

	 	
[NAME OF PURCHASER (FOR TRANSFERS) OR OWNER (FOR EXCHANGES)]

	 	
By:
	____________________________________________________________  
	 	  	
Name:
	  
	 	  	
Title:
	  
	 	  	
Address:
	  

Date: _________________

  

G-3  

  

Upon transfer, the Notes would be registered in the name of the new beneficial owner as follows:

 

By:  _________________________________

 

Date:  ________________________________

 

Taxpayer ID number:  ___________________

 

  

G-4  

  

EXHIBIT H

 

[COMPLETE FORM I OR FORM II AS APPLICABLE.]

[FORM I]

 

Certificate of Beneficial Ownership

 

	
To:
	
U.S. Bank National Association

	
  
	
60 Livington Avenue

	
  
	
EP-MN-WS3C

	
  
	
St. Paul, MN 55107-2292

	
  
	
Attention: Corporate Trust Administration OR

 

[Name of DTC Participant]

 

	
Re:
	

Wendy’s/Arby’s Restaurants, LLC (the “Company”)

10.00% Senior

Notes due 2016 (the “Notes”)

Issued under the Indenture (the “Indenture”) dated as

as of June 23, 2009 relating to the Notes                                             

Ladies and Gentlemen:

 

We are the beneficial owner of $____ principal amount of Notes issued under the Indenture and represented by a Temporary Offshore Global Note (as defined in the Indenture).

 

We hereby certify as follows:

 

[CHECK A OR B AS APPLICABLE.]

 

	
  ____
	
  A. 
	
We are a non-U.S. person (within the meaning of Regulation S under the Securities Act of 1933, as amended).

 

	
  ____
	
  B. 
	
We are a U.S. person (within the meaning of Regulation S under the Securities Act of 1933, as amended) that purchased the Notes in a transaction that did not require registration under the Securities Act of 1933, as amended.

 

You and the Company are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

 

  

H-1  

  

                                                                                
Very truly yours,

 

	 	
[NAME OF BENEFICIAL OWNER]

	 	
By:
	_________________________________________  
	 	  	
Name:
	  
	 	  	
Title:
	  
	 	  	
Address:
	  

Date: _________________

 

[FORM II]

 

 

Certificate of Beneficial Ownership

 

	
To:
	
U.S. Bank National Association

60 Livington Avenue

EP-MN-WS3C

St. Paul, MN 55107-2292

Attention: Corporate Trust Administration

	
Re:
	
Wendy’s/Arby’s Restaurants, LLC (the “Company”)

10.00% Senior

Notes due 2016 (the “Notes”)

Issued under the Indenture (the “Indenture”) dated as

as of June 23, 2009 relating to the Notes

Ladies and Gentlemen:

 

This is to certify that based solely on certifications we have received in writing, by tested telex or by electronic transmission from Institutions appearing in our records as persons being entitled to a portion of the principal amount of Notes represented by a Temporary Offshore Global Note issued under the above-referenced
Indenture, that as of the date hereof, $____ principal amount of Notes represented by the Temporary Offshore Global Note being submitted herewith for exchange is beneficially owned by persons that are either (i) non-U.S. persons (within the meaning of Regulation S under the Securities Act of 1933, as amended) or (ii) U.S. persons that purchased the Notes in a transaction that did not require registration under the Securities Act of 1933, as amended.

 

We further certify that (i) we are not submitting herewith for exchange any portion of such Temporary Offshore Global Note excepted in such certifications and (ii) as of the date hereof we have not received any notification from any Institution to the effect that the statements made by such Institution with respect

 

  

H-2  

  

to any portion of such Temporary Offshore Global Note submitted herewith for exchange are no longer true and cannot be relied upon as of the date hereof.

 

You and the Company are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

 

Yours faithfully,

 

	 	
[Name of DTC Participant]

	 	
By:
	____________________________________  
	 	  	
Name:
	  
	 	  	
Title:
	  
	 	  	
Address:
	  

Date: _________________

  

H-3  

  

EXHIBIT I

 

THIS NOTE IS A TEMPORARY GLOBAL NOTE.  PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD APPLICABLE HERETO, BENEFICIAL INTERESTS HEREIN MAY NOT BE HELD BY ANY PERSON OTHER THAN (1) A NON-U.S. PERSON OR (2) A U.S. PERSON THAT PURCHASED SUCH INTEREST IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  BENEFICIAL INTERESTS HEREIN ARE NOT EXCHANGEABLE FOR PHYSICAL NOTES OTHER THAN A PERMANENT GLOBAL NOTE IN ACCORDANCE WITH THE TERMS OF THE INDENTURE. TERMS IN THIS LEGEND ARE USED AS USED IN REGULATION S UNDER THE SECURITIES ACT.

 

NO BENEFICIAL OWNERS OF THIS TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF PRINCIPAL OR INTEREST HEREON UNTIL SUCH BENEFICIAL INTEREST IS EXCHANGED OR TRANSFERRED FOR AN INTEREST IN ANOTHER NOTE

  

I-1  

  

EXHIBIT J

 

THE INSTRUMENT EVIDENCED HEREBY WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL INCOME TAX PURPOSES.  SOLELY FOR PURPOSES OF APPLYING THE RELEVANT U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT RULES, FOR EACH $1,000 PAR AMOUNT OF THIS INSTRUMENT, THE ISSUE PRICE IS $975.33; THE ISSUE DATE IS JUNE 23,
2009; THE AMOUNT OF ORIGINAL ISSUE DISCOUNT AS OF THE ISSUE DATE IS $24.67; AND THE YIELD TO MATURITY IS 10.500% PER ANNUM.

  

J-1

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