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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

  

CURRENT REPORT

 

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):  September 23, 2020

  

Franchise Group, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware 001-35588 27-3561876
(State or Other Jurisdiction of
Incorporation)
(Commission File Number) (I.R.S. Employer Identification No.)

 

2387 Liberty Way

Virginia Beach, Virginia 23456

(Address of Principal Executive Offices) (Zip Code)

 

(757) 493-8855

(Registrant's telephone number, including area code)

 

n/a

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading Symbol(s) Name of each exchange on which
registered

Common Stock, par value $0.01 per share

FRG

Nasdaq Global Market

     
7.50% Series A Cumulative Perpetual Preferred Stock, par value $0.01 per share and liquidation preference of $25.00 per share FRGAP Nasdaq Global Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 1.01.    Entry into a Material Definitive Agreement.

 

Amendments to Term Loan Credit Agreement

 

On September 23, 2020, Franchise Group Intermediate Holdco, LLC, a Delaware limited liability company ("Lead Borrower") and an indirect subsidiary of Franchise Group, Inc., a Delaware corporation (the "Company"), Franchise Group New Holdco, LLC, a Delaware limited liability company ("Parent") and the direct parent of Lead Borrower, and various subsidiaries of Parent entered into an Amendment Number Three to Credit Agreement (the “Third Term Loan Amendment”) with the Term Lenders (as defined below) party thereto, GACP Finance Co., LLC, as administrative agent (the “Term Administrative Agent”), and Kayne Solutions Fund, L.P., as collateral agent (the “Term Collateral Agent”), which amended that certain Credit Agreement, dated as of February 14, 2020 (the “Original Term Loan Credit Agreement”, and the Original Term Loan Credit Agreement as amended by Amendment Number One to Credit Agreement, dated as of March 13, 2020, and Limited Waiver, Joinder and Amendment Number Two to Credit Agreement, dated as of May 1, 2020, the “Existing Term Loan Credit Agreement”), by and among Lead Borrower, as lead borrower, Parent, as a guarantor, various subsidiaries of Parent from time to time party thereto as borrowers or guarantors (together with Lead Borrower and Parent, the “Term Loan Loan Parties”), various lenders from time to time party thereto (the “Term Lenders”), the Term Administrative Agent and the Term Collateral Agent. On September 25, 2020, the Term Loan Loan Parties entered into an Amendment Number Four to Credit Agreement (the “Fourth Term Loan Amendment”, and together with the Third Term Loan Amendment, the “Term Loan Amendments”) with the Term Lenders, the Term Administrative Agent and the Term Collateral Agent, which amended the Existing Credit Agreement (as amended by the Third Term Loan Amendment) (the Existing Credit Agreement, as amended by the Term Loan Amendments, the “Term Loan Credit Agreement”).

 

The Term Loan Amendments amended the Existing Term Loan Credit Agreement to, among other things, (i) facilitate the entry into the New ABL Credit Agreement (as defined below), (ii) permit sales of real property of the Term Loan Loan Parties and the use of the net proceeds therefrom to repay the obligations under the Term Loan Credit Agreements and (iii) provide for certain exclusions to prepayment premiums required under the Existing Term Loan Credit Agreement.

 

The foregoing descriptions are subject to, and qualified in their entirety by, the full texts of the Term Loan Amendments, which are incorporated herein by reference to Exhibits 10.1-10.2 to this Current Report on Form 8-K.

 

New ABL Credit Agreement

 

On September 23, 2020, Lead Borrower, as lead borrower, certain direct and indirect subsidiaries of Parent from time to time party thereto as borrowers (together with Lead Borrower, collectively, the "New ABL Borrowers"), Parent, as a guarantor, and certain direct and indirect subsidiaries of Parent from time to time party thereto as guarantors (together with Parent, the “New ABL Guarantors”, and the New ABL Guarantors together with the New ABL Borrowers, the “New ABL Loan Parties”) entered into an ABL Credit Agreement (the “New ABL Credit Agreement”) with various lenders from time to time party thereto (the “New ABL Lenders”), Citizens Bank, N.A., as administrative agent and collateral agent (in such capacities, the “New ABL Agent”) and the other persons from time to time party thereto. The New ABL Credit Agreement provides for a senior secured revolving loan facility (the “New ABL Revolver”) with commitments available to the New ABL Borrowers of the lesser of (i) $125.0 million and (ii) a borrowing base based on the eligible credit card receivables, accounts, inventory and revenue due under certain rental agreements, less certain reserves, of Franchise Group Newco Intermediate AF, LLC, a Delaware limited liability company and an indirect subsidiary of the Company, and Franchise Group Intermediate B, LLC, a Delaware limited liability company and an indirect subsidiary of the Company, and each of their direct and indirect subsidiaries, in each case to the extent such persons are New ABL Loan Parties (collectively, the “Core New ABL Loan Parties”). The New ABL Credit Agreement also includes a $15.0 million swingline subfacility and a $15.0 million letter of credit subfacility.

 

The New ABL Borrowers’ obligations under the New ABL Credit Agreement are guaranteed by the New ABL Guarantors, and are required to be guaranteed by each of Parent’s direct and indirect subsidiaries (other than certain excluded subsidiaries) existing from time to time. The obligations of the New ABL Borrowers under the New ABL Credit Agreement are secured on a first priority basis by, subject to certain exceptions, credit card receivables, accounts receivable, deposit accounts, securities accounts, inventory and rental agreements of the New ABL Loan Parties (other than, to the extent constituting New ABL Loan Parties, the Liberty Parties), are secured on a second priority basis by substantially all other assets of the New ABL Loan Parties, and are required to be secured by each of Parent’s direct and indirect subsidiaries (other than certain excluded subsidiaries) existing from time to time. The New ABL Borrowers borrowed approximately $32.7 million on September 23, 2020, the proceeds of which were used to prepay certain existing indebtedness under the Existing ABL Credit Agreement (as defined below), to pay fees and expenses in connection with the New ABL Credit Agreement and the Term Loan Amendment, and for general corporate purposes.

 

 

 

The New ABL Revolver will mature on the earlier of September 23, 2025 and the maturity date under the Term Loan Credit Agreement (i.e., February 14, 2025), unless the maturity is accelerated subject to the terms set forth in the New ABL Credit Agreement. Borrowings under the New ABL Revolver will, at Lead Borrower’s option, bear interest at either (i) a rate per annum based on LIBOR for an interest period of one, two, three or six months (or, if all applicable New ABL Lenders agree, twelve months), plus an interest rate margin that ranges from 3.50% to 3.75%, depending on the total leverage ratio of the Core New ABL Loan Parties, with a 1.00% LIBOR floor (a “New ABL LIBOR Loan”), or (ii) an alternate base rate determined as provided in the New ABL Credit Agreement, plus an interest rate margin that ranges from 2.50% to 2.75%, depending on the total leverage ratio of the Core New ABL Loan Parties, with an effective 2.00% alternate base rate floor (a “New ABL ABR Loan”). Interest on New ABL LIBOR Loans is payable in arrears at the end of each applicable interest period (and, with respect to any six- or twelve-month interest period, at three month intervals after the first day of such interest period), and interest on New ABL ABR Loans is payable in arrears on the first day of each month.

 

If the sum of the outstanding principal amount of the outstanding loans (including swingline loans) under the New ABL Revolver and the outstanding amount of letter of credit obligations thereunder exceeds the borrowing base (as tested on a fiscal monthly basis, subject to weekly testing under certain circumstances), the New ABL Borrowers are required to prepay the loans under the New ABL Revolver (including swingline loans) or cash collateralize letters of credit thereunder in the amount of any such excess. The New ABL Borrowers are also required to prepay the loans under the New ABL Revolver, subject to the agreements between the New ABL Lenders and the Term Lenders, with the net cash proceeds of certain other customary events (subject to certain customary reinvestment rights). The New ABL Borrowers may make voluntary prepayments of the loans under the New ABL Revolver from time to time. Amounts repaid may be re-borrowed, subject to compliance with the borrowing base and the other conditions set forth in the New ABL Credit Agreement. The New ABL Borrowers may be required to pay LIBOR breakage and redeployment costs in certain limited circumstances.

 

The New ABL Credit Agreement and the New ABL Security Agreement (as defined below) include customary affirmative and negative covenants binding on the New ABL Loan Parties, including delivery of financial statements and other reports. The negative covenants limit the ability of the New ABL Loan Parties and certain of their direct and indirect subsidiaries, among other things, to incur debt, incur liens, make investments, sell assets, pay dividends on their capital stock and enter into transactions with affiliates. The New ABL Credit Agreement also includes a covenant that availability must not be less than the greater of $12.5 million and 12.5% of the lesser of $125.0 million and the borrowing base. In addition, the New ABL Credit Agreement includes customary events of default, the occurrence of which may require that the New ABL Borrowers pay an additional 2.0% interest on the outstanding loans under the New ABL Revolver. The New ABL Credit Agreement also includes passive holding company covenants binding on Parent.

 

The foregoing description is subject to, and qualified in its entirety by, the full texts of each of the New ABL Credit Agreement and the ABL Security Agreement, dated as of September 23, 2020 (the “New ABL Security Agreement”), by and among the New ABL Loan Parties, as grantors, in favor of New ABL Agent, each of which is incorporated herein by reference to Exhibits 10.3 and 10.4 to this Current Report on Form 8-K, respectively.

 

Item 1.02. Termination of a Material Definitive Agreement.

 

As previously disclosed, on February 14, 2020, Lead Borrower, as lead borrower, certain direct and indirect subsidiaries of Parent from time to time party thereto as borrowers (together with Lead Borrower, collectively, the "Existing ABL Borrowers"), Parent, as a guarantor, and certain direct and indirect subsidiaries of Parent from time to time party thereto as guarantors entered into an ABL Credit Agreement (as amended, the "Existing ABL Credit Agreement") with the lenders from time to time party thereto (the "Existing ABL Lenders") and GACP Finance Co., LLC, as administrative agent and collateral agent (the "Existing ABL Agent"). The Existing ABL Credit Agreement provided for a $100.0 million senior secured asset-based term loan (the "Existing ABL Term Loan") to be made by the Existing ABL Lenders to certain of the Existing ABL Borrowers on February 14, 2020. The proceeds of the Existing ABL Term Loan were used, together with certain other funds, to consummate the acquisition (the “Merger”) by Franchise Group Newco Intermediate AF, LLC, a Delaware limited liability company and an indirect subsidiary of the Company, of American Freight Group, Inc., a Delaware corporation (now known as American Freight Group, LLC, a Delaware limited liability company) (“American Freight”), on February 14, 2020, to prepay certain existing indebtedness of American Freight and its direct and indirect subsidiaries and certain other indirect subsidiaries of the Company, to pay fees and expenses in connection with the Merger, the Existing ABL Credit Agreement and the Original Term Loan Credit Agreement, and for general corporate purposes. On September 23, 2020, the Borrowers repaid in full all amounts that were outstanding under the Existing ABL Term Loan and terminated the Existing ABL Credit Agreement.

 

 

 

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

To the extent required, the information set forth in Item 1.01 to this Current Report on Form 8-K is incorporated herein by reference.

 

Item 9.01. Financial Statements and Exhibits.

 

(c) Exhibits

 

The following exhibits are filed with this Current Report on Form 8-K:

 

10.1 Amendment Number Three to Credit Agreement, dated as of September 23, 2020, by and among Franchise Group New Holdco, LLC, Franchise Group Intermediate Holdco, LLC, each of their direct and indirect subsidiaries named therein, the lenders named therein, GACP Finance Co., LLC, as administrative agent, and Kayne Solutions Fund, L.P., as collateral agent.
   
10.2 Amendment Number Four to Credit Agreement, dated as of September 25, 2020, by and among Franchise Group New Holdco, LLC, Franchise Group Intermediate Holdco, LLC, each of their direct and indirect subsidiaries named therein, the lenders named therein, GACP Finance Co., LLC, as administrative agent, and Kayne Solutions Fund, L.P., as collateral agent.
   
10.3 ABL Credit Agreement, dated as of September 23, 2020, by and among Franchise Group New Holdco, LLC, Franchise Group Intermediate Holdco, LLC, each of their direct and indirect subsidiaries named therein, the lenders named therein, Citizens Bank, N.A., as administrative agent and collateral agent, and the other persons named therein.*
   
10.4 ABL Security Agreement, dated as of September 23, 2020, by and among by and among Franchise Group New Holdco, LLC, Franchise Group Intermediate Holdco, LLC, each of their direct and indirect subsidiaries named therein and Citizens Bank, N.A., as administrative agent and collateral agent.*
   
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

*Pursuant to Item 601(b)(10) of Regulation S-K, certain annexes to the agreement have not been filed herewith. The registrant agrees to furnish supplementally a copy of any omitted annex to the Securities and Exchange Commission upon request.

 

 

 

 

SIGNATURE

  

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  Franchise Group, Inc.
     
     
Date: September 28, 2020 By:  /s/ Eric F. Seeton
    Eric F. Seeton
    Chief Financial Officer

 

 

 

 

 

 

Exhibit 10.1

 

Execution Version

 

 

FLORIDA DOCUMENTARY STAMP TAXES IN THE AMOUNT OF $2,450.00 HAVE BEEN OR WILL BE PAID DIRECTLY TO THE FLORIDA DEPARTMENT OF REVENUE.

 

 

AMENDMENT NUMBER THREE TO CREDIT AGREEMENT

 

THIS AMENDMENT NUMBER THREE TO CREDIT AGREEMENT (this “Amendment No. 3”), dated as of September 23, 2020, is entered into by and among GACP FINANCE CO., LLC (“GACP”), in its capacity as administrative agent for each of the Lenders (in such capacity, “Agent”), FRANCHISE GROUP NEW HOLDCO, LLC, a Delaware limited liability company (“Global Parent”), FRANCHISE GROUP INTERMEDIATE HOLDCO, LLC, a Delaware limited liability company (“Lead Borrower”), AMERICAN FREIGHT GROUP, LLC, a Delaware limited liability company (“AFG”), certain other Subsidiaries of Lead Borrower party hereto as Borrowers (together with Lead Borrower and AFG, each individually and collectively, jointly and severally, “Borrower”), the other Loan Parties party hereto and the lenders identified on the signature pages hereof (such lenders, together with their respective successors and permitted assigns, each individually, a “Lender”, and collectively, the “Lenders”), and in light of the following:

 

W I T N E S S E T H

 

WHEREAS, Global Parent, Borrower, Lenders, the other Loan Parties and Agent are parties to that certain Credit Agreement, dated as of February 14, 2020 (as amended by that certain Amendment Number One to Credit Agreement, dated as of March 13, 2020, and that certain Limited Waiver, Joinder and Amendment Number Two to Credit Agreement, dated as of May 1, 2020, the “Existing Credit Agreement”, and the Existing Credit Agreement as amended by this Amendment No. 3, the “Credit Agreement”);

 

WHEREAS, Borrower has requested that Agent and the Required Lenders make certain amendments to the Existing Credit Agreement, including with respect to the ABL Credit Agreement;

 

WHEREAS, the Required Lenders authorize Agent’s and Collateral Agent’s entry into the Intercreditor Agreement with the ABL Agent to set forth the respective rights of the Agent and Collateral Agent, on one hand, and the ABL Agent, on the other hand, in relation to the Collateral; and

 

WHEREAS, upon the terms and conditions set forth herein, Agent and the Required Lenders are willing to make certain amendments to the Existing Credit Agreement on the terms set forth herein.

 

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

 

1.                   Defined Terms. All initially capitalized terms used herein (including the preamble and recitals hereof) without definition shall have the meanings ascribed thereto in Section 1.01 of the Credit Agreement.

 

2.                   Amendments to Existing Credit Agreement. Subject to the satisfaction (or waiver in writing by the Required Lenders) of the conditions precedent set forth in Section 3 hereof, the Existing Credit Agreement shall be amended to reflect the changes which are attached as Annex A hereto, such that on the Amendment Effective Date (as defined below) the terms set forth in Annex A hereto which appear in bold and double underlined text (inserted text) shall be added to the Existing Credit Agreement and the terms appearing as text which is stricken (deleted text) shall be deleted from the Existing Credit Agreement.

 

 

 

 

3.                   Conditions Precedent to Amendment. The satisfaction (or waiver in writing by Agent and Required Lenders) of each of the following shall constitute conditions precedent to the effectiveness of this Amendment No. 3 (such date being the “Amendment Effective Date”):

 

(a)                Agent shall have received this Amendment No. 3, duly executed by the Borrowers and their subsidiaries party hereto and by the Required Lenders, and the same shall be in full force and effect.

 

(b)                Agent shall have received a fully executed and effective ABL Credit Agreement (as defined in Annex A) in form and substance reasonably satisfactory to each Agent with commitments thereunder of at least $125,000,000.

 

(c)                Agent shall have received a fully executed and effective Intercreditor Agreement (as defined in Annex A) in form and substance reasonably satisfactory to each Agent and the Required Lenders.

 

(d)                After giving effect to this Amendment No. 3, with respect to Global Parent and its Subsidiaries, the representations and warranties contained herein, in the Credit Agreement, and in the other Loan Documents, in each case, shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties are true and correct in all respects subject to such qualification) on and as of the date hereof, to the same extent as though made on and as of the date hereof, except to the extent that such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of such earlier date.

 

(e)                No event has occurred and is continuing or would result from the consummation of the transactions contemplated herein that would constitute a Default or Event of Default.

 

(f)                 Lead Borrower shall pay substantially concurrently with the closing of the transactions evidenced by this Amendment No. 3, all fees, costs, expenses and taxes then payable pursuant to the Credit Agreement and Section 4 of this Amendment No. 3.

 

(g)                On the Amendment Effective Date, Agent shall have received a solvency certificate of the chief executive officer, chief operating officer or chief financial officer of the Lead Borrower substantially in the form of Exhibit F-2 of the Credit Agreement, amended to be relevant to the transactions contemplated in the ABL Credit Agreement, dated as of the Amendment Effective Date and addressed to the Agent and Lenders.

 

4.                   Payment of Costs and Fees. Lead Borrower shall pay to Agent and each Lender all expenses required to be paid pursuant to Section 10.02 of the Credit Agreement in connection with the preparation, negotiation, execution and delivery of this Amendment No. 3 and any documents and instruments relating hereto.

 

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5.                   APPLICABLE LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL PROVISIONS. THIS AMENDMENT NO. 3 SHALL BE SUBJECT TO THE PROVISIONS REGARDING APPLICABLE LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL SET FORTH IN SECTIONS 10.14, 10.15 AND 10.16 OF THE CREDIT AGREEMENT, AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

 

6.                   Representations and Warranties. Each Loan Party, jointly and severally, hereby:

 

(a)represents and warrants that, each of the representations and warranties made to Agent and Lenders under the Credit Agreement and all of the other Loan Documents are true and correct in all material respects on and as of the date hereof (after giving effect to this Amendment No. 3 and the other documents executed in connection with this Amendment No. 3) except to the extent that (i) such representations or warranties are qualified by a materiality standard, in which case they shall be true and correct in all respects, or (ii) such representations or warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects as of such earlier date (or, if such representations or warranties are qualified by a materiality standard, in all respects as of such earlier date));

 

(b)represents and warrants that, after giving effect to this Amendment No. 3, no Default or Event of Default has occurred and is continuing;

 

(c)represents and warrants that the execution, delivery and performance by each Loan Party of this Amendment No. 3 and the consummation of the transactions contemplated hereby or thereby, are within such Loan Party’s powers, have been duly authorized by all necessary organizational action, and do not contravene (i) the Organizational Documents of such Loan Party or (ii) any law or any Contractual Obligation of any Loan Party, except, for purposes of this clause (ii), to the extent such contravention would not reasonably be expected to have a Material Adverse Effect;

 

(d)represents and warrants that no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority, any stockholders, members, partners or any other equityholders of any Loan Party, and any Person pursuant to any Contractual Obligation, is required for the due execution, delivery and performance by any Loan Party of this Amendment No. 3 that has not already been obtained if the failure to obtain such authorization, approval or other action, or to provide such notice or make such filing, could reasonably be expected to result in a Material Adverse Effect;

 

(e)represents and warrants that this Amendment No. 3 has been duly executed and delivered by each Loan Party party thereto; and

 

(f)represents and warrants that this Amendment No. 3 constitutes upon execution, the legal, valid and binding obligation of each Loan Party party hereto enforceable against such Loan Party in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization or moratorium or similar laws relating to or affecting the rights of creditors generally and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).

 

7.                   Amendments. This Amendment No. 3 cannot be altered, amended, changed or modified in any respect except in accordance with Section 10.05 of the Credit Agreement.

 

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8.                   Counterpart Execution. This Amendment No. 3 may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Amendment. The words “execution,” signed,” “signature,” and words of like import in this Amendment No. 3 or in any other certificate, agreement or document related to this Amendment No. 3 or any other Loan Documents shall include images of manually executed signatures transmitted by facsimile or other electronic format (including, without limitation, “pdf”, “tif” or “jpg”) and other electronic signatures (including, without limitation, DocuSign). The use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act and any other applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act or the Uniform Commercial Code.

 

9.                   Effect on Loan Documents.

 

(a)                The Credit Agreement, as amended hereby, and each of the other Loan Documents shall be and remain in full force and effect in accordance with their respective terms and hereby are ratified and confirmed in all respects. The execution, delivery, and performance of this Amendment No. 3 shall not operate, except as expressly set forth herein, as a modification or waiver of any right, power, or remedy of Agent or any Lender under the Credit Agreement or any other Loan Document. Except for the amendments to the Credit Agreement expressly set forth herein, the Credit Agreement and the other Loan Documents shall remain unchanged and in full force and effect. The waivers, consents and modifications set forth herein, if any, are limited to the specifics hereof (including facts or occurrences on which the same are based), shall not apply with respect to any facts or occurrences other than those on which the same are based, shall neither excuse any future non-compliance with the Loan Documents nor operate as a waiver of any Default or Event of Default, shall not operate as a consent to any further waiver, consent or amendment or other matter under the Loan Documents, and shall not be construed as an indication that any future waiver or amendment of covenants or any other provision of the Credit Agreement will be agreed to, it being understood that the granting or denying of any waiver or amendment which may hereafter be requested by Borrower remains in the sole and absolute discretion of Agent and Lenders. To the extent that any terms or provisions of this Amendment No. 3 conflict with those of the Credit Agreement or the other Loan Documents, the terms and provisions of this Amendment No. 3 shall control.

 

(b)                Upon and after the effectiveness of this Amendment No. 3, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “herein”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to “the Credit Agreement”, “thereunder”, “therein”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as modified and amended hereby. Upon and after the effectiveness of this Amendment No. 3, each reference in the Intercreditor Agreement to in the Credit Agreement, and each reference in the other Loan Documents to “the Intercreditor Agreement”, “thereunder”, “therein”, “thereof” or words of like import referring to the Intercreditor Agreement, shall mean and be a reference to the Intercreditor Agreement as in effect on the Amendment No. 3 Effective Date.

 

(c)                To the extent that any of the terms and conditions in any of the Loan Documents shall contradict or be in conflict with any of the terms or conditions of the Credit Agreement, after giving effect to this Amendment No. 3, such terms and conditions are hereby deemed modified or amended accordingly to reflect the terms and conditions of the Credit Agreement as modified or amended hereby.

 

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(d)                This Amendment No. 3 is a Loan Document.

 

(e)                Unless the context of this Amendment No. 3 clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or”. The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Amendment No. 3 refer to this Amendment No. 3 as a whole and not to any particular provision of this Amendment No. 3. Section, subsection, clause, schedule, and exhibit references herein are to this Amendment No. 3 unless otherwise specified. Any reference in this Amendment No. 3 to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein) Any reference herein to the Obligations shall (i) mean “Obligations” as defined in the Credit Agreement (including any expenses, fees or interest that accrue after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding) and (ii) include all or any portion thereof and any extensions, modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency Proceeding.

 

10.               Entire Agreement. This Amendment No. 3, and the terms and provisions hereof, the Credit Agreement and the other Loan Documents constitute the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersede any and all prior or contemporaneous amendments or understandings with respect to the subject matter hereof, whether express or implied, oral or written.

 

11.               Integration. This Amendment No. 3, together with the other Loan Documents, incorporates all negotiations of the parties hereto with respect to the subject matter hereof and is the final expression and agreement of the parties hereto with respect to the subject matter hereof.

 

12.               Reaffirmation of Obligations. Each Loan Party hereby (a) acknowledges and reaffirms its obligations owing to Agent and each Lender under each Loan Document to which it is a party (including, in respect of Global Parent, its Guaranty of the Obligations), and (b) agrees that each of the Loan Documents to which it is a party is and shall remain in full force and effect. Each Loan Party hereby (i) further ratifies and reaffirms the validity and enforceability of all of the Liens and security interests heretofore granted, pursuant to and in connection with the Security Agreement or any other Loan Document to Collateral Agent, on behalf and for the benefit of each Secured Party, as collateral security for the obligations under the Loan Documents in accordance with their respective terms, and (ii) acknowledges that all of such Liens and security interests, and all Collateral heretofore pledged as security for such obligations, continue to be and remain collateral for such obligations from and after the date hereof (including, without limitation, from after giving effect to this Amendment No. 3).

 

13.               Severability. In case any provision in this Amendment No. 3 shall be invalid, illegal or unenforceable, such provision shall be severable from the remainder of this Amendment No. 3 and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

14.               Intercreditor Agreement. Without limiting the authority granted to Agent and Collateral Agent under Section 10.23 of the Credit Agreement, each undersigned Lender, collectively comprising the Required Lenders hereby authorizes and directs each of Agent and Collateral Agent to enter into the Intercreditor Agreement attached hereto as Exhibit A and agrees that each of Agent and Collateral Agent may take such actions as is contemplated by the terms of the Intercreditor Agreement.

 

 5 

 

 

[Signature pages follow]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 6 

 

 

IN WITNESS WHEREOF, the parties have entered into this Amendment Number Three as of the date first above written.

 

  FRANCHISE GROUP NEW HOLDCO, LLC,
  as Global Parent  
       
       
  By: /s/ Brian Kahn  
  Name: Brian Kahn  
  Title: President and Chief Executive Officer
   
   
  FRANCHISE GROUP INTERMEDIATE HOLDCO, LLC,
  as Lead Borrower  
       
       
  By: /s/ Brian Kahn  
  Name: Brian Kahn  
  Title: President and Chief Executive Officer
   
   
  AMERICAN FREIGHT GROUP, LLC,
  as a Borrower  
       
       
  By: /s/ William Powell  
  Name: William Powell  
  Title: Executive Vice President 
   
   
  Franchise Group Newco Intermediate AF, LLC,
  as a Borrower  
     
     
  By: /s/ Brian Kahn  
  Name:  Brian Kahn  
  Title:  President and Chief Executive Officer
   
   
  American Freight Holdings, LLC,
  as a Borrower  
     
     
  By: /s/ William Powell  
  Name: William Powell  
  Title: Executive Vice President 
   
   

 

[Signature Page to Amendment Number Three to Credit Agreement]

 

 

  American Freight, LLC  
  as a Borrower  
     
     
  By: /s/ William Powell  
  Name: William Powell  
  Title: Executive Vice President 
   
   
  American Freight Management Company, LLC,
  as a Borrower  
     
     
  By: /s/ William Powell  
  Name: William Powell  
  Title: Executive Vice President
   
   
  Franchise Group Intermediate B, LLC,
  as a Borrower  
     
     
  By: /s/ Brian Kahn  
  Name:  Brian Kahn  
  Title:  President and Chief Executive Officer
   
   
  Buddy’s Newco, LLC,  
  as a Borrower  
     
     
  By: /s/ Michael Bennett  
  Name:  Michael Bennett  
  Title:  Chief Executive Officer
   
   
  Buddy’s Franchising and Licensing LLC,
  as a Borrower  
     
     
  By: /s/ Michael Bennett  
  Name:  Michael Bennett  
  Title:   Chief Executive Officer

 

[Signature Page to Amendment Number Three to Credit Agreement]

 

 

  Franchise Group Intermediate S, LLC,
  as a Borrower  
     
     
  By: /s/ Brian Kahn  
  Name:  Brian Kahn  
  Title:  President and Chief Executive Officer
   
   
  Franchise Group Newco S, LLC,
  as a Borrower  
     
     
  By: /s/ Ron Allender  
  Name:  Ron Allender  
  Title:  Executive Vice President
   
   
  American Freight Outlet Stores, LLC,
  as a Borrower  
     
     
  By: /s/ William Powell  
  Name:  Will Powell  
  Title:  President  
     
     
  Outlet Merchandise, LLC,
  as a Borrower  
     
     
  By: /s/ William Powell  
  Name:  Will Powell  
  Title:  President  
     
     
  American Freight Discount Outlet Franchising, LLC,
  as a Borrower  
     
     
  By: /s/ William Powell  
  Name:  Will Powell  
  Title:  Executive Vice President

 

 

[Signature Page to Amendment Number Three to Credit Agreement]

 

 

  FRANCHISE GROUP INTERMEDIATE V, LLC,
  as a Guarantor  
     
     
  By: /s/ Brian Kahn  
  Name: Brian Kahn  
  Title: President and Chief Executive Officer
   
   
  FRANCHISE GROUP NEWCO V, LLC,
  as a Guarantor  
     
     
  By: /s/ Brian Kahn  
  Name: Brian Kahn  
  Title: President and Chief Executive Officer
   
   
  FRANCHISE GROUP INTERMEDIATE L, LLC,
  as a Guarantor  
     
     
  By: /s/ Brian Kahn  
  Name: Brian Kahn  
  Title: President and Chief Executive Officer
       
       
  FRANCHISE GROUP INTERMEDIATE L 1, LLC
   
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:   Chief Financial Officer
   
       
  FRANCHISE GROUP INTERMEDIATE L 2, LLC
   
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:  Chief Financial Officer
       
       
  JTH TAX LLC  
     
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:  Chief Financial Officer

 

[Signature Page to Amendment Number Three to Credit Agreement]

 

 

  SIEMPRETAX+ LLC  
     
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:  Chief Financial Officer
   
       
  LIBERTY CREDIT REPAIR, LLC
   
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:  Chief Financial Officer and Vice President
   
       
  JTH FINANCIAL, LLC  
     
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title: Chief Financial Officer
   
       
  WEFILE LLC  
     
       
  By: /s/ Daniel Brashier  
  Name: Daniel Brashier  
  Title:  Treasurer  
       
       
  JTH PROPERTIES 1632, LLC
   
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:  Chief Financial Officer
   
       
  LTS PROPERTIES, LLC
   
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title: Chief Financial Officer
       
       
  LTS SOFTWARE LLC  
     
       
  By: /s/ Daniel Brashier  
  Name: Daniel Brashier  
  Title:  Treasurer  

 

[Signature Page to Amendment Number Three to Credit Agreement]

 

 

  JTH TAX OFFICE PROPERTIES, LLC
   
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:  Chief Financial Officer
   
       
  360 ACCOUNTING SOLUTIONS LLC
       
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:  Chief Financial Officer
   
       
  JTH COURT PLAZA, LLC
   
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:  Chief Financial Officer
   
       
  LIBERTY TAX HOLDING CORPORATION
   
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:  Chief Financial Officer
       
       
  LIBERTY TAX SERVICE INC.
   
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:  Chief Financial Officer

 

[Signature Page to Amendment Number Three to Credit Agreement]

 

 

  GACP FINANCE CO., LLC,
  as Administrative Agent  
       
       
  By: /s/ Robert Louzan  
  Name:  Robert Louzan  
  Title:  President  

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Amendment Number Three to Credit Agreement]

 

 

  PIF ONSHORE VI LP,  
  as a Lender  
       
  By: Pacific Investment Management
  Company LLC, its investment manager
       
       
  By: /s/ Adam L. Gubner  
  Name: Adam L. Gubner  
  Title: Managing Director  
     
       
  HVS XXIV LLC,  
  as a Lender  
       
       
  By: /s/ Adam L. Gubner  
  Name: Adam L. Gubner  
  Title: Authorized Person  
       
       
  RSF XI LLC,  
  as a Lender  
       
       
  By: /s/ Russell D. Gannaway  
  Name: Russell D. Gannaway
  Title: Authorized Person  

 

[Signature Page to Amendment Number Three to Credit Agreement]

 

 

  BTC HOLDINGS SC FUND LLC,
  as a Lender  
       
  By: Blue Torch Credit Opportunities SC Master Fund LP, its sole member
  By: Blue Torch Credit Opportunities SC GP LLC, its General Partner
  By: KPG BTC Management LLC, its sole member
       
       
  By: /s/ Kevin Genda  
  Name: Kevin Genda  
  Title: Managing Member  
       
       
  BTC HOLDINGS FUND I, LLC,
  as a Lender  
       
  By: Blue Torch Credit Opportunities Fund I LP, its sole member
  By: Blue Torch Credit Opportunities GP LLC, its general partner
  By: KPG BTC Management LLC, its sole Member
       
       
  By: /s/ Kevin Genda  
  Name: Kevin Genda  
  Title: Managing Member  

 

 

 

 

 

 

[Signature Page to Amendment Number Three to Credit Agreement]

 

 

  BTC HOLDINGS FUND I-B, LLC,
  as a Lender  
       
  By: Blue Torch Credit Opportunities Fund I LP, its sole member
  By: Blue Torch Credit Opportunities GP LLC, its general partner
  By: KPG BTC Management LLC, its sole member
       
       
  By: /s/ Kevin Genda  
  Name: Kevin Genda  
  Title: Managing Member  
       
       

 

 

 

 

 

 

 

 

[Signature Page to Amendment Number Three to Credit Agreement]

 

 

  CERBERUS ASRS FUNDING LLC
  as a Lender  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Vice President  
       
       
  CERBERUS AOZ LOAN OPPORTUNITIES FUND, L.P.,
  as a Lender  
       
  By: Cerberus AOZ Loan Opportunities GP, LLC
  Its: General Partner  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Senior Managing Director
       
       
  CERBERUS AUS LEVERED HOLDINGS LP,
  as a Lender  
       
  By: CAL I GP Holdings LLC
  Its: General Partner  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Senior Managing Director

 

[Signature Page to Amendment Number Three to Credit Agreement]

 

 

  CERBERUS C-1 LEVERED LLC
  as a Lender  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Vice President  
       
       
  CERBERUS FSBA LEVERED LLC
  as a Lender  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Vice President  
       
       
  CERBERUS KRS LEVERED LLC
  as a Lender  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Vice President  
       
       
  CERBERUS ND LEVERED LLC
  as a Lender  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Vice President  
       
       
  CERBERUS ONSHORE LEVERED IV LLC
  as a Lender  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Vice President  

 

[Signature Page to Amendment Number Three to Credit Agreement]

 

 

  CERBERUS OFFSHORE LEVERED IV LLC
  as a Lender  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Vice President  
       
       
  CERBERUS OFFSHORE UNLEVERED LOAN
  OPPORTUNITIES MASTER FUND IV, L.P.,
  as a Lender  
       
  By: Cerberus Offshore Unlevered Opportunities IV GP, LLC
  Its: General Partner  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Senior Managing Director
       
       
  CERBERUS REDWOOD LEVERED A LLC
  as a Lender  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Vice President  

 

[Signature Page to Amendment Number Three to Credit Agreement]

 

 

  CERBERUS REDWOOD LEVERED LOAN
  OPPORTUNITIES FUND B, L.P.,
  as a Lender  
       
  By: Cerberus Redwood Levered Opportunities GP B, LLC
  Its: General Partner  
     
     
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Senior Managing Director
       
       
  CERBERUS PSERS LEVERED LLC
  as a Lender  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Vice President  
       
       
  CERBERUS STEPSTONE LEVERED LLC
  as a Lender  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Vice President  
       
       
  KAAMANEN HOLDINGS, LP
  as a Lender  
       
  By: Kaamanen GP, LLC, its general partner
  By: CBF Manager, L.P., its non-member manager
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Senior Managing Director

 

[Signature Page to Amendment Number Three to Credit Agreement]

 

 

  KAAMANEN LEVERED, LP,
  as a Lender  
       
  By: Kaamanen Levered GP, LLC, its general
  Partner  
       
  By: CBF Manager, L.P., its non-member manager
  as Assignee  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Senior Managing Director
   
       
  RELIANCE STANDARD LIFE INSURANCE
  COMPANY  
  as a Lender  
       
  By: CBF-D Manager, LLC  
  Its: Investment Manager  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Senior Managing Director

 

 

 

 

[Signature Page to Amendment Number Three to Credit Agreement]

 

 

  KAYNE SOLUTIONS FUND, L.P.
  as a Lender  
       
  By: Kayne Solutions Fund GP, LLC,
  its general partner  
       
       
  By: /s/ Jon Levinson  
  Name: Jon Levinson  
  Title: Managing Partner  
       
       
  KAFRG INVESTORS, L.P.,
  as a Lender  
       
  By: KAFRG Investors GP, LLC,
  its general partner  
       
       
  By: /s/ Jon Levinson  
  Name: Jon Levinson  
  Title: Managing Partner  
       
       
  KAYNE SOLUTIONS MINI-MASTER FUND, L.P.
  as a Lender  
       
  By: Kayne Solutions Fund GP, LLC,
  its general partner  
       
       
  By: /s/ Jon Levinson  
  Name: Jon Levinson  
  Title: Managing Partner  

 

[Signature Page to Amendment Number Three to Credit Agreement]

 

 

  GACP II, L.P.,  
  as a Lender  
       
       
  By: /s/ Robert Louzan  
  Name:  Robert Louzan  
  Title:  Authorized Person  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Amendment Number Three to Credit Agreement]

 

Exhibit 10.2

 

[FLORIDA DOCUMENTARY STAMP TAXES IN THE AMOUNT OF $2,450.00 HAVE BEEN OR WILL BE PAID DIRECTLY TO THE FLORIDA DEPARTMENT OF REVENUE.]

 

 

AMENDMENT NUMBER FOUR TO CREDIT AGREEMENT

 

THIS AMENDMENT NUMBER FOUR TO CREDIT AGREEMENT (this “Amendment No. 4”), dated as of September 25, 2020, is entered into by and among GACP FINANCE CO., LLC (“GACP”), in its capacity as administrative agent for each of the Lenders (in such capacity, “Agent”), FRANCHISE GROUP NEW HOLDCO, LLC, a Delaware limited liability company (“Global Parent”), FRANCHISE GROUP INTERMEDIATE HOLDCO, LLC, a Delaware limited liability company (“Lead Borrower”), AMERICAN FREIGHT GROUP, LLC, a Delaware limited liability company (“AFG”), certain other Subsidiaries of Lead Borrower party hereto as Borrowers (together with Lead Borrower and AFG, each individually and collectively, jointly and severally, “Borrower”), the other Loan Parties party hereto and the lenders identified on the signature pages hereof (such lenders, together with their respective successors and permitted assigns, each individually, a “Lender”, and collectively, the “Lenders”), and in light of the following:

 

W I T N E S S E T H

 

WHEREAS, Global Parent, Borrower, Lenders, the other Loan Parties and Agent are parties to that certain Credit Agreement, dated as of February 14, 2020 (as amended by that certain Amendment Number One to Credit Agreement, dated as of March 13, 2020, that certain Limited Waiver, Joinder and Amendment Number Two to Credit Agreement, dated as of May 1, 2020, that Amendment Number Three to Credit Agreement, dated as of September 23, 2020, the “Existing Credit Agreement”, and the Existing Credit Agreement as amended by this Amendment No. 4, the “Credit Agreement”);

 

WHEREAS, Required Lenders authorized Agent and Collateral Agent to, and Agent and Collateral Agent did, enter into the Intercreditor Agreement on the Amendment No. 3 Effective Date;

 

WHEREAS, Borrower has requested that Agent and each of the Lenders make certain amendments to the Existing Credit Agreement; and

 

WHEREAS, upon the terms and conditions set forth herein, Agent and the Required Lenders are willing to make certain amendments to the Existing Credit Agreement on the terms set forth herein.

 

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

 

1.            Defined Terms. All initially capitalized terms used herein (including the preamble and recitals hereof) without definition shall have the meanings ascribed thereto in Section 1.01 of the Credit Agreement.

 

2.            Amendments to Existing Credit Agreement. Subject to the satisfaction (or waiver in writing by all of the Lenders) of the conditions precedent set forth in Section 3 hereof, the Existing Credit Agreement shall be amended to reflect the changes which are attached as Annex A hereto, such that on the Amendment Effective Date (as defined below) the terms set forth in Annex A hereto which appear in bold and double underlined text (inserted text) shall be added to the Existing Credit Agreement and the terms appearing as text which is stricken (deleted text) shall be deleted from the Existing Credit Agreement.

 

 

 

3.            Conditions Precedent to Amendment. The satisfaction (or waiver in writing by Agent and all of the Lenders) of each of the following shall constitute conditions precedent to the effectiveness of this Amendment No. 4 (such date being the “Amendment Effective Date”):

 

(a)                Agent shall have received this Amendment No. 4, duly executed by the Borrowers and their subsidiaries party hereto and by each of the Lenders, and the same shall be in full force and effect.

 

(b)                After giving effect to this Amendment No. 4, with respect to Global Parent and its Subsidiaries, the representations and warranties contained herein, in the Credit Agreement, and in the other Loan Documents, in each case, shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties are true and correct in all respects subject to such qualification) on and as of the date hereof, to the same extent as though made on and as of the date hereof, except to the extent that such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of such earlier date.

 

(c)                No event has occurred and is continuing or would result from the consummation of the transactions contemplated herein that would constitute a Default or Event of Default.

 

(d)                Lead Borrower shall pay substantially concurrently with the closing of the transactions evidenced by this Amendment No. 4, all fees, costs, expenses and taxes then payable pursuant to the Credit Agreement and Section 4 of this Amendment No. 4.

 

4.            Payment of Costs and Fees. Lead Borrower shall pay to Agent and each Lender all expenses required to be paid pursuant to Section 10.02 of the Credit Agreement in connection with the preparation, negotiation, execution and delivery of this Amendment No. 4 and any documents and instruments relating hereto.

 

5.            APPLICABLE LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL PROVISIONS. THIS AMENDMENT NO. 4 SHALL BE SUBJECT TO THE PROVISIONS REGARDING APPLICABLE LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL SET FORTH IN SECTIONS 10.14, 10.15 AND 10.16 OF THE CREDIT AGREEMENT, AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

 

6.            Representations and Warranties. Each Loan Party, jointly and severally, hereby:

 

(a)represents and warrants that, each of the representations and warranties made to Agent and Lenders under the Credit Agreement and all of the other Loan Documents are true and correct in all material respects on and as of the date hereof (after giving effect to this Amendment No. 4 and the other documents executed in connection with this Amendment No. 4) except to the extent that (i) such representations or warranties are qualified by a materiality standard, in which case they shall be true and correct in all respects, or (ii) such representations or warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects as of such earlier date (or, if such representations or warranties are qualified by a materiality standard, in all respects as of such earlier date));

 

 2 

 

(b)represents and warrants that, after giving effect to this Amendment No. 4, no Default or Event of Default has occurred and is continuing;

 

(c)represents and warrants that the execution, delivery and performance by each Loan Party of this Amendment No. 4 and the consummation of the transactions contemplated hereby or thereby, are within such Loan Party’s powers, have been duly authorized by all necessary organizational action, and do not contravene (i) the Organizational Documents of such Loan Party or (ii) any law or any Contractual Obligation of any Loan Party, except, for purposes of this clause (ii), to the extent such contravention would not reasonably be expected to have a Material Adverse Effect;

 

(d)represents and warrants that no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority, any stockholders, members, partners or any other equityholders of any Loan Party, and any Person pursuant to any Contractual Obligation, is required for the due execution, delivery and performance by any Loan Party of this Amendment No. 4 that has not already been obtained if the failure to obtain such authorization, approval or other action, or to provide such notice or make such filing, could reasonably be expected to result in a Material Adverse Effect;

 

(e)represents and warrants that this Amendment No. 4 has been duly executed and delivered by each Loan Party party thereto; and

 

(f)represents and warrants that this Amendment No. 4 constitutes upon execution, the legal, valid and binding obligation of each Loan Party party hereto enforceable against such Loan Party in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization or moratorium or similar laws relating to or affecting the rights of creditors generally and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).

 

7.            Amendments. This Amendment No. 4 cannot be altered, amended, changed or modified in any respect except in accordance with Section 10.05 of the Credit Agreement.

 

8.            Counterpart Execution. This Amendment No. 4 may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Amendment. The words “execution,” signed,” “signature,” and words of like import in this Amendment No. 4 or in any other certificate, agreement or document related to this Amendment No. 4 or any other Loan Documents shall include images of manually executed signatures transmitted by facsimile or other electronic format (including, without limitation, “pdf”, “tif” or “jpg”) and other electronic signatures (including, without limitation, DocuSign). The use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act and any other applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act or the Uniform Commercial Code.

 

 3 

 

9.            Effect on Loan Documents.

 

(a)                The Credit Agreement, as amended hereby, and each of the other Loan Documents shall be and remain in full force and effect in accordance with their respective terms and hereby are ratified and confirmed in all respects. The execution, delivery, and performance of this Amendment No. 4 shall not operate, except as expressly set forth herein, as a modification or waiver of any right, power, or remedy of Agent or any Lender under the Credit Agreement or any other Loan Document. Except for the amendments to the Credit Agreement expressly set forth herein, the Credit Agreement and the other Loan Documents shall remain unchanged and in full force and effect. The waivers, consents and modifications set forth herein, if any, are limited to the specifics hereof (including facts or occurrences on which the same are based), shall not apply with respect to any facts or occurrences other than those on which the same are based, shall neither excuse any future non-compliance with the Loan Documents nor operate as a waiver of any Default or Event of Default, shall not operate as a consent to any further waiver, consent or amendment or other matter under the Loan Documents, and shall not be construed as an indication that any future waiver or amendment of covenants or any other provision of the Credit Agreement will be agreed to, it being understood that the granting or denying of any waiver or amendment which may hereafter be requested by Borrower remains in the sole and absolute discretion of Agent and Lenders. To the extent that any terms or provisions of this Amendment No. 4 conflict with those of the Credit Agreement or the other Loan Documents, the terms and provisions of this Amendment No. 4 shall control.

 

(b)                Upon and after the effectiveness of this Amendment No. 4, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “herein”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to “the Credit Agreement”, “thereunder”, “therein”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as modified and amended hereby.

 

(c)                To the extent that any of the terms and conditions in any of the Loan Documents shall contradict or be in conflict with any of the terms or conditions of the Credit Agreement, after giving effect to this Amendment No. 4, such terms and conditions are hereby deemed modified or amended accordingly to reflect the terms and conditions of the Credit Agreement as modified or amended hereby.

 

(d)                This Amendment No. 4 is a Loan Document.

 

(e)                Unless the context of this Amendment No. 4 clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or”. The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Amendment No. 4 refer to this Amendment No. 4 as a whole and not to any particular provision of this Amendment No. 4. Section, subsection, clause, schedule, and exhibit references herein are to this Amendment No. 4 unless otherwise specified. Any reference in this Amendment No. 4 to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein) Any reference herein to the Obligations shall (i) mean “Obligations” as defined in the Credit Agreement (including any expenses, fees or interest that accrue after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding) and (ii) include all or any portion thereof and any extensions, modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency Proceeding.

 

 4 

 

10.          Entire Agreement. This Amendment No. 4, and the terms and provisions hereof, the Credit Agreement and the other Loan Documents constitute the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersede any and all prior or contemporaneous amendments or understandings with respect to the subject matter hereof, whether express or implied, oral or written.

 

11.          Integration. This Amendment No. 4, together with the other Loan Documents, incorporates all negotiations of the parties hereto with respect to the subject matter hereof and is the final expression and agreement of the parties hereto with respect to the subject matter hereof.

 

12.          Reaffirmation of Obligations. Each Loan Party hereby (a) acknowledges and reaffirms its obligations owing to Agent and each Lender under each Loan Document to which it is a party (including, in respect of Global Parent, its Guaranty of the Obligations), and (b) agrees that each of the Loan Documents to which it is a party is and shall remain in full force and effect. Each Loan Party hereby (i) further ratifies and reaffirms the validity and enforceability of all of the Liens and security interests heretofore granted, pursuant to and in connection with the Security Agreement or any other Loan Document to Collateral Agent, on behalf and for the benefit of each Secured Party, as collateral security for the obligations under the Loan Documents in accordance with their respective terms, and (ii) acknowledges that all of such Liens and security interests, and all Collateral heretofore pledged as security for such obligations, continue to be and remain collateral for such obligations from and after the date hereof (including, without limitation, from after giving effect to this Amendment No. 4).

 

13.          Severability. In case any provision in this Amendment No. 4 shall be invalid, illegal or unenforceable, such provision shall be severable from the remainder of this Amendment No. 4 and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

14.          Consent to Intercreditor Agreement. Each undersigned Lender, collectively comprising all Lenders, hereby (i) confirms that it has reviewed the terms of the Intercreditor Agreement and (ii) acknowledges and consents to the terms of the Intercreditor Agreement for all purposes on the terms set forth therein.

 

[Signature pages follow]

 

 

 

 

 

 

 

 

 

 5 

 

 

IN WITNESS WHEREOF, the parties have entered into this Amendment Number Four as of the date first above written.

 

  FRANCHISE GROUP NEW HOLDCO, LLC,
  as Global Parent  
       
       
  By: /s/ Brian Kahn  
  Name: Brian Kahn  
  Title: President and Chief Executive Officer
   
   
  FRANCHISE GROUP INTERMEDIATE HOLDCO, LLC,
  as Lead Borrower  
       
       
  By: /s/ Brian Kahn  
  Name: Brian Kahn  
  Title: President and Chief Executive Officer
   
   
  AMERICAN FREIGHT GROUP, LLC,
  as a Borrower  
       
       
  By: /s/ William Powell  
  Name: William Powell  
  Title: Executive Vice President 
   
   
  Franchise Group Newco Intermediate AF, LLC,
  as a Borrower  
     
     
  By: /s/ Brian Kahn  
  Name:  Brian Kahn  
  Title:  President and Chief Executive Officer
   
   
  American Freight Holdings, LLC,
  as a Borrower  
     
     
  By: /s/ William Powell  
  Name: William Powell  
  Title: Executive Vice President 

 

[Signature Page to Amendment Number Four to Credit Agreement]

 

 

  American Freight, LLC  
  as a Borrower  
     
     
  By: /s/ William Powell  
  Name: William Powell  
  Title: Executive Vice President 
   
   
  American Freight Management Company, LLC,
  as a Borrower  
     
     
  By: /s/ William Powell  
  Name: William Powell  
  Title: Executive Vice President
   
   
  Franchise Group Intermediate B, LLC,
  as a Borrower  
     
     
  By: /s/ Brian Kahn  
  Name:  Brian Kahn  
  Title:  President and Chief Executive Officer
   
   
  Buddy’s Newco, LLC,  
  as a Borrower  
     
     
  By: /s/ Michael Bennett  
  Name:  Michael Bennett  
  Title:  Chief Executive Officer
   
   
  Buddy’s Franchising and Licensing LLC,
  as a Borrower  
     
     
  By: /s/ Michael Bennett  
  Name:  Michael Bennett  
  Title:   Chief Executive Officer

 

[Signature Page to Amendment Number Four to Credit Agreement]

 

 

  Franchise Group Intermediate S, LLC,
  as a Borrower  
     
     
  By: /s/ Brian Kahn  
  Name:  Brian Kahn  
  Title:  President and Chief Executive Officer
   
   
  Franchise Group Newco S, LLC,
  as a Borrower  
     
     
  By: /s/ Ron Allender  
  Name:  Ron Allender  
  Title:  Executive Vice President
   
   
  American Freight Outlet Stores, LLC,
  as a Borrower  
     
     
  By: /s/ William Powell  
  Name:  Will Powell  
  Title:  President  
     
     
  Outlet Merchandise, LLC,
  as a Borrower  
     
     
  By: /s/ William Powell  
  Name:  Will Powell  
  Title:  President  
     
     
  American Freight Discount Outlet Franchising, LLC,
  as a Borrower  
     
     
  By: /s/ William Powell  
  Name:  Will Powell  
  Title:  Executive Vice President

[Signature Page to Amendment Number Four to Credit Agreement]

 

  FRANCHISE GROUP INTERMEDIATE V, LLC,
  as a Guarantor  
     
     
  By: /s/ Brian Kahn  
  Name: Brian Kahn  
  Title: President and Chief Executive Officer
   
   
  FRANCHISE GROUP NEWCO V, LLC,
  as a Guarantor  
     
     
  By: /s/ Brian Kahn  
  Name: Brian Kahn  
  Title: President and Chief Executive Officer
   
   
  FRANCHISE GROUP INTERMEDIATE L, LLC,
  as a Guarantor  
     
     
  By: /s/ Brian Kahn  
  Name: Brian Kahn  
  Title: President and Chief Executive Officer
       
       
  FRANCHISE GROUP INTERMEDIATE L 1, LLC
   
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:   Chief Financial Officer
   
       
  FRANCHISE GROUP INTERMEDIATE L 2, LLC
   
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:  Chief Financial Officer
       
       
  JTH TAX LLC  
     
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:  Chief Financial Officer

[Signature Page to Amendment Number Four to Credit Agreement]

 

 

  SIEMPRETAX+ LLC  
     
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:  Chief Financial Officer
   
       
  LIBERTY CREDIT REPAIR, LLC
   
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:  Chief Financial Officer and Vice President
   
       
  JTH FINANCIAL, LLC  
     
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title: Chief Financial Officer
   
       
  WEFILE LLC  
     
       
  By: /s/ Daniel Brashier  
  Name: Daniel Brashier  
  Title:  Treasurer  
       
       
  JTH PROPERTIES 1632, LLC
   
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:  Chief Financial Officer
   
       
  LTS PROPERTIES, LLC
   
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title: Chief Financial Officer
       
       
  LTS SOFTWARE LLC  
     
       
  By: /s/ Daniel Brashier  
  Name: Daniel Brashier  
  Title:  Treasurer  

[Signature Page to Amendment Number Four to Credit Agreement]

 

  JTH TAX OFFICE PROPERTIES, LLC
   
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:  Chief Financial Officer
   
       
  360 ACCOUNTING SOLUTIONS LLC
       
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:  Chief Financial Officer
   
       
  JTH COURT PLAZA, LLC
   
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:  Chief Financial Officer
   
       
  LIBERTY TAX HOLDING CORPORATION
   
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:  Chief Financial Officer
       
       
  LIBERTY TAX SERVICE INC.
   
       
  By: /s/ Michael Piper  
  Name:  Michael Piper  
  Title:  Chief Financial Officer

[Signature Page to Amendment Number Four to Credit Agreement]

 

  GACP FINANCE CO., LLC,
  as Administrative Agent  
       
       
  By: /s/ Robert Louzan  
  Name:  Robert Louzan  
  Title:  President  

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Amendment Number Four to Credit Agreement]

 

 

  PIF ONSHORE VI LP,  
  as a Lender  
       
  By: Pacific Investment Management
  Company LLC, its investment manager
       
       
  By: /s/ Adam L. Gubner  
  Name: Adam L. Gubner  
  Title: Managing Director  
     
       
  HVS XXIV LLC,  
  as a Lender  
       
       
  By: /s/ Adam L. Gubner  
  Name: Adam L. Gubner  
  Title: Authorized Person  
       
       
  RSF XI LLC,  
  as a Lender  
       
       
  By: /s/ Russell D. Gannaway  
  Name: Russell D. Gannaway
  Title: Authorized Person  

 

[Signature Page to Amendment Number Four to Credit Agreement]

 

  BTC HOLDINGS SC FUND LLC,
  as a Lender  
       
  By: Blue Torch Credit Opportunities SC Master Fund LP, its sole member
  By: Blue Torch Credit Opportunities SC GP LLC, its General Partner
  By: KPG BTC Management LLC, its sole member
       
       
  By: /s/ Kevin Genda  
  Name: Kevin Genda  
  Title: Managing Member  
       
       
  BTC HOLDINGS FUND I, LLC,
  as a Lender  
       
  By: Blue Torch Credit Opportunities Fund I LP, its sole member
  By: Blue Torch Credit Opportunities GP LLC, its general partner
  By: KPG BTC Management LLC, its sole Member
       
       
  By: /s/ Kevin Genda  
  Name: Kevin Genda  
  Title: Managing Member  

 

 

 

 

 

 

[Signature Page to Amendment Number Four to Credit Agreement]

 

  BTC HOLDINGS FUND I-B, LLC,
  as a Lender  
       
  By: Blue Torch Credit Opportunities Fund I LP, its sole member
  By: Blue Torch Credit Opportunities GP LLC, its general partner
  By: KPG BTC Management LLC, its sole member
       
       
  By: /s/ Kevin Genda  
  Name: Kevin Genda  
  Title: Managing Member  
       
       

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Amendment Number Four to Credit Agreement]

 

  CERBERUS ASRS FUNDING LLC
  as a Lender  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Vice President  
       
       
  CERBERUS AOZ LOAN OPPORTUNITIES FUND, L.P.,
  as a Lender  
       
  By: Cerberus AOZ Loan Opportunities GP, LLC
  Its: General Partner  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Senior Managing Director
       
       
  CERBERUS AUS LEVERED HOLDINGS LP,
  as a Lender  
       
  By: CAL I GP Holdings LLC
  Its: General Partner  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Senior Managing Director

 

[Signature Page to Amendment Number Four to Credit Agreement]

 

  CERBERUS C-1 LEVERED LLC
  as a Lender  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Vice President  
       
       
  CERBERUS FSBA LEVERED LLC
  as a Lender  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Vice President  
       
       
  CERBERUS KRS LEVERED LLC
  as a Lender  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Vice President  
       
       
  CERBERUS ND LEVERED LLC
  as a Lender  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Vice President  
       
       
  CERBERUS ONSHORE LEVERED IV LLC
  as a Lender  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Vice President  

 

[Signature Page to Amendment Number Four to Credit Agreement]

 

  CERBERUS OFFSHORE LEVERED IV LLC
  as a Lender  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Vice President  
       
       
  CERBERUS OFFSHORE UNLEVERED LOAN
  OPPORTUNITIES MASTER FUND IV, L.P.,
  as a Lender  
       
  By: Cerberus Offshore Unlevered Opportunities IV GP, LLC
  Its: General Partner  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Senior Managing Director
       
       
  CERBERUS REDWOOD LEVERED A LLC
  as a Lender  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Vice President  

 

 

[Signature Page to Amendment Number Four to Credit Agreement]

 

  CERBERUS REDWOOD LEVERED LOAN
  OPPORTUNITIES FUND B, L.P.,
  as a Lender  
       
  By: Cerberus Redwood Levered Opportunities GP B, LLC
  Its: General Partner  
     
     
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Senior Managing Director
       
       
  CERBERUS PSERS LEVERED LLC
  as a Lender  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Vice President  
       
       
  CERBERUS STEPSTONE LEVERED LLC
  as a Lender  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Vice President  
       
       
  KAAMANEN HOLDINGS, LP
  as a Lender  
       
  By: Kaamanen GP, LLC, its general partner
  By: CBF Manager, L.P., its non-member manager
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Senior Managing Director

 

[Signature Page to Amendment Number Four to Credit Agreement]

 

  KAAMANEN LEVERED, LP,
  as a Lender  
       
  By: Kaamanen Levered GP, LLC, its general
  Partner  
       
  By: CBF Manager, L.P., its non-member manager
  as Assignee  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Senior Managing Director
   
       
  RELIANCE STANDARD LIFE INSURANCE
  COMPANY  
  as a Lender  
       
  By: CBF-D Manager, LLC  
  Its: Investment Manager  
       
       
  By: /s/ Eric Miller  
  Name: Eric Miller  
  Title: Senior Managing Director

 

 

[Signature Page to Amendment Number Four to Credit Agreement]

 

  MC INCOME PLUS FINANCING SPV LLC
  as a Lender  
       
  By: /s/ Mike Meyer  
  Name: Mike Meyer  
  Title: Director  
       
       
  Monroe Capital Opportunistic Private Credit Master Fund SCSp,
  as a Lender  
       
  By: Monroe Capital Management Advisors LLC,
 

as Investment Manager

 
       
       
  By: /s/ Mike Meyer  
  Name: Mike Meyer  
  Title: Director  
       
       
  Monroe Capital Private Credit Fund III (Lux) Financing SPV LP,
  as a Lender  
       
  By: Monroe Capital Private Credit Fund III (Lux) Financing SPV GP LLC,
  its general partner  
     
  By: Monroe Capital Management Advisors LLC, as Manager
       
       
  By: /s/ Mike Meyer  
  Name: Mike Meyer  
  Title: Director  
     
     
  MONROE CAPITAL PRIVATE CREDIT FUND III (UNLEVERAGED) LP
  as a Lender  
       
  By: MONROE CAPITAL PRIVATE CREDIT FUND III LLC,
  its general partner  
       
  By: /s/ Mike Meyer  
  Name: Mike Meyer  
  Title: Director  

 

 

  MONROE CAPITAL CORPORATION,
  as a Lender  
       
  By: /s/ Mike Meyer  
  Name: Mike Meyer  
  Title: Director  

 

[Signature Page to Amendment Number Four to Credit Agreement]

 

  MONROE CAPITAL PRIVATE CREDIT FUND III FINANCING SPV LLC,
  as a Lender  
     
 

By: MONROE CAPITAL PRIVATE CREDIT FUND III LP,

as Designated Manager

   
 

By: MONROE CAPITAL PRIVATE CREDIT FUND III LLC,

its general partner

       
  By: /s/ Mike Meyer  
  Name: Mike Meyer  
  Title: Director  
       
       
 

MONROE PRIVATE CREDIT FUND A FINANCING SPV LLC

  as a Lender  
       
 

By: MONROE PRIVATE CREDIT FUND A LP,

as its Designated Manager

   
  By: MONROE PRIVATE CREDIT FUND A LLC,
  its general partner
       
       
  By: /s/ Mike Meyer  
  Name: Mike Meyer  
  Title: Director  
       
       
  MONROE (NP) U.S. PRIVATE DEBT FUND LP,
  as a Lender  
       
  By: MONROE (NP) U.S. PRIVATE DEBT FUND GP LTD.,
  its general partner  
       
       
  By: /s/ Mike Meyer  
  Name: Mike Meyer  
  Title: Director  
     
     
  Monroe Capital Fund SV S.a.r.l., acting in respect of its Fund III (Unleveraged) Compartment
  as a Lender  
       
  By: Monroe Capital Management Advisors LLC
  as Investment Manager  
       
  By: /s/ Mike Meyer  
  Name: Mike Meyer  
  Title: Director  

 

 

[Signature Page to Amendment Number Four to Credit Agreement]

 

 

  FLF I AB HOLDINGS FINANCE L.P.,
  as a Lender  
     
 

By: FLF I AB Holdings Finance CM LLC,

as Servicer

   
 

By: Fortress Lending I Holdings L.P., 

its sole member

   
 

By: Fortress Lending Advisors LLC,

its investment manager

   
  By: /s/ Avraham Dreyfuss  
  Name: Avraham Dreyfuss  
  Title: Authorized Signatory  
       
       
  DBDB FUNDING LLC,
  as a Lender  
       
  By: /s/ Avraham Dreyfuss  
  Name: Avraham Dreyfuss  
  Title: Chief Financial Officer  
       
       
  FLF I HOLDINGS FINANCE L.P.,
  as a Lender  
       
  By: FLF I Holdings Finance CM LLC,
  as servicer  
     
 

By: Fortress Lending I Holdings L.P.,

its sole member

 
     
 

By: Fortress Lending Advisors LLC,

its investment manager

 
       
  By: /s/ Avraham Dreyfuss  
  Name: Avraham Dreyfuss  
  Title: Authorized Person  

 

[Signature Page to Amendment Number Four to Credit Agreement]

 

  KAYNE SOLUTIONS FUND, L.P.
  as a Lender  
       
  By: Kayne Solutions Fund GP, LLC,
  its general partner  
       
       
  By: /s/ Jon Levinson  
  Name: Jon Levinson  
  Title: Managing Partner  
       
       
  KAFRG INVESTORS, L.P.,
  as a Lender  
       
  By: KAFRG Investors GP, LLC,
  its general partner  
       
       
  By: /s/ Jon Levinson  
  Name: Jon Levinson  
  Title: Managing Partner  
       
       
  KAYNE SOLUTIONS MINI-MASTER FUND, L.P.
  as a Lender  
       
  By: Kayne Solutions Fund GP, LLC,
  its general partner  
       
       
  By: /s/ Jon Levinson  
  Name: Jon Levinson  
  Title: Managing Partner  

[Signature Page to Amendment Number Four to Credit Agreement]

 

  GACP II, L.P.,  
  as a Lender  
       
       
  By: /s/ Robert Louzan  
  Name:  Robert Louzan  
  Title:  Authorized Person  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Amendment Number Four to Credit Agreement]

 

 

 

Exhibit 10.3

 

EXECUTION

 

 

 

ABL CREDIT AGREEMENT

 

dated as of September 23, 2020

 

by and among

 

FRANCHISE GROUP NEW HOLDCO, LLC,
as Global Parent,

 

FRANCHISE GROUP INTERMEDIATE HOLDCO, LLC,
as Lead Borrower,

 

certain Subsidiaries of Lead Borrower from time to time party hereto as Borrowers,

 

certain Subsidiaries of Lead Borrower from time to time party hereto as Guarantors,

 

the Lenders from time to time party hereto, and

 

CITIZENS BANK, N.A.,
as Administrative Agent

 

 

 

CITIZENS BANK, N.A.,
as Sole Lead Arranger and Sole Bookrunner

 

 

 

 

TABLE OF CONTENTS

 

 

 

Page

ARTICLE I DEFINITIONS AND INTERPRETATION 1
Section 1.01   Definitions 1
Section 1.02   Accounting and Other Terms 63
Section 1.03   Construction 64
Section 1.04   Time References 65
Section 1.05   Fiscal Periods 65
Section 1.06   Classification of Loans and Borrowings 65
Section 1.07   Interest; LIBOR Notification 65
Section 1.08   Divisions 65
ARTICLE II LOANS 66
Section 2.01   Revolving Commitments 66
Section 2.02   Borrowings, Conversions and Continuations of Loans 66
Section 2.03   Swingline Loans 68
Section 2.04   Letters of Credit 70
Section 2.05   Termination and Reduction of Commitments 77
Section 2.06   Repayment of Loans; Evidence of Debt 77
Section 2.07   Voluntary Prepayments 78
Section 2.08   Mandatory Prepayments 78
Section 2.09   Payments Generally; Administrative Agent’s Clawback 81
Section 2.10   Defaulting Lenders 84
Section 2.11   Cash Collateral 86
Section 2.12   Incremental Commitments 87
Section 2.13   Interest 89
Section 2.14   Fees 90
Section 2.15   Alternate Rate of Interest 91
Section 2.16   Increased Costs; Illegality 92
Section 2.17   Break Funding Payments 94
Section 2.18   Taxes; Withholding, etc 94
Section 2.19   Mitigation Obligations; Replacement of Lenders 98
Section 2.20   Joint and Several Liability 99
Section 2.21   Lead Borrower 102
ARTICLE III CONDITIONS PRECEDENT 103
Section 3.01   Conditions to Initial Credit Extensions 103
Section 3.02   Conditions to All Credit Extensions 105
ARTICLE IV REPRESENTATIONS AND WARRANTIES 106
Section 4.01   Organization; Requisite Power and Authority; Qualification 106
Section 4.02   Capital Stock and Ownership 106
Section 4.03   Due Authorization 106
Section 4.04   No Conflict 106
Section 4.05   Governmental Consents 107
Section 4.06   Binding Obligation 107
Section 4.07   Historical Financial Statements 107

 

 - i - 

TABLE OF CONTENTS

 

Section 4.08   Projections 107
Section 4.09   No Material Adverse Effect 108
Section 4.10   Adverse Proceedings, etc 108
Section 4.11   Payment of Material Taxes 108
Section 4.12   Properties 108
Section 4.13   Environmental Matters 109
Section 4.14   Eligible Credit Card Receivables; Eligible Accounts; Eligible Rental Agreements 109
Section 4.15   Eligible Inventory 110
Section 4.16   Governmental Regulation 110
Section 4.17   Margin Stock 110
Section 4.18   Employee Matters 110
Section 4.19   Employee Benefit Plans 111
Section 4.20   Certain Fees 111
Section 4.21   Solvency 111
Section 4.22   [Reserved] 111
Section 4.23   Compliance with Statutes, etc 111
Section 4.24   Intellectual Property 112
Section 4.25   Inventory and Equipment 112
Section 4.26   Trademarks and Key Trademark Licenses 112
Section 4.27   Insurance 112
Section 4.28   Franchise Agreements 113
Section 4.29   Permits, etc 113
Section 4.30   Cash Management 113
Section 4.31   Security Interests 113
Section 4.32   PATRIOT ACT 114
Section 4.33   OFAC/Sanctions 114
Section 4.34   Disclosure 114
Section 4.35   Use of Proceeds 115
ARTICLE V AFFIRMATIVE COVENANTS 115
Section 5.01   Financial Statements and Other Reports 115
Section 5.02   Existence 120
Section 5.03   Payment of Taxes and Claims 120
Section 5.04   Maintenance of Properties 121
Section 5.05   Insurance 121
Section 5.06   Collateral Administration; Inspections; Field Examinations and Appraisals 122
Section 5.07   Lenders Meetings and Conference Calls 123
Section 5.08   Compliance with Laws 123
Section 5.09   Environmental 123
Section 5.10   Subsidiaries 124
Section 5.11   Material Real Estate Assets 125
Section 5.12   Location of Inventory and Equipment 126
Section 5.13   Further Assurances 127
Section 5.14   Corporate Separateness 127
Section 5.15   Anti-Commingling 127

 

 - ii - 

TABLE OF CONTENTS

 

Section 5.16   Post-Closing Matters 128
Section 5.17   Use of Proceeds 128
Section 5.18   Franchise Agreements 128
Section 5.19   Rental Agreements 128
ARTICLE VI NEGATIVE COVENANTS 128
Section 6.01   Indebtedness 128
Section 6.02   Liens 128
Section 6.03   [Reserved] 129
Section 6.04   No Further Negative Pledges 129
Section 6.05   Restricted Junior Payments 129
Section 6.06   Restrictions on Subsidiary Distributions 130
Section 6.07   Investments 131
Section 6.08   Minimum Availability 131
Section 6.09   Fundamental Changes; Disposition of Assets 131
Section 6.10   Disposal of Subsidiary Interests 133
Section 6.11   Sales and Lease Backs 134
Section 6.12   Transactions with Affiliates 134
Section 6.13   Conduct of Business 135
Section 6.14   Permitted Activities of Parent Companies 135
Section 6.15   Changes to Certain Agreements and Organizational Documents 136
Section 6.16   Accounting Methods 136
Section 6.17   Cash Management 136
Section 6.18   Voluntary Prepayments of Term Obligations 138
Section 6.19   Issuance of Capital Stock 138
Section 6.20   Anti-Terrorism Laws 138
Section 6.21   Franchise Agreements 139
Section 6.22   Liberty Matters 139
ARTICLE VII GUARANTY 140
Section 7.01   Guaranty of the Obligations 140
Section 7.02   Contribution by Guarantors 140
Section 7.03   Payment by Guarantors 140
Section 7.04   Liability of Guarantors Absolute 141
Section 7.05   Waivers by Guarantors 142
Section 7.06   Guarantors’ Rights of Subrogation, Contribution, etc 143
Section 7.07   Subordination of Other Obligations 143
Section 7.08   Continuing Guaranty 144
Section 7.09   Authority of Guarantors or Borrowers 144
Section 7.10   Financial Condition of Borrowers 144
Section 7.11   Bankruptcy, etc 144
Section 7.12   Discharge of Guaranty upon Sale of Guarantor 145
ARTICLE VIII EVENTS OF DEFAULT 145
Section 8.01   Events of Default 145
Section 8.02   Application of Funds 148
ARTICLE IX ADMINISTRATIVE AGENT 150

 

 - iii - 

TABLE OF CONTENTS

 

Section 9.01   Appointment of Administrative Agent 150
Section 9.02   Powers and Duties 150
Section 9.03   General Immunity 150
Section 9.04   Administrative Agent Entitled to Act as Lender 152
Section 9.05   Lenders’ Representations, Warranties and Acknowledgment 152
Section 9.06   [Reserved] 152
Section 9.07   Successor Administrative Agent 152
Section 9.08   Collateral Documents and Guaranty 154
Section 9.09   Agency for Perfection 155
Section 9.10   Administrative Agent May File Proofs of Claim 155
Section 9.11   Compliance with Flood Insurance Laws 156
Section 9.12   Cash Management Obligations and Swap Agreement Obligations 156
Section 9.13   No Other Duties, Etc 156
ARTICLE X MISCELLANEOUS 156
Section 10.01   Notices 156
Section 10.02   Expenses 157
Section 10.03   Indemnity 158
Section 10.04   Setoff 160
Section 10.05   Amendments and Waivers 160
Section 10.06   Successors and Assigns; Participations 162
Section 10.07   Independence of Covenants 167
Section 10.08   Survival of Representations, Warranties, and Agreements 167
Section 10.09   No Waiver; Remedies Cumulative 167
Section 10.10   Marshalling; Payments Set Aside 167
Section 10.11   Severability 168
Section 10.12   Obligations Several; Independent Nature of Lenders’ Rights 168
Section 10.13   Headings 168
Section 10.14   APPLICABLE LAW 168
Section 10.15   CONSENT TO JURISDICTION 168
Section 10.16   WAIVER OF JURY TRIAL 169
Section 10.17   Confidentiality 169
Section 10.18   Usury Savings Clause 170
Section 10.19   Counterparts; Integration; Electronic Execution 171
Section 10.20   Effectiveness 171
Section 10.21   Acknowledgement and Consent to Bail-In of EEA Financial Institutions 171
Section 10.22   PATRIOT Act Notice 172
Section 10.23   Consent to Intercreditor Agreements 172
Section 10.24   Intercreditor Agreement Governs 173
Section 10.25   [Reserved] 173
Section 10.26   No Fiduciary Duty 173
Section 10.27   Certain ERISA Matters 173
Section 10.28   Acknowledgment Regarding Any Supported QFCs 175

 

 - iv - 

 

 

APPENDICES:   A   Commitments
    B   Notice Addresses
SCHEDULES:   1.1   Third Party Franchisees
    2.4   Existing Letter of Credit
    4.1   Jurisdiction of Organization
    4.2   Capital Stock and Ownership
    4.12   Material Real Estate Assets
    4.13   Environmental Matters
    4.24   Intellectual Property
    4.25   Inventory and Equipment
    4.27   Insurance
    4.28   Franchise Agreements
    4.3   Bank Accounts and Securities Accounts
    5.1   Performance Information
    5.16   Certain Post Closing Matters
    6.1   Certain Indebtedness
    6.2   Certain Liens
    6.7   Certain Investments
    6.12   Certain Affiliate Transactions
    6.17   Credit Card Issuers and Credit Card Processors
    7.1   List of Names
EXHIBITS:   A-1   Committed Loan Notice
    A-2   Swingline Loan Notice
    B   Perfection Certificate
    C   Compliance Certificate
    D   Assignment Agreement
    E-1   Certificate Regarding Non-Bank Status (For Non-US 
        Lenders That Are Not Partnerships or Pass-Thru Entities
        For U.S. Federal Income Tax Purposes)
    E-2   Certificate Regarding Non-Bank Status (For Non-US 
        Lenders That Are Partnerships or Pass-Thru Entities
        For U.S. Federal Income Tax Purposes)
    F-1   Closing Date Certificate
    F-2   Solvency Certificate
    G   Security Agreement
    H   Borrowing Base Certificate
    I   Credit Card Notifications
    J-1   Revolving Loan Note 
    J-2   Swingline Loan Note
    K   Borrower Joinder Agreement
    L   Secured Obligation Designation Notice

 

 

 

 

ABL CREDIT AGREEMENT

 

This ABL CREDIT AGREEMENT, dated as of September 23, 2020, by and among FRANCHISE GROUP INTERMEDIATE HOLDCO, LLC, a Delaware limited liability company (“Lead Borrower”), as a Borrower, certain other Subsidiaries of Lead Borrower from time to time party hereto as Borrowers, FRANCHISE GROUP NEW HOLDCO, LLC, a Delaware limited liability company (“Global Parent”), as a Guarantor, certain Subsidiaries of Lead Borrower from time to time party hereto as Guarantors, the lenders from time to time party hereto (each, a “Lender,” as that term is hereinafter further defined), and CITIZENS BANK, N.A. (“Citizens Bank”), as administrative agent and collateral agent for each of the Lenders (in such capacities, together with its successors and assigns in such capacities, the “Administrative Agent”).

 

W I T N E S S E T H:

 

WHEREAS, capitalized terms used in these recitals shall have the respective meanings set forth for such terms in Section 1.01 hereof;

 

WHEREAS, Lenders have agreed to extend a senior secured, asset based revolving credit facility to Borrowers in the maximum aggregate principal amount of $125,000,000, the proceeds of which will be used as described in Section 4.35.

 

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:

 

ARTICLE I

DEFINITIONS AND INTERPRETATION

 

Section 1.01            Definitions. As used in this Agreement, the following terms shall have the following definitions:

 

A Team” means A Team Sales, LLC, a Delaware limited liability company.

 

A Team Secured Note” means that certain Amended and Restated Secured Promissory Note, dated May 18, 2020, with respect to the Promissory Note originally dated October 23, 2019, between A Team and Franchise Group Newco S, LLC, as may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.

 

ABL Fixed Charge Coverage Ratio” means, for any period, the ratio of (a) the result of (i) the Consolidated EBITDA of the ABL Loan Parties and ABL Subsidiaries for such period, plus (ii) net cash received from A Team and its Subsidiaries and utilized to repay or prepay Indebtedness during such period, minus (iii) the aggregate amount of all Consolidated Capital Expenditures of the ABL Loan Parties and ABL Subsidiaries made in cash during such period (except to the extent financed with the proceeds of Indebtedness (other than a Revolving Borrowing)), minus (iv) federal, state, local and foreign income and franchise taxes paid in cash during such period by the ABL Loan Parties and ABL Subsidiaries and (without duplication) all Permitted Tax Payments paid in cash during such period by the ABL Loan Parties and ABL Subsidiaries (net of cash refunds of such Taxes received during such period), to (b) the sum of (A) ABL Fixed Charges for such period plus (B) Restricted Junior Payments made in cash during such period by the ABL Loan Parties and ABL Subsidiaries to Persons other than the ABL Loan Parties and ABL Subsidiaries. For avoidance of doubt, each reference in this definition to the ABL Loan Parties and ABL Subsidiaries, including on a consolidated basis, shall be deemed to exclude the Non-ABL Loan Parties and Non-ABL Subsidiaries.

 - 1 - 

 

ABL Fixed Charges” means, for any period, the sum, without duplication, of each of the following with respect to the ABL Loan Parties and ABL Subsidiaries, determined on a consolidated basis in accordance with GAAP (excluding, for avoidance of doubt, the Non-ABL Loan Parties and Non-ABL Subsidiaries): (a) Consolidated Interest Expense paid in cash for such period, plus (b) the aggregate of all scheduled principal amounts that become payable during such period in respect of Consolidated Total Debt (including the principal portion of Capital Leases).

 

ABL Loan Party” means each of (a) Lead Borrower and (b) each Loan Party included in the following groups: (i) AF Holdings and its Subsidiaries and (ii) Buddy Top Parent and its Subsidiaries.

 

ABL Priority Collateral” shall have the meaning ascribed to such term in the Intercreditor Agreement.

 

ABL Subsidiary” means each Subsidiary of AF Holdings or Buddy Top Parent.

 

ABR Borrowing” means, as to any Borrowing, the ABR Loans comprising such Borrowing.

 

ABR Loan” means a Loan (other than a Swingline Loan) bearing interest based on the Alternate Base Rate.

 

Accounts” means all “accounts” (as defined in the UCC) of the Loan Parties (or, if referring to another Person, of such Person), including, without limitation, accounts, accounts receivable, monies due or to become due, and obligations in any form (whether arising in connection with contracts, contract rights, instruments, general intangibles, or chattel paper), in each case whether arising out of goods sold or services rendered or from any other transaction and whether or not earned by performance, now or hereafter in existence, and all documents of title or other documents representing any of the foregoing, and all collateral security and guaranties of any kind, now or hereafter in existence, given by any Person with respect to any of the foregoing.

 

Account Debtor” means any Person who is obligated on an Account, chattel paper, or a general intangible.

 

Accounting Change” means any change in accounting principles required by the promulgation of any rule, regulation, pronouncement, or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (or any successor thereto or any agency with similar functions).

 

Acquired EBITDA” means, with respect to any Acquired Entity or Business for any period, the historical Consolidated EBITDA of such Acquired Entity or Business for such period as certified by an Authorized Officer of the Lead Borrower, which historical Consolidated EBITDA shall be calculated in a manner consistent with the definition of Consolidated EBITDA herein and to be based on financial statements for such Acquired Entity or Business prepared in accordance with GAAP (subject to the absence of footnote disclosures and year-end audit adjustments with respect to financial statements that are not annual audited financial statements), provided that when such Acquired EBITDA is included in Consolidated EBITDA it shall be on a Pro Forma Basis.

 - 2 - 

 

Acquired Entity or Business” means, for any period, any Person, property, business or asset acquired in a Permitted Acquisition, to the extent not subsequently sold, transferred or otherwise disposed of during such period.

 

Acquisition” means the acquisition and merger contemplated under the Acquisition Agreement, which was consummated on or about February 14, 2020.

 

Acquisition Agreement” means that certain Agreement and Plan of Merger, dated as of December 28, 2019, by and among American Freight Group, LLC (f/k/a American Freight Group, Inc.), a Delaware limited liability company, AF Holdings, Franchise Group Merger Sub AF, Inc., a Delaware corporation, and The Jordan Company, L.P., a Delaware limited partnership, as Representative.

 

Adjusted LIBOR Rate” means, with respect to any LIBOR Borrowing for any Interest Period, an interest rate per annum equal to the LIBOR Rate in effect for such Interest Period multiplied by the Statutory Reserve Rate; provided, however, that the Adjusted LIBOR Rate shall at no time be less than 1.00% per annum.

 

Administrative Agent” has the meaning specified in the preamble hereto.

 

Administrative Agent’s Payment Office” means the Administrative Agent’s office located at Boston, Massachusetts, or such other office as to which the Administrative Agent may from time to time notify the Lead Borrower and the Lenders.

 

Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

 

Adverse Proceeding” means any action, suit, proceeding (whether administrative, judicial, or otherwise), governmental investigation, or arbitration (whether or not purportedly on behalf of any Loan Party or any of its Subsidiaries (excluding the Excluded Entities)) at law or in equity, or before or by any Governmental Authority, domestic or foreign (including any Environmental Actions) or other regulatory body or any mediator or arbitrator, whether pending or, to the knowledge of any Loan Party, threatened in writing against or affecting any Loan Party or any of its Subsidiaries (excluding the Excluded Entities) or any property of any Loan Party or any of its Subsidiaries (excluding the Excluded Entities).

 

AF Holdings” means Franchise Group Newco Intermediate AF, LLC, a Delaware limited liability company.

 

Affiliate” means, as applied to any Person, any other Person who controls, is controlled by, or is under common control with such Person. For purposes of this definition, “control” means the possession, directly or indirectly through one or more intermediaries, of the power to direct the management and policies of a Person, whether through the ownership of Capital Stock, by contract, or otherwise; provided, that for purposes of Section 6.12 of this Agreement: (a) any Person which owns directly or indirectly 30% or more of the Capital Stock having ordinary voting power for the election of directors or other members of the governing body of a Person or 30% or more of the partnership or other ownership interests of a Person (other than as a limited partner of such Person) shall be deemed an Affiliate of such Person, (b) each director (or comparable manager) of a Person shall be deemed to be an Affiliate of such Person, (c) each partnership in which a Person is a general partner shall be deemed an Affiliate of such Person and (d) each Permitted Holder and each of its employees, directors, officers and other Affiliates shall be deemed an Affiliate of the Loan Parties. Without limiting the foregoing, Ultimate Parent and any Subsidiary of Ultimate Parent that is not a Loan Party shall be considered Affiliates of the Loan Parties for purposes of this Agreement. Notwithstanding anything herein to the contrary, in no event shall the Administrative Agent or any Lender be considered an “Affiliate” of any Loan Party. “Affiliated” shall have a meaning correlative to the foregoing.

 - 3 - 

 

Agent Parties” has the meaning specified in Section 10.01(b)(iii).

 

Aggregate Payments” has the meaning specified in Section 7.02.

 

Agreement” means this ABL Credit Agreement and any annexes, exhibits, and schedules attached hereto as it may be amended, supplemented, or otherwise modified from time to time.

 

Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 0.50% per annum and (c) the Daily LIBOR Rate on such day plus 1.00% per annum, provided that the Alternate Base Rate shall at no time be less than 1.00% per annum. If the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate or the Daily LIBOR Rate for any reason, including the inability of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition of the term Federal Funds Effective Rate, the Alternate Base Rate shall be determined without regard to clause (b) or (c), as applicable, of the preceding sentence until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Daily LIBOR Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Daily LIBOR Rate, respectively.

 

Anti-corruption Laws” means the Foreign Corrupt Practices Act, and all other applicable laws concerning or relating to bribery, money laundering or corruption.

 

Applicable Lending Office” means for any Lender, such Lender’s office, branch or affiliate designated for LIBOR Loans, ABR Loans, Swingline Loans or Letters of Credit or participations therein, as applicable, as notified to the Administrative Agent, any of which offices may be changed by such Lender.

 

Applicable Margin” means, during the applicable periods set forth below, in the case of (i) ABR Borrowings and Swingline Loans, the percentage set forth in the following table under the heading “ABR Margin”, and (ii) LIBOR Borrowings and L/C Participation Fees, the percentage set forth in the following table under the heading “LIBOR Margin”:

 

Pricing
Level
Total Leverage Ratio ABR
Margin
LIBOR
Margin
I Greater than or equal to 2.00:1.00 2.75% 3.75%
II Less than 2.00:1.00 2.50% 3.50%

 

 - 4 - 

 

The Applicable Margin shall be determined and adjusted quarterly on the date (each a “Margin Determination Date”) that is five (5) Business Days after receipt by the Administrative Agent of the Compliance Certificate pursuant to Section 5.01(d) for the most recently ended Fiscal Quarter of the Lead Borrower, by reference to the Total Leverage Ratio as of the last day of such Fiscal Quarter; provided that (a) the Applicable Margin shall be based on Pricing Level I until the Margin Determination Date for the first full Fiscal Quarter ending after the Closing Date, (b) if the Borrower fails to deliver the Compliance Certificate as required by Section 5.01(d) for the most recently ended Fiscal Quarter preceding the applicable Margin Determination Date, the Applicable Margin from such Margin Determination Date shall be based on Pricing Level I until the fifth Business Day after an appropriate Compliance Certificate is delivered, at which time the Pricing Level shall be determined by reference to the Total Leverage Ratio as of the last day of the most recently ended Fiscal Quarter of the Lead Borrower preceding such Margin Determination Date. The Applicable Margin shall be effective from one Margin Determination Date until the next Margin Determination Date. Any adjustment in the Applicable Margin shall be applicable to all Credit Extensions then existing or subsequently made during the applicable period for which the relevant Applicable Margin applies. Notwithstanding the foregoing, in the event that any financial statement delivered pursuant to Section 5.01 or any Compliance Certificate delivered pursuant to Section 5.01(d) is inaccurate (regardless of whether (i) this Agreement is in effect, (ii) any of the Commitments are in effect, or (iii) any Loans or Letters of Credit are outstanding when such inaccuracy is discovered or such financial statement or Compliance Certificate was delivered), and such inaccuracy, if corrected, would have led to the application of a higher Applicable Margin for any period (an “Applicable Period”) than the Applicable Margin applied for such Applicable Period, then (A) the Borrower shall immediately deliver to the Administrative Agent a corrected Compliance Certificate for such Applicable Period, (B) the Applicable Margin for such Applicable Period shall be determined as if the Total Leverage Ratio in the corrected Compliance Certificate were applicable for such Applicable Period, and (C) the Borrower shall immediately pay to the Administrative Agent the accrued additional interest and fees owing as a result of such increased Applicable Margin for such Applicable Period, which payment shall be promptly applied by the Administrative Agent in accordance with Section 2.09. Nothing in this paragraph shall limit the rights of the Administrative Agent and Lenders with respect to Section 2.13 and Section 8.01.

 

Applicable Percentage” means, at any time (a) with respect to any Lender with a Revolving Commitment, the percentage equal to a fraction the numerator of which is the amount of such Lender’s Revolving Commitment and the denominator of which is the aggregate amount of all Revolving Commitments of all Lenders (provided that if the Revolving Commitments have terminated or expired, the Applicable Percentages of the Lenders under the Revolving Facility shall be determined based upon the Revolving Exposure at such time of the determination pursuant to clause (b) below) and (b) with respect to the Loans of any Class, a percentage equal to a fraction the numerator of which is such Lender’s Outstanding Amount of the Loans of such Class and the denominator of which is the aggregate Outstanding Amount of all Loans of such Class.

 

Appropriate Lenders” means, at any time, (a) with respect to the Revolving Facility, the Revolving Lenders, (b) with respect to any Letters of Credit, the L/C Issuers and the Revolving Lenders, and (c) with respect to any Swingline Loans, the Swingline Lender and the Revolving Lenders.

 

Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

Asset Sale” means a sale, lease, or sub lease (as lessor or sublessor), sale and leaseback, assignment, conveyance, transfer, license, or other disposition to (other than (i) by an ABL Loan Party or ABL Subsidiary to an ABL Loan Party (other than Lead Borrower) or (ii) by a Non-ABL Loan Party or Non-ABL Subsidiary to a Loan Party), or any exchange of property with, any Person, in one transaction or a series of transactions, of all or any part of any Loan Party’s or any of its Subsidiaries’ businesses, assets, or properties of any kind, whether real, personal, or mixed and whether tangible or intangible, whether now owned or hereafter acquired, including, without limitation, the Capital Stock of any Loan Party (other than Global Parent to the extent the issuance of such Capital Stock does not result in a Change of Control), other than inventory (or other assets) sold or consigned in the ordinary course of business, licensed in the ordinary course of business or leased in the ordinary course of business. For purposes of clarification, “Asset Sale” shall include (a) the sale or other disposition for value of any contracts, (b) any sale of merchant accounts (or any rights thereto, including, without limitation, any rights to any residual payment stream with respect thereto) by any Loan Party or any of its Subsidiaries, and (c) licenses of patents, trademarks, and other intellectual property rights granted by any Loan Party or any of its Subsidiaries.

 - 5 - 

 

Assignment Agreement” means an Assignment and Assumption Agreement substantially in the form of Exhibit D, with such amendments or modifications as may be approved by Administrative Agent.

 

Authorized Officer” means, as applied to any Person, any individual holding the position of chairman of the board (if an officer), chief executive officer, chief operating officer, secretary, president, or one of its vice presidents (or the equivalent thereof, including, without limitation, senior vice presidents and executive vice presidents), and such Person’s chief financial officer or treasurer. Any document delivered hereunder that is signed by an Authorized Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party, and such Authorized Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

 

Auto-Renewal Letter of Credit” has the meaning assigned to such term in Section 2.04(b)(iii).

 

Availability” means, at any time, the Line Cap at such time less the amount of the Total Revolving Outstandings at such time.

 

Availability Period” means, with respect to the Revolving Facility, the period from and including the Closing Date to but excluding the earlier of the Maturity Date and, if different, the date of the termination of the Revolving Commitments in accordance with the provisions of this Agreement.

 

Back-to-Back Letter of Credit” means a letter of credit, in form and substance reasonably satisfactory to the applicable L/C Issuer and issued by an issuer reasonably satisfactory to such L/C Issuer.

 

Backstopped” means, in respect of any Letter of Credit that remains outstanding on the applicable date, that the applicable L/C Issuer shall have received (a) a Back-to-Back Letter of Credit and/or (b) cash or Cash Equivalents, provided that (i) the sum of the maximum drawable amount of such Back-to-Back Letter of Credit plus the amount of such cash and Cash Equivalents shall not be less than the Minimum Collateral Amount of the maximum drawable amount of such Letter of Credit, (ii) the arrangements with respect to such cash, Cash Equivalents and drawings on any Back-to-Back Letter of Credit allow the applicable L/C Issuer to apply the same to reimburse itself with respect to drawings on, and other sums owing with respect to, such Letter of Credit, and (iii) the requirements under clauses (i) and (ii) of this defined term are in all respects satisfactory to the applicable L/C Issuer.

 

Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

 

Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

 - 6 - 

 

Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.

 

Benchmark Replacement” means the sum of: (a) the alternate benchmark rate (which may include Term SOFR or another rate based on SOFR) that has been selected by the Administrative Agent and Lead Borrower giving due consideration to (i) any selection or recommendation of a replacement rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a rate of interest as a replacement to the LIBOR Rate for U.S. dollar-denominated syndicated credit facilities and (b) the Benchmark Replacement Adjustment; provided that, if the Benchmark Replacement as so determined would be less than 1.00%, the Benchmark Replacement will be deemed to be 1.00% for the purposes of this Agreement.

 

Benchmark Replacement Adjustment” means, with respect to any replacement of the LIBOR Rate with an Unadjusted Benchmark Replacement for each applicable Interest Period, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and Lead Borrower giving due consideration to: (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the LIBOR Rate with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the LIBOR Rate with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated syndicated credit facilities at such time.

 

Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Alternate Base Rate,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest and other administrative matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of the Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement).

 

Benchmark Replacement Date” means the earlier to occur of the following events with respect to the LIBOR Rate:

 

(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of the LIBOR Rate permanently or indefinitely ceases to provide the LIBOR Rate; or

 - 7 - 

 

(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein.

 

Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the LIBOR Rate:

 

(1) a public statement or publication of information by or on behalf of the administrator of the LIBOR Rate announcing that such administrator has ceased or will cease to provide the LIBOR Rate, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the LIBOR Rate;

 

(2) a public statement or publication of information by the regulatory supervisor for the administrator of the LIBOR Rate, the U.S. Federal Reserve System, an insolvency official with jurisdiction over the administrator for the LIBOR Rate, a resolution authority with jurisdiction over the administrator for the LIBOR Rate or a court or an entity with similar insolvency or resolution authority over the administrator for the LIBOR Rate, which states that the administrator of the LIBOR Rate has ceased or will cease to provide the LIBOR Rate permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the LIBOR Rate; or

 

(3) a public statement or publication of information by the regulatory supervisor for the administrator of the LIBOR Rate or a Governmental Authority having jurisdiction over the Administrative Agent in effect announcing that the LIBOR Rate is no longer representative.

 

Benchmark Transition Start Date” means (a) in the case of a Benchmark Transition Event, the earlier of (i) the applicable Benchmark Replacement Date and (ii) if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the 90th day prior to the expected date of such event as of such public statement or publication of information (or if the expected date of such prospective event is fewer than 90 days after such statement or publication, the date of such statement or publication) and (b) in the case of an Early Opt-in Election, the date specified by the Administrative Agent or the Required Lenders, as applicable, by notice to Lead Borrower, the Administrative Agent (in the case of such notice by the Required Lenders) and the Lenders.

 

Benchmark Unavailability Period” means, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to the LIBOR Rate and solely to the extent that the LIBOR Rate has not been replaced with a Benchmark Replacement, the period (x) beginning at the time that such Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the LIBOR Rate for all purposes hereunder in accordance with Section 2.15(b) and (y) ending at the time that a Benchmark Replacement has replaced the LIBOR Rate for all purposes hereunder pursuant to Section 2.15(b).

 

Beneficial Ownership Certification” means, with respect to the Borrowers, one or more certifications regarding beneficial ownership as required by the Beneficial Ownership Regulation, which certifications shall be substantially in the form provided by Administrative Agent or such other form satisfactory to the Administrative Agent.

 

Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

 

Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of the Internal Revenue Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Internal Revenue Code) the assets of any such “employee benefit plan” or “plan”.

 

BK Permitted Holders” means (a) Samjor Family LP and (b) Brian Kahn.

 

Board” means (a) with respect to any corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board, (b) with respect to a partnership, the board of directors of the general partner of the partnership, (c) with respect to a limited liability company, the managing member or members or any controlling committee or board of directors of such company or the sole member or the managing member thereof, and (d) with respect to any other Person, the board or committee of such Person serving a similar function.

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Borrower Joinder Agreement” means a joinder agreement in substantially the form of Exhibit K hereto and otherwise in form and substance acceptable to the Administrative Agent.

 

Borrowers” means, collectively, the following: (a) Lead Borrower, (b) each of the other Persons identified on the signature pages hereof as a “Borrower” and (c) any other Person that at any time after the Closing Date becomes a Borrower pursuant to the terms hereof, including, without limitation, Section 5.10(a) hereof, and by execution of a Borrower Joinder Agreement; each sometimes being referred to herein individually as a “Borrower”.

 

Borrowing” means Loans of the same Class and Type made, converted or continued on the same date and, in the case of LIBOR Loans, as to which a single Interest Period is in effect.

 

Borrowing Base” means, as of any date of determination, the result of:

 

(a)          90% multiplied by the face amount of Eligible Credit Card Receivables, plus

 

(b)          85% multiplied by the face amount of Eligible Accounts, plus

 

(c)          90% of the Net Orderly Liquidation Value of the value (determined on a first-in, first-out, lower of cost or market basis in accordance with GAAP) of Eligible Inventory (such determination may be made as to different categories of Eligible Inventory based upon the net recovery percentage applicable to such categories) at such time; plus

 

(d)          65% of the Net Orderly Liquidation Value of the “Remaining Contractual Revenue” corresponding to Eligible Rental Agreements that are “Active Lease Contracts” (as described in the Eligible Rental Agreement Portfolio); provided, that the aggregate amount included in the Borrowing Base pursuant to this clause (d) (after giving effect to the foregoing advance rate and Net Orderly Liquidation Value, but before giving effect to any Reserves under clause (e) below) shall not exceed 30% of the aggregate amount of the Borrowing Base; minus

 

(e)          Reserves implemented by the Administrative Agent in its Permitted Discretion.

 

Borrowing Base Certificate” means a certificate by an Authorized Officer of Lead Borrower, on its own behalf and on behalf of all other Borrowers, substantially in the form of Exhibit H setting forth the calculation of the Borrowing Base, including a calculation of each component thereof, all in such detail as shall be reasonably satisfactory to Administrative Agent. All calculations of the Borrowing Base in connection with the preparation of any Borrowing Base Certificate shall originally be made by the Lead Borrower and certified to Administrative Agent; provided that Administrative Agent shall have the right to review and adjust, in the exercise of its Permitted Discretion, any such calculation after giving notice thereof to the Loan Parties, (1) to reflect its reasonable estimate of declines in value of any of the Collateral described therein, and (2) to the extent that Administrative Agent determines that such calculation is not in accordance with this Agreement.

 

Borrowing Minimum” means, in the case of a LIBOR Borrowing, $500,000.

 

Borrowing Multiple” means, in the case of a LIBOR Borrowing, $100,000.

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Buddy Top Parent” means Franchise Group Intermediate B, LLC, a Delaware limited liability company.

 

Business Day” means (a) any day excluding Saturday, Sunday, and any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in such state are authorized or required by law or other governmental action to close and (b) with respect to all notices, determinations, fundings, and payments in connection with a LIBOR Loan, the term “Business Day” means any day which is a Business Day described in clause (a) and which is also a day for trading by and between banks in Dollar deposits in the London interbank market.

 

Capital Lease” means, as applied to any Person, any lease of any property (whether real, personal, or mixed) by that Person (a) as lessee that, in conformity with GAAP as in effect on the date hereof, is or should be accounted for as a capital lease on the balance sheet of that Person or (b) as lessee which is a transaction of a type commonly known as a “synthetic lease” (i.e., a transaction that is treated as an operating lease for accounting purposes but with respect to which payments of rent are intended to be treated as payments of principal and interest on a loan for Federal income Tax purposes).

 

Capital Stock” means any and all shares, interests, participations, or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including, without limitation, partnership interests and membership interests, and any and all warrants, rights, or options to purchase, or other arrangements or rights to acquire any of the foregoing.

 

Cash” means money, currency, or a credit balance in any demand or Deposit Account.

 

Cash Collateralize” means to deposit in a Controlled Account or to pledge and deposit with or deliver to the Administrative Agent, for the benefit of one or more of the L/C Issuers or the Lenders, as collateral for L/C Obligations or obligations of the Lenders to fund participations in respect of L/C Obligations, cash or deposit account balances or, if each of the Administrative Agent and the applicable L/C Issuer shall agree in its sole discretion, other credit support, in each case pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and the applicable L/C Issuer. “Cash Collateral”, “Cash Collateralized” and “Cash Collateralization” shall have a meaning analogous to the foregoing and shall include the proceeds of such cash collateral and other credit support.

 

Cash Dominion Trigger Event” means either of (a) the occurrence of an Event of Default, or (b) Availability being less than the greater of (i) $15,500,000 and (ii) 15% of the Line Cap at any time.

 

Cash Dominion Trigger Period” means the period commencing on the occurrence of a Cash Dominion Trigger Event, and continuing until the date that (a) no Event of Default shall be continuing and (b) Availability is greater than or equal to the greater of (i) $15,500,000 and (ii) 15% of the Line Cap for a period of at least thirty (30) consecutive calendar days.

 

Cash Equivalents” means, as at any date of determination, (a) marketable securities (i) issued or directly and unconditionally guaranteed as to interest and principal by the United States Government or (ii) issued by any agency of the United States, the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one year after such date, (b) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s, (c) commercial paper maturing no more than one year from the date of creation thereof and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit or bankers’ acceptances maturing within one year after such date and issued or accepted by any Lender or by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia that (i) is at least “adequately capitalized” (as defined in the regulations of its primary Federal banking regulator) and (ii) has Tier 1 capital (as defined in such regulations) of not less than $100,000,000, and (e) shares of any money market mutual fund that (i) has substantially all of its assets invested continuously in the types of investments referred to in clauses (a) and (b) above, (ii) has net assets of not less than $250,000,000, and (iii) has the highest rating obtainable from either S&P or Moody’s.

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Cash Management Services” means, collectively, (a) commercial debit or credit cards, merchant card processing and other services, purchase or debit cards, including non-card e-payables services and merchant store value cards, (b) treasury management services (including cash pooling arrangements, controlled disbursement, netting, overdraft, return items, lockbox and electronic or automatic clearing house fund transfer services (including the Automated Clearing House processing of electronic funds transfers through the direct Federal Reserve Fedline system), return items, sweep and interstate depository network services, and foreign check clearing services), and (c) any other demand deposit or operating account relationships or other cash management services.

 

Casualty Event” means any involuntary loss of title, any involuntary loss of, damage to, or any destruction of, or any condemnation or other taking (including by any Governmental Authority) of, any property of any Loan Party or any of its Subsidiaries. “Casualty Event” shall include, but not be limited to, any taking of all or any part of any real estate of any Person or any part thereof, in or by condemnation or other eminent domain proceedings pursuant to any requirement of law, or by reason of the temporary requisition of the use or occupancy of all or any part of any Real Property of any Person or any part thereof by any Governmental Authority, civil or military, or any settlement in lieu thereof.

 

CEA Swap Obligation” means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

 

Certificate Regarding Non-Bank Status” means a certificate substantially in the form of Exhibit E-1 or Exhibit E-2, as applicable.

 

Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority or the compliance therewith by any Credit Party (or, for purposes of Section 2.16(b), by any Applicable Lending Office of such Credit Party or such Credit Party’s holding company, if any); provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines and directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

Change of Control” means the occurrence of any of the following events or circumstances:

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(a)          any Person or two or more Persons acting in concert (other than Permitted Holders) shall have acquired beneficial ownership, directly or indirectly, of Capital Stock of Ultimate Parent (or other securities convertible into such Capital Stock) representing 35% or more of the combined voting power of all Capital Stock of Ultimate Parent,

 

(b)          during any period of 24 consecutive months commencing on or after the Closing Date, the occurrence of a change in the composition of the Board of Ultimate Parent such that a majority of the members of such Board are not Continuing Directors,

 

(c)          (i) Ultimate Parent fails to own and control, directly or indirectly, 100% of the Capital Stock of Global Parent or (ii) Global Parent fails to own and control, directly or indirectly, 100% of the Capital Stock (other than directors’ qualifying shares, issuances pursuant to any equity incentive plan or similar plan, the Equity Grant, or other nominal issuance in order to comply with local laws) of each other Loan Party (other than as permitted by Section 6.10 or Section 6.19),

 

(d)          the BK Permitted Holders fail to own and control, directly or indirectly, Capital Stock in Ultimate Parent in an aggregate amount equal to 80% or greater than the aggregate amount of Capital Stock of Ultimate Parent that is owned and controlled directly by the BK Permitted Holders as of the Closing Date (in each case, on a fully-diluted basis (and taking into account all Capital Stock of Ultimate Parent that the BK Permitted Holders may have the right to acquire pursuant to any option right)), or

 

(e)          the occurrence of a Change of Management.

 

Change of Management” means that Brian Kahn’s direct or indirect management responsibilities of Lead Borrower are materially diminished from those held by him as of the Closing Date, in each case, other than as a result of (a) death or (b) physical or mental incapacity.

 

Citizens Bank” has the meaning ascribed thereto in the preamble to this Agreement.

 

Citizens Fee Letter” means the fee letter, dated as of the Closing Date, by and between the Lead Borrower and Citizens Bank, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

 

Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans or Swingline Loans.

 

Closing Date” means the date on which the conditions specified in Section 3.01 are satisfied (or waived in accordance with Section 10.05).

 

Closing Date Certificate” means a Closing Date Certificate substantially in the form of Exhibit F-1.

 

Collateral” means, collectively, all of the real, personal, and mixed property (including Capital Stock) and all interests therein and proceeds thereof now owned or hereafter acquired by any Person upon which a Lien is granted or purported to be granted by such Person pursuant to the Collateral Documents as security for the Secured Obligations.

 

Collateral Access Agreement” means a collateral access agreement in form and substance reasonably satisfactory to the Administrative Agent.

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Collateral Coverage Test” has the meaning specified in Section 5.10.

 

Collateral Documents” means the Security Agreement, the Credit Card Notifications, the Mortgages, if any, the Collateral Access Agreements, if any, any Control Agreement, and all other instruments, documents, and agreements delivered by any Loan Party pursuant to this Agreement or any of the other Loan Documents in order to grant to the Administrative Agent, for the benefit of Secured Parties, a Lien on any real, personal, or mixed property of such Loan Party as security for the Secured Obligations, in each case, as such Collateral Documents may be amended or otherwise modified from time to time.

 

Collateral Monitoring Trigger Event” means either of (a) the occurrence of an Event of Default, or (b) Availability being less than the greater of (i) $22,000,000 and (ii) 20% of the Line Cap at any time.

 

Collateral Monitoring Trigger Period” means the period commencing on the occurrence of a Collateral Monitoring Trigger Event, and continuing until the date that (a) no Event of Default shall be continuing and (b) Availability is greater than or equal to the greater of (i) $22,000,000 and (ii) 20% of the Line Cap for a period of at least thirty (30) consecutive calendar days.

 

Collateral Reporting Trigger Event” means any Asset Sale or other transaction (whether pursuant to the sale of Capital Stock in a Subsidiary, an Investment, a Restricted Junior Payment, a merger or consolidation or otherwise, but excluding any transaction that is expressly excluded from the definition of “Asset Sale”) that would result in the elimination of Collateral from the Borrowing Base constituting 5% or more of the Borrowing Base (on a net basis, after giving effect to all applicable advance rates, Net Orderly Liquidation Values and any Reserves applicable to such assets) in effect immediately prior to giving effect to such Asset Sale or other transaction. In determining whether a Collateral Reporting Trigger Event has occurred in connection with any Asset Sale or other transaction, such Asset Sale or other transaction shall be taken together with all other Asset Sales and other such transactions that have occurred since the delivery of the most recent Borrowing Base Certificate required hereunder.

 

Commitment” means, with respect to any Lender, such Lender’s Revolving Commitment.

 

Commitment Fee” has the meaning assigned to such term in Section 2.14(a).

 

Commitment Fee Margin” means 0.50% per annum.

 

Committed Loan Notice” means a notice of a Borrowing (other than a Swingline Borrowing), a conversion of Loans from one Type to the other, or a continuation of LIBOR Loans pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of Exhibit A-1.

 

Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.) and any successor statute.

 

Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of any Loan Party pursuant to any Loan Document or the transactions contemplated therein which is distributed to any Credit Party by means of electronic communications pursuant to Section 10.01, including through the Platform.

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Compliance Certificate” means a Compliance Certificate substantially in the form of Exhibit C.

 

Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

 

Consolidated Capital Expenditures” means, with respect to any Person for any period, the aggregate of all expenditures of such Person and its Subsidiaries during such period determined on a consolidated basis that, in accordance with GAAP, are or should be included in “purchase of property and equipment or which should otherwise be capitalized” or similar items reflected in the consolidated statement of cash flows of such Person.

 

Consolidated Depreciation and Amortization Expense” means, with respect to any Person for any period, the total amount of depreciation and amortization expense, including the amortization of deferred financing fees or costs, capitalized expenditures, customer acquisition costs and incentive payments, conversion costs and contract acquisition costs, the amortization of original issue discount and amortization of favorable or unfavorable lease assets or liabilities, of such Person and its Subsidiaries for such period on a consolidated basis and otherwise determined in accordance with GAAP.

 

Consolidated EBITDA” means, with respect to any Person for any period, the Consolidated Net Income of such Person and its Subsidiaries for such period:

 

(a)          increased (without duplication) by the following, in each case, to the extent deducted (and not added back) in computing Consolidated Net Income for such Person for such period:

 

(i)                 federal, state, local and foreign income or franchise taxes of such Person and its Subsidiaries (including, without duplication, Permitted Tax Payments); plus

 

(ii)               Consolidated Interest Expense of such Person and its Subsidiaries; plus

 

(iii)             Consolidated Depreciation and Amortization Expense of such Person and its Subsidiaries; plus

 

(iv)              non-cash losses, non-cash write-downs, non-cash expenses, non-cash charges and other non-cash items (excluding any non-cash charges that constitute an accrual of or a reserve for future cash charges or are reasonably likely to result in a cash outlay in a future period) (including, without limitation, (A) purchase accounting adjustments under ASC 805 or similar acquisition accounting under GAAP or similar provisions under GAAP and (B) net non-cash exchange, non-cash translation, or non-cash performance losses relating to foreign currency transactions and currency fluctuations); plus

 

(v)                reasonable and documented out-of-pocket costs and expenses incurred by such Person and its Subsidiaries on or prior to 30 days after the Closing Date and payable to unaffiliated third parties in connection with the Transactions; plus

 

(vi)              charges, losses, expenses, and payments that are covered by indemnification, reimbursement, guaranty, or purchase price adjustment provisions in favor of such Person or any of its Subsidiaries in any written agreement entered into by such Person or any of its Subsidiaries to the extent such charges, losses, expenses and payments have been reimbursed pursuant to the applicable indemnity, guaranty, or acquisition agreement (including, for the avoidance of doubt, with respect to Permitted Acquisitions) in such period (or reasonably expected to be so paid or reimbursed within one year after the end of such period to the extent not accrued and to the extent such reimbursement or payment obligation has not been contested or disclaimed by the Person otherwise responsible for the payment thereof) or an earlier period if not added back to Consolidated EBITDA in such earlier period, to the extent such payments or reimbursements are not otherwise included in the calculation of Consolidated EBITDA for any period; provided, that (A) if such amount is not so reimbursed within such one-year period, such expenses or losses shall be subtracted in the subsequent calculation period and (B) if reimbursed or received in a subsequent period, such amount shall not be added back in calculating Consolidated EBITDA in such subsequent period; plus

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(vii)            any cash extraordinary (as defined under GAAP prior to FASB Update No. 2015-01), unusual, or non-recurring expenses, losses, or charges incurred; provided that the aggregate amount added back pursuant to this clause (vii) in calculating Consolidated EBITDA for such period shall not exceed 10% of Consolidated EBITDA for such period (calculated after giving effect to such add-back); plus

 

(viii)          the unamortized fees, costs, and expenses paid in cash in connection with the repayment of Indebtedness to persons that are not Affiliates of any Loan Party; and

 

(b)          decreased (without duplication) by the following, in each case, to the extent taken into account (or added back) in computing Consolidated Net Income for such Person for such period:

 

(i)                 interest income to the extent received in cash or otherwise during such period; plus

 

(ii)               any gain realized in connection with the sale or other disposition of assets or securities other than in the ordinary course of business or the extinguishment of any Indebtedness.

 

For purposes of determining Consolidated EBITDA of the ABL Loan Parties and ABL Subsidiaries for any period, without duplication, (a) there shall be included the Acquired EBITDA of any Acquired Entity or Business on a Pro Forma Basis and (b) there shall be excluded the Disposed EBITDA of any Sold Entity or Business on a Pro Forma Basis.

 

Consolidated Interest Expense” means, with respect to any Person and its Subsidiaries for any period, the consolidated total interest expense (including that portion attributable to Capital Leases in accordance with GAAP and capitalized interest) of such Person and its Subsidiaries for such period, as determined in accordance with GAAP.

 

Consolidated Liquidity” means, for any period, an amount, determined on a consolidated basis, equal to the aggregate sum of (1) the sum of Qualified Cash of Global Parent, the Lead Borrower and its Subsidiaries (other than the Excluded Entities) plus (2) Availability.

 

Consolidated Net Income” means, for any Person (the “first Person”) for any period, the sum of net income (or loss) for such period of such first Person and its Subsidiaries determined on a consolidated basis in accordance with GAAP, excluding, without duplication, to the extent included in determining such net income (or loss) for such period: (a) any income (or loss) of any other Person (the “second Person”) if such second Person is not a Subsidiary of such first Person, except that such first Person’s equity in the net income of any second Person for such period shall be included in the determination of Consolidated Net Income up to the aggregate amount of cash actually distributed by such second Person during such period to such first Person or any of its Subsidiaries as a dividend or other distribution, (b) any gains attributable to write-ups of assets or any losses attributable to the write-down of assets, (c) the income (or loss) of any second Person accrued prior to the date it became a Subsidiary of such first Person or is merged into or consolidated with such first Person or any of its Subsidiaries or such second Person’s assets are acquired by such first Person or any of its Subsidiaries, (d) non-recurring gains (or losses), (e) the income of any Subsidiary of such first Person to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary of that income is prohibited by operation of the terms of its charter or any agreement, instrument, judgment, decree, statute, rule or governmental regulation applicable to such Subsidiary, and (f) all non-cash adjustments made to translate foreign assets and liabilities for changes in foreign exchange rates made in accordance with ASC 830.

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Consolidated Total Debt” means, as at any time of determination, the aggregate outstanding principal amount at such time of all Indebtedness of the ABL Loan Parties and ABL Subsidiaries determined on a consolidated basis in accordance with GAAP (excluding, for avoidance of doubt, the Non-ABL Loan Parties and Non-ABL Subsidiaries).

 

Continuing Director” means (1) any member of the Board of Ultimate Parent who was a director (or comparable manager) of Ultimate Parent on the Closing Date and (2) any individual who becomes a member of the Board of Ultimate Parent after the Closing Date if such individual was approved, appointed, or nominated for election to the Board of Ultimate Parent by either a majority of the Permitted Holders or a majority of the Continuing Directors.

 

Contractual Obligation” means, as applied to any Person, any provision of any Security issued by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement, or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject.

 

Control Agreement” means a control agreement, in form and substance reasonably satisfactory to the Administrative Agent, executed and delivered by the Administrative Agent, the applicable securities intermediary (with respect to a Securities Account) or bank (with respect to a Deposit Account) and any one or more of the Loan Parties.

 

Controlled Account” means, as the context may require, a Deposit Account or Securities Account that is subject to a Control Agreement.

 

COVID-19 Pandemic” means the global spread of the coronavirus illness, which was declared to be a pandemic by the World Health Organization on March 11, 2020.

 

Credit Card Issuer” means any Person (other than a Loan Party or any of its Subsidiaries) who issues or whose members issue credit cards, including, without limitation, MasterCard or VISA bank credit or debit cards or other bank credit or debit cards issued through MasterCard International, Inc., Visa, U.S.A., Inc. or Visa International and American Express, Discover, Diners Club, Carte Blanche and other non-bank credit or debit cards, including, without limitation, credit or debit cards issued by or through American Express Travel Related Services Company, Inc., and Novus Services, Inc. and other issuers approved by the Administrative Agent.

 

Credit Card Notification” has the meaning provided in Section 6.17(d).

 

Credit Card Processor” means 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 ABL Loan Party’s sales transactions involving credit card or debit card purchases by customers using credit cards or debit cards issued by any Credit Card Issuer.

 - 16 - 

 

Credit Card Receivables” means each “Account” or “payment intangible” (each as defined in the UCC) together with all income, payments and proceeds thereof, owed by a Credit Card Issuer or Credit Card Processor to an ABL Loan Party resulting from charges by a customer of an ABL Loan Party on credit or debit cards issued by such Credit Card Issuer in connection with the sale of goods by an ABL Loan Party, or services performed by an ABL Loan Party, in each case in the ordinary course of its business.

 

Credit Extension” means the making of a Loan or an L/C Credit Extension.

 

Credit Facility” means the Revolving Facility.

 

Credit Parties” means the Administrative Agent, the Swingline Lender, the L/C Issuers and the Lenders.

 

Daily LIBOR Rate” means, for any day, a rate per annum equal to the Adjusted LIBOR Rate in effect on such day for deposits in Dollars for a one-month Interest Period (subject to any interest rate floor set forth in the definition of “Adjusted LIBOR Rate”).

 

Debtor Relief Law” means the Bankruptcy Code and any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief law of the United States or other applicable jurisdiction from time to time in effect.

 

Default” means a condition or event that, after notice or lapse of time or both, would constitute an Event of Default.

 

Default Rate” means (a) when used with respect to the outstanding principal balance of any Loan, the sum of (i) the rate of interest otherwise applicable thereto plus (ii) 2.00% per annum, and (b) when used with respect to any L/C Borrowing or any interest, fee or other amount payable under the Loan Documents which shall not have been paid when due, the sum of (i) the Alternate Base Rate plus (ii) the Applicable Margin applicable to ABR Borrowings plus (iii) 2.00% per annum.

 

Defaulting Lender” means, subject to Section 2.10(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Lead Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, any L/C Issuer, the Swingline Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swingline Loans) within two (2) Business Days of the date when due, (b) has notified the Lead Borrower, the Administrative Agent, any L/C Issuer or the Swingline Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after written request by the Administrative Agent or the Lead Borrower, to confirm in writing to the Administrative Agent and the Lead Borrower that it will comply with its prospective funding obligations hereunder, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Lead Borrower, or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.10(b)) upon delivery of written notice of such determination to the Lead Borrower, the L/C Issuers, the Swingline Lender and each Lender.

 - 17 - 

 

Deposit Account” means a demand, time, savings, passbook, or like account with a bank, savings and loan association, credit union, or like organization, other than an account evidenced by a negotiable certificate of deposit.

 

Disposed EBITDA” means, with respect to any Sold Entity or Business for any period, the historical Consolidated EBITDA of such Sold Entity or Business for such period as certified by an Authorized Officer of the Lead Borrower, which historical Consolidated EBITDA shall be calculated in a manner consistent with the definition of Consolidated EBITDA herein and to be based on financial statements for such Sold Entity or Business prepared in accordance with GAAP (subject to the absence of footnote disclosures and year-end audit adjustments with respect to financial statements that are not annual audited financial statements), provided that when such Disposed EBITDA is excluded from Consolidated EBITDA it shall be on a Pro Forma Basis.

 

Disqualified Capital Stock” means any Capital Stock that, by its terms (or by the terms of any security or other Capital Stock into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Qualified Capital Stock), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior occurrence of the Termination Date), (b) is redeemable at the option of the holder thereof (other than solely for Qualified Capital Stock), in whole or in part, (c) provides for the scheduled payments of dividends in cash, or (d) is or becomes convertible into or exchangeable for Indebtedness or any other Capital Stock that would constitute Disqualified Capital Stock, in each case, prior to the date that is 180 days after the Maturity Date. Any Capital Stock in any Person that is issued to any director, officer, or other employee shall not constitute a Disqualified Capital Stock solely because it may be required to be repurchased by such Person or any of its subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death, or disability.

 

Disqualified Institutions” means (a) any person that has been separately identified in writing by Lead Borrower (or its counsel) to Administrative Agent on or prior to the Closing Date, (b) those persons who are competitors of Ultimate Parent and its and their subsidiaries that are separately identified in writing by Lead Borrower (or its counsel) to Administrative Agent from time to time, and (c) in the case of each of clauses (a) and (b), any of their respective Affiliates (which, for the avoidance of doubt, shall not include any bona fide debt investment funds that are Affiliates of the persons referenced in clause (b) above, unless separately identified by Lead Borrower (or its counsel) pursuant to clause (a) above) that are either (i) identified in writing by Lead Borrower (or its counsel) from time to time or (ii) readily identifiable on the basis of such Affiliate’s name; provided that no updates to the list of Disqualified Institutions shall be deemed to retroactively disqualify any parties that have previously acquired an assignment or participation interest in respect of the Loans from continuing to hold or vote such previously acquired assignments and participations on the terms set forth herein for Lenders that are not Disqualified Institutions (it being understood and agreed that such prohibitions with respect to Disqualified Institutions shall apply to any potential future assignments or participations to any such parties).

 - 18 - 

 

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

 

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

 

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

 

Dollars” and the sign “$” mean the lawful money of the United States of America.

 

Early Opt-in Election” means the occurrence of:

 

(1)(a) a determination by the Administrative Agent or (b) a notification by the Required Lenders to the Administrative Agent (with a copy to Lead Borrower) that the Required Lenders have determined that U.S. dollar-denominated syndicated credit facilities being executed at such time, or that include language similar to that contained in Section 2.15(b), are being executed or amended, as applicable, to incorporate or adopt a new benchmark interest rate to replace the LIBOR Rate, and

 

(2)(a) the election by the Administrative Agent or (b) the election by the Required Lenders to declare that an Early Opt-in Election has occurred and the provision, as applicable, by the Administrative Agent of written notice of such election to Lead Borrower and the Lenders or by the Required Lenders of written notice of such election to the Administrative Agent.

 

EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

 

EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

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EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

 

Eligible Accounts” means, at the time of any determination thereof, those Accounts (other than Credit Card Receivables and Accounts generated by Rental Agreements) created by an ABL Loan Party in the ordinary course of its business, that arise out of such ABL Loan Party’s sale of goods or rendition of services, that conform to all representations, warranties or other provisions in the Loan Documents relating to Accounts, and that are not excluded as ineligible by virtue of one or more of the excluding criteria set forth below; provided, that such criteria may be revised from time to time by the Administrative Agent in the Administrative Agent’s Permitted Discretion to address the results of any information with respect to the ABL Loan Parties’ business or assets of which the Administrative Agent becomes aware after the Closing Date, including any field examination performed by (or on behalf of) the Administrative Agent from time to time after the Closing Date. In determining the amount to be included, Eligible Accounts shall be calculated net of customer deposits, unapplied cash, taxes, finance charges, service charges, discounts, credits, allowances, and rebates. Eligible Accounts shall not include the following:

 

(a)          Accounts that the Account Debtor has failed to pay within 90 days of original invoice date or 60 days of original due date,

 

(b)          Accounts owed by an Account Debtor (or its Affiliates) where 50% or more of all Accounts owed by that Account Debtor (or its Affiliates) are deemed ineligible under clause (a) above,

 

(c)          Accounts with selling terms of more than 90 days,

 

(d)          Accounts with respect to which the Account Debtor is a Loan Party, a Subsidiary or Affiliate of a Loan Party, or an employee or agent of any Loan Party or any Subsidiary or Affiliate of a Loan Party,

 

(e)          Accounts (i) arising in a transaction wherein goods are placed on consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a bill and hold, or any other terms by reason of which the payment by the Account Debtor may be conditional, or (ii) with respect to which the payment terms are “C.O.D.”, cash on delivery or other similar terms,

 

(f)           Accounts that are not payable in Dollars,

 

(g)          Accounts with respect to which the Account Debtor either (i) does not maintain its chief executive office in the United States (including the District of Columbia and Puerto Rico and excluding all other territories or possessions of the United States), or (ii) is not organized under the laws of the United States, any state thereof, the District of Columbia or Puerto Rico (excluding all other territories or possessions of the United States), or (iii) is the government of any foreign country or sovereign state, or of any state, province, municipality, or other political subdivision thereof, or of any department, agency, public corporation, or other instrumentality thereof, unless (A) the Account is supported by an irrevocable letter of credit reasonably satisfactory to the Administrative Agent (as to form, substance, and issuer or domestic confirming bank) that has been delivered to the Administrative Agent and, if requested by the Administrative Agent, is directly drawable by the Administrative Agent, or (B) the Account is covered by credit insurance in form, substance, and amount, and by an insurer, reasonably satisfactory to the Administrative Agent,

 - 20 - 

 

(h)          Accounts with respect to which the Account Debtor is either (i) the United States or any department, agency, or instrumentality of the United States (exclusive, however, of Accounts with respect to which the ABL Loan Parties have complied, to the reasonable satisfaction of the Administrative Agent, with the Assignment of Claims Act, 31 USC §3727), or (ii) any state of the United States or any other Governmental Authority,

 

(i)           Accounts with respect to which the Account Debtor is a creditor or supplier of any Loan Party or its Subsidiaries, has or has asserted a right of recoupment or setoff, or has disputed its obligation to pay all or any portion of the Account, to the extent of such claim, right of recoupment or setoff, or dispute,

 

(j)           Accounts with respect to an Account Debtor whose Eligible Accounts owing to the ABL Loan Parties exceed 10% (such percentage, as applied to a particular Account Debtor, being subject to reduction by the Administrative Agent in its Permitted Discretion if the creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts, to the extent of the obligations owing by such Account Debtor in excess of such percentage; provided, that in each case, the amount of Eligible Accounts that are excluded because they exceed the foregoing percentage shall be determined by the Administrative Agent based on all of the otherwise Eligible Accounts prior to giving effect to any eliminations based upon the foregoing concentration limit,

 

(k)          Accounts with respect to which the Account Debtor is subject to an Insolvency Proceeding, has gone out of business, or as to which any ABL Loan Party has received notice of an imminent Insolvency Proceeding,

 

(l)           Accounts (i) that are not subject to the Administrative Agent’s duly perfected First Priority security interest or (ii) with respect to which such ABL Loan Party does not have good and valid title thereto, free and clear of any Lien (other than Permitted Liens),

 

(m)        Accounts with respect to which, (i) the goods giving rise to such Account have not been shipped and billed to the Account Debtor, (ii) the services giving rise to such Account have not been performed and billed to the Account Debtor, or (iii) such Account otherwise does not represent a final sale,

 

(n)          Accounts with respect to which the Account Debtor is a Sanctioned Person or Sanctioned Entity,

 

(o)          Accounts that represent the right to receive progress payments or other advance billings that are due prior to the completion of performance by the applicable Borrower of the subject contract for goods or services,

 

(p)          Accounts that represent the right to receive royalties, fees or similar payments from franchisees or other Persons,

 

(q)          Accounts acquired through an acquisition (including, without limitation, acquisitions effected by mergers or consolidations) of all of or substantially all of the Capital Stock or assets of any Person, or of any division or line of business or other business unit of any Person, unless and until the Administrative Agent has completed or received (A) a satisfactory field examination of such Accounts from a field examiner reasonably acceptable to Administrative Agent and establishes Reserves (if applicable) therefor, and (B) such other due diligence as Administrative Agent may reasonably require, all of the results of the foregoing to be reasonably satisfactory to Administrative Agent, or

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(r)           Accounts which does not meet such other reasonable eligibility criteria for Accounts as Administrative Agent may determine in its Permitted Discretion.

 

Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 10.06(c)(iii), (v) and (vi) (subject to such consents, if any, as may be required under Section 10.06(c)(iii)).

 

Eligible Credit Card Receivables” means, at the time of any determination thereof, each Credit Card Receivable that satisfies the following criteria at the time of creation and continues to meet the same at the time of such determination: such Credit Card Receivable (i) has been earned by performance and represents the bona fide amounts due to an ABL Loan Party from a Credit Card Issuer or Credit Card Processor, and in each case is originated in the ordinary course of business of such ABL Loan Party, and (ii) in each case is not ineligible for inclusion in the calculation of the Borrowing Base pursuant to any of clauses (a) through (n) below. Without limiting the foregoing, to qualify as an Eligible Credit Card Receivable, a Credit Card Receivable shall indicate no Person other than an ABL Loan Party as payee or remittance party. In determining the amount to be so included, the face amount of a Credit Card Receivable shall be reduced by, without duplication, to the extent not reflected in such face amount, (i) the amount of all accrued and actual discounts, claims, credits or credits pending, promotional program allowances, price adjustments, finance charges or other allowances and (ii) the aggregate amount of all cash received in respect of such Credit Card Receivable but not yet applied by the ABL Loan Parties to reduce the amount of such Credit Card Receivable. Except as otherwise agreed by the Administrative Agent in its Permitted Discretion, Eligible Credit Card Receivables shall not include the following:

 

(a)          Credit Card Receivables which do not constitute an “Account” or “payment intangible” (each as defined in the UCC);

 

(b)          Credit Card Receivables that have been outstanding for more than five (5) Business Days from the date of sale;

 

(c)          Credit Card Receivables (i) that are not subject to the Administrative Agent’s duly perfected First Priority security interest or (ii) with respect to which an ABL Loan Party does not have good and valid title thereto, free and clear of any Lien (other than Permitted Liens);

 

(d)          Credit Card Receivables which are disputed or with respect to which a claim, counterclaim, offset or chargeback has been asserted by the applicable credit card processor (to the extent of such dispute, claim, counterclaim, offset or chargeback);

 

(e)          Credit Card Receivables as to which a Credit Card Issuer or a Credit Card Processor has the right under certain circumstances to require a Loan Party or any of its Subsidiaries to repurchase the entire portfolio of Credit Card Receivables from such Credit Card Issuer or Credit Card Processor;

 

(f)           Credit Card Receivables due from a Credit Card Issuer or a Credit Card Processor which is subject to any Insolvency Proceeding, has gone out of business, or as to which any ABL Loan Party has received notice of an imminent Insolvency Proceeding;

 

(g)          Credit Card Receivables which are not a valid, legally enforceable obligation of the applicable Credit Card Issuer or a Credit Card Processor with respect thereto;

 

(h)          Credit Card Receivables which do not conform to all representations, warranties or other provisions in the Loan Documents relating to Credit Card Receivables;

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(i)           Credit Card Receivables that are not payable in Dollars;

 

(j)           Credit Card Receivables arising from any private label credit card program or other similar credit arrangement of a Loan Party or any of its Subsidiaries, except as otherwise approved by the Administrative Agent in its Permitted Discretion;

 

(k)          Credit Card Receivables as to which the applicable Credit Card Issuer or Credit Card Processor either (i) does not maintain its chief executive office in the United States (including the District of Columbia and Puerto Rico and excluding all other territories or possessions of the United States), or (ii) is not organized under the laws of the United States, any state thereof, the District of Columbia or Puerto Rico (excluding all other territories or possessions of the United States);

 

(l)           Credit Card Receivables as to which the applicable Credit Card Issuer or Credit Card Processor has not received a Credit Card Notification, except as otherwise approved by the Administrative Agent in its Permitted Discretion; provided, that this clause (l) shall not be applicable with respect to Credit Card Receivables from any Credit Card Issuer or Credit Card Processor prior to the date, if any, on which the applicable Credit Card Notification is required to be delivered pursuant to Section 6.17 hereof (as such date may be extended pursuant to such Section 6.17); provided, further, that if a Credit Card Notification has not been received as and when required by this clause (l), the Administrative Agent shall deem the applicable Credit Card Receivables to be Eligible Credit Card Receivables (notwithstanding the requirements of this clause (l) but subject to all other requirements for such Credit Card Receivables to be Eligible Credit Card Receivables) so long as it has established a Reserve in such amount as the Administrative Agent in its Permitted Discretion deems appropriate;

 

(m)        Credit Card Receivables acquired through an acquisition (including, without limitation, acquisitions effected by mergers or consolidations) of all of or substantially all of the Capital Stock or assets of any Person, or of any division or line of business or other business unit of any Person, unless and until the Administrative Agent has completed or received (A) a satisfactory field examination of such Credit Card Receivables from a field examiner reasonably acceptable to Administrative Agent and establishes Reserves (if applicable) therefor, and (B) such other due diligence as Administrative Agent may reasonably require, all of the results of the foregoing to be reasonably satisfactory to Administrative Agent; or

 

(n)          Credit Card Receivables which Administrative Agent determines in its Permitted Discretion to be uncertain of collection or which do not meet such other reasonable eligibility criteria for Credit Card Receivables as Administrative Agent may determine in its Permitted Discretion.

 

Eligible Inventory” means, at the time of any determination thereof, items of Inventory of an ABL Loan Party that are finished goods, merchantable and readily saleable to the public in the ordinary course of such ABL Loan Party’s business, that, except as otherwise agreed by the Administrative Agent in its Permitted Discretion, conform to all representations, warranties or other provisions in the Loan Documents relating to Inventory and are not excluded as ineligible by virtue of one or more of the criteria set forth below. Except as otherwise agreed by the Administrative Agent in its Permitted Discretion, Eligible Inventory shall not include the following:

 

(a)          Inventory (i) that is not subject to the Administrative Agent’s duly perfected First Priority security interest, or (ii) with respect to which an ABL Loan Party does not have good and valid title thereto, free and clear of any Lien (other than Permitted Liens);

 

(b)          Inventory that is leased or consigned from a vendor to such ABL Loan Party;

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(c)          Inventory that is consigned by an ABL Loan Party to a Person which is not an ABL Loan Party, other than Inventory that is consigned to Third Party Franchisees for which the ABL Loan Parties have met the Third Party Franchisee Eligibility Requirements;

 

(d)          Inventory that is not located in the United States (including the District of Columbia and Puerto Rico and excluding all other territories or possessions of the United States) at a location that is owned or leased by an ABL Loan Party, except (i) Inventory in transit between such owned or leased locations, (ii) Inventory at locations owned or leased by Third Party Franchisees for which the ABL Loan Parties have met the Third Party Franchisee Eligibility Requirements, and (iii) to the extent permitted by clause (e) below, Inventory located in a distribution center, warehouse or similar location;

 

(e)          (i) Inventory that is located in a distribution center, warehouse or similar location leased by an ABL Loan Party, unless the Administrative Agent has received a Collateral Access Agreement with respect thereto; provided, that if such a Collateral Access Agreement is not obtained within thirty (30) days following the later of the Closing Date and the date on which the applicable ABL Loan Party has entered into the applicable lease arrangement with the applicable lessor (or such later date as the Administrative Agent may agree in its Permitted Discretion), the Administrative Agent shall deem the applicable Inventory to be Eligible Inventory (notwithstanding the requirements of this clause (e) but subject to all other requirements for such Inventory to be Eligible Inventory) so long as it has established a Reserve in such amount as the Administrative Agent in its Permitted Discretion deems appropriate;

 

(f)           Other than Inventory customarily sold at outlet locations in the ordinary course of business or otherwise in a manner consistent with past practice, Inventory that is comprised of goods which (i) are damaged, defective, “seconds,” or otherwise unmerchantable, (ii) are to be returned to the vendor, (iii) are obsolete, or custom items, work-in-process, raw materials, or that constitute samples, spare parts, promotional, marketing, labels, bags and other packaging and shipping materials or supplies used or consumed in an ABL Loan Party’s business, (iv) which have been packed away and stored for more than 12 months, (v) are not in material compliance with all standards imposed by any Governmental Authority having regulatory authority over such Inventory, its use or sale, or (vi) are bill and hold goods;

 

(g)          Inventory that is not insured in compliance with the provisions of Section 4.27 hereof;

 

(h)          Inventory that has been sold but not yet delivered or as to which an ABL Loan Party has accepted a deposit from a third party;

 

(i)           Inventory that exhibits, includes or is identified by any trademark, tradename or other Intellectual Property right which trademark, tradename or other Intellectual Property right (i) is subject to a restriction that could reasonably be expected to adversely affect the Administrative Agent’s ability to liquidate such Inventory or (ii) the relevant ABL Loan Party does not have the right to use in connection with the sale of such Inventory, either through direct ownership or through a written license or sublicense;

 

(j)           Inventory that is subject to any consumer lease or rental agreement or arrangement (including any Rental Agreement);

 

(k)          Inventory acquired through an acquisition (including, without limitation, acquisitions effected by mergers or consolidations) of all of or substantially all of the Capital Stock or assets of any Person, or of any division or line of business or other business unit of any Person, unless and until the Administrative Agent has completed or received (A) a satisfactory appraisal of such Inventory from appraisers reasonably acceptable to Administrative Agent and the Initial Lenders and establishes Reserves (if applicable) therefor, and (B) such other due diligence as Administrative Agent may reasonably require, all of the results of the foregoing to be reasonably satisfactory to Administrative Agent; or

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(l)           Inventory which does not meet such other reasonable eligibility criteria for Inventory as Administrative Agent may determine in its Permitted Discretion.

 

Eligible Rental Agreement Portfolio” means, at the time of any determination thereof, the most recent portfolio, in form and detail reasonably acceptable to the Administrative Agent, of Eligible Rental Agreements of the ABL Loan Parties received by the Administrative Agent at such time.

 

Eligible Rental Agreements” means, at the time of any determination thereof, Rental Agreements that, except as otherwise agreed by the Administrative Agent in its Permitted Discretion, conform to all representations, warranties or other provisions in the Loan Documents relating to Rental Agreements, and that are not excluded as ineligible by virtue of one or more of the excluding criteria set forth below; provided, that such criteria may be revised from time to time by the Administrative Agent in the Administrative Agent’s Permitted Discretion to address the results of any information with respect to the ABL Loan Parties’ business or assets of which the Administrative Agent becomes aware after the Closing Date, including any field examination or appraisal performed by (or on behalf of) the Administrative Agent from time to time after the Closing Date. In determining the amount to be included, Eligible Rental Agreements shall be calculated net of customer deposits, unapplied cash, taxes, finance charges, service charges, discounts, credits, allowances, and rebates. Except as otherwise agreed by the Administrative Agent in its Permitted Discretion, Eligible Rental Agreements shall not include the following:

 

(a)          Rental Agreements that (i) that are not subject to the Administrative Agent’s duly perfected First Priority security interest or (ii) with respect to which such ABL Loan Party does not have good and valid title thereto, free and clear of any Lien (other than Permitted Liens);

 

(b)          Rental Agreements with respect to which the remaining value of the Inventory in respect thereof has been written off the books of the applicable ABL Loan Party or otherwise designated as uncollectible;

 

(c)          Rental Agreements which do not arise from the rental of Inventory in the ordinary course of such ABL Loan Party’s business;

 

(d)          Rental Agreements for which the Inventory subject thereto has not been shipped to the applicable counterparty;

 

(e)          Rental Agreements with respect to which the amounts due thereunder remain unpaid after the original due date for a period to be determined by the Administrative Agent in its Permitted Discretion based on the most recently delivered Borrowing Base Certificate or the most recent Eligible Rental Agreement Portfolio appraisal received by the Administrative Agent;

 

(f)           Rental Agreements with respect to which the applicable counterparty is, to the knowledge of any ABL Loan Party, subject to an Insolvency Proceeding, or as to which any ABL Loan Party has received notice of an imminent Insolvency Proceeding;

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(g)          Rental Agreements with respect to which rental payments are owed in any currency other than Dollars;

 

(h)          Rental Agreements which are not governed by the law of the United States (excluding territories or possessions of the United States) or any state thereof;

 

(i)           Rental Agreements which are not generated at a store located in the United States (including the District of Columbia and excluding all other territories or possessions of the United States);

 

(j)           Rental Agreements with respect to which the applicable counterparty is a Loan Party, a Subsidiary or Affiliate of a Loan Party, or an employee, officer or director of any Loan Party or any Subsidiary or Affiliate of a Loan Party;

 

(k)          Rental Agreements with respect to which the applicable counterparty is a Person to which a Loan Party or any of its Subsidiaries is indebted, but only to the extent of such indebtedness;

 

(l)           Rental Agreements with respect to which the payments thereunder are subject to any asserted counterclaim, deduction, defense, setoff or dispute but only to the extent of any such asserted counterclaim, deduction, defense, setoff or dispute;

 

(m)        Rental Agreements with respect to which the applicable ABL Loan Party has made any agreement with the applicable counterparty for any reduction in any rental payments or other amounts due thereunder, other than discounts and adjustments given in the ordinary course of business that are consistent with the treatment provided for in the most recently delivered Borrowing Base Certificate or the most recent Eligible Rental Agreement Portfolio appraisal received by the Administrative Agent;

 

(n)          Rental Agreements which (i) do not comply in all material respects with the requirements of all applicable laws and regulations, whether federal, state or local, or (ii) are characterized or otherwise qualify as a credit or installment sale (as opposed to a rent-to-own agreement) under any such applicable laws and regulations;

 

(o)          Rental Agreements which are for Inventory that has been rented pursuant to the terms of a written contract or other written agreement that indicates or purports that any Person other than an ABL Loan Party has an ownership interest in such Inventory, or which indicates any party other than an ABL Loan Party as payee or remittance party; or

 

(p)          Rental Agreements which do not meet such other reasonable eligibility criteria for Rental Agreements as Administrative Agent may determine in its Permitted Discretion.

 

Employee Benefit Plan” means any “employee benefit plan” as defined in Section 3(3) of ERISA which is or was sponsored, maintained, or contributed to, or required to be contributed, by any Loan Party or any of its ERISA Affiliates.

 

Environmental Action” means any written complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter, or other written communication from any Governmental Authority or any third party involving violations of Environmental Laws or releases of Hazardous Materials (a) from any assets, properties, or businesses any Loan Party or any of its Subsidiaries (excluding the Excluded Entities), or any of their respective predecessors in interest, (b) from adjoining properties or businesses, or (c) from or onto any facilities which received Hazardous Materials generated by any Loan Party or any of its Subsidiaries (excluding the Excluded Entities), or any of their respective predecessors in interest.

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Environmental Law” means any applicable federal, state, provincial, foreign or local statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and enforceable written policy, or rule of common law now or hereafter in effect and in each case as amended, or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree, or judgment, in each case, to the extent binding on any Loan Party or its Subsidiaries (excluding the Excluded Entities), relating to protection of the environment, protection of employee health (from exposure to Hazardous Materials), or Hazardous Materials, in each case as amended from time to time.

 

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

 

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

 

Equipment” has the meaning ascribed to such term in the Security Agreement.

 

Equity Grant” means Capital Stock issued within 365 days after May 1, 2020 by Liberty/Revolution Top Parent to Brent Turner; provided that no more than 5% of the Capital Stock issued by Liberty/Revolution Top Parent as of May 1, 2020 may be so issued.

 

ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor thereto.

 

ERISA Affiliate” means, as applied to any Person, (a) any corporation which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which that Person is a member, (b) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Internal Revenue Code of which that Person is a member, and (c) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue Code of which that Person, any corporation described in clause (a) above, or any trade or business described in clause (b) above is a member. Any former ERISA Affiliate of Global Parent or any of its Subsidiaries (excluding the Excluded Entities) shall continue to be considered an ERISA Affiliate of Global Parent or any such Subsidiary (excluding the Excluded Entities) within the meaning of this definition with respect to the period such entity was an ERISA Affiliate of Global Parent or such Subsidiary and with respect to liabilities arising after such period for which Global Parent or such Subsidiary could be liable under the Internal Revenue Code or ERISA.

 - 27 - 

 

ERISA Event” means: (a) a “reportable event” within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for thirty day notice to the PBGC has been waived by regulation); (b)the failure to meet the minimum funding standard of Section 412 of the Internal Revenue Code or Section 302 of ERISA with respect to any Pension Plan (whether or not waived in accordance with Section 412(d) of the Internal Revenue Code), the failure to make by its due date a required installment under Section 412(m) of the Internal Revenue Code with respect to any Pension Plan, or the failure to make any required contribution to a Multiemployer Plan; (c) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (d) the withdrawal by Global Parent, any of its Subsidiaries (excluding the Excluded Entities), or any of their respective ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability to Global Parent, any of its Subsidiaries (excluding the Excluded Entities), or any of their respective Affiliates pursuant to Section 4063 or 4064 of ERISA; (e) the institution by the PBGC of proceedings to terminate any Pension Plan or the occurrence of any event or condition which might constitute grounds under ERISA for the termination of or the appointment of a trustee to administer, any Pension Plan; (f) the imposition of liability on Global Parent, any of its Subsidiaries (excluding the Excluded Entities), or any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (g) the withdrawal of Global Parent, any of its Subsidiaries (excluding the Excluded Entities), or any of their respective ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability therefor, or the receipt by Global Parent, any of its Subsidiaries (excluding the Excluded Entities), or any of their respective ERISA Affiliates of notice from any Multiemployer Plan (1) imposing withdrawal liability, (2) that such Multiemployer Plan is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, (3) that such Multiemployer Plan is in “endangered” or “critical” status (within the meaning of Section 432 of the Internal Revenue Code or Section 305 of ERISA), or (4) that such Multiemployer Plan intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (h) the occurrence of an act or omission which could give rise to the imposition on Global Parent, any of its Subsidiaries (excluding the Excluded Entities), or any of their respective ERISA Affiliates of fines, penalties, Taxes, or related charges under Chapter 43 of the Internal Revenue Code or under Section 409, Section 502(c), (i), or (l), or Section 4071 of ERISA in respect of any Employee Benefit Plan; (i) the assertion of a material claim (other than routine claims for benefits) against any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof, or against Global Parent, any of its Subsidiaries (excluding the Excluded Entities), or any of their respective ERISA Affiliates in connection with any Employee Benefit Plan; (j) receipt from the Internal Revenue Service of notice of the failure of any Pension Plan (or any other Employee Benefit Plan intended to be qualified under Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Internal Revenue Code, (k) the imposition of a Lien pursuant to Section 430(k) of the Internal Revenue Code or pursuant to Section 303(k) of ERISA with respect to any Pension Plan, (l) the existence with respect to any funded Employee Benefit Plan sponsored by Global Parent, any of its Subsidiaries (excluding the Excluded Entities), or any of their respective ERISA Affiliates of a non-exempt “Prohibited Transaction” (within the meaning of Section 406 of ERISA or Section 4975(c) of the Internal Revenue Code), (m) the filing, pursuant to Section 412(c) of the Internal Revenue Code or Section 302(c) of ERISA, of an application for a waiver of the minimum funding standard with respect to any Pension Plan, (n) a determination that any Pension Plan is in “at risk” status (within the meaning of Section 430 of the Internal Revenue Code or Section 303 of ERISA).

 

EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

 

Event of Default” means each of the conditions or events set forth in Section 8.01.

 

Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.

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Excluded Accounts” means Deposit Accounts, Securities Accounts and Commodity Accounts (1) specially and exclusively used for payroll, payroll Taxes, accrued and unpaid employee compensation payments and other employee wage and benefit payments to or for any Grantor’s employees and (including salaries, wages, benefits and expense reimbursements, 401(k) and other retirement plans and employee benefits, including rabbi trusts for deferred compensation and health care benefits), (2) that are zero balance accounts or other local operating accounts of individual retail locations that automatically sweep balances on an at least daily basis (other than days that are not business days for the applicable bank) (or, solely with respect to such accounts of AF Holdings and its Subsidiaries that individually have a daily balance of not more than $100,000 and collectively have a daily balance of not more than $2,500,000, weekly) to a concentration account that is subject to a Control Agreement (subject to the timing requirements set forth in Section 6.17), (3) that (x) individually have a daily balance of not more than $100,000 and (y) together with all other Deposit Accounts, Securities Accounts and Commodity Accounts constituting Excluded Accounts under this clause (3), have a daily balance of not more than $2,500,000 in the aggregate for all such Deposit Accounts, Securities Accounts or Commodity Accounts, (4) consisting solely of Cash or Cash Equivalents securing Permitted Indebtedness (other than the Secured Obligations or the Term Obligations) to the extent such security constitutes Permitted Liens (including, for avoidance of doubt, any account used solely in connection with cash collateralizing the Workers Comp L/C to the extent not in violation of clause (o) of the definition of “Permitted Liens”), (5) used solely for withholding and trust accounts, escrow and any other fiduciary accounts, and (6) subject to compliance with Section 6.17(b), Local Deposit Accounts.

 

Excluded CEA Swap Obligation” means, with respect to any Guarantor, any CEA Swap Obligation if, and only to the extent that, all or a portion of the Guaranty of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such CEA Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof), including by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guaranty of such Guarantor or the grant by such Guarantor of such security interest becomes effective with respect to such CEA Swap Obligation. If a CEA Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such CEA Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal.

 

Excluded Entities” means (a) Revolution Holdings and its direct and indirect subsidiaries and (b) Vitamin Holdings and its direct and indirect subsidiaries; provided that with respect to clause (b), to the extent not prohibited by law, regulation or the terms of such Person’s third party Indebtedness, each such Person and its respective direct and indirect subsidiaries shall immediately, and without further action by any Person, no longer constitute “Excluded Entities”.

 

Excluded Subsidiary” means any Subsidiary (a) that is prohibited, but only so long as such Subsidiary would be prohibited, by applicable law, rule, or regulation binding upon such Subsidiary from providing a guaranty of the Guaranteed Obligations or granting a Lien on its assets to secure the Secured Obligations or that would require governmental (including regulatory) consent, approval, license or authorization to provide such a guaranty or grant such a Lien, unless such consent, approval, license or authorization has been received (it being understood that the Loan Parties shall not be obligated to seek any such consent, approval, license or authorization); provided that the exclusion in this clause (a) shall in no way be construed to (A) apply to the extent that any described prohibition is ineffective under Section 9-406, 9-407, 9-408, or 9-409 of the UCC or other applicable law, or (B) limit, impair, or otherwise affect any of the Administrative Agent’s continuing security interests in and liens upon any rights or interests of any Loan Party in or to (1) monies due or to become due under or in connection with the Capital Stock of such Excluded Subsidiary, or (2) any proceeds from the sale, license, lease, or other dispositions of the Capital Stock of such Excluded Subsidiary; (b) to the extent the Administrative Agent, the Initial Lenders and the Lead Borrower mutually determine that the cost and/or burden of obtaining a guaranty of the Guaranteed Obligations and/or a grant of a Lien on its assets to secure the Secured Obligations by such Subsidiary outweighs the benefit to the Lenders, (c) that is, or if it were a Loan Party, would be, an “investment company” under the Investment Company Act of 1940, (d) that is a not-for-profit entity with a charitable purpose, (e) that is an Excluded Entity, (f) that is a controlled foreign corporation (as defined in Section 957 of the Internal Revenue Code) (or a Subsidiary that owns no material assets other than Capital Stock in one or more Subsidiaries that are controlled foreign corporations), to the extent the Lead Borrower reasonably determines, in consultation with the Administrative Agent and Initial Lenders, that such Subsidiary providing a guaranty of the Guaranteed Obligations and/or granting Liens on its assets to secure the Secured Obligations will result in material adverse tax consequences, (g) that is a direct or indirect Subsidiary of an entity described in clause (a), (b), (c) or (d) above, or (h) that is a Liberty Party, until the Liberty Trigger Date; provided that, in the case of this clause (h), from and after the Liberty Trigger Date, the Liberty Parties, to the extent they remain Subsidiaries of Global Parent on such date, shall immediately, and without further action by any Person, no longer constitute Excluded Subsidiaries (except to the extent that any Liberty Party constitutes an Excluded Subsidiary under another clause of this definition). For the avoidance of doubt, the only Excluded Subsidiaries as of the Closing Date are (i) the Excluded Entities and (ii) the Persons described in clause (h) of this definition.

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Excluded Taxes” has the meaning specified in Section 2.18(a).

 

Existing Businesses” means each of the businesses owned or operated, directly or indirectly, as of the Closing Date by Global Parent and its Subsidiaries.

 

Existing Indebtedness” means Indebtedness and other obligations outstanding under that certain ABL Credit Agreement, dated as of February 14, 2020, by and among the Loan Parties party thereto, the lenders party thereto, and GACP Finance Co., LLC, as administrative agent and collateral agent, as amended, restated, amended and restated, supplemented or otherwise modified prior to the Closing Date.

 

Existing Letter of Credit” means the letter of credit listed on Schedule 2.4.

 

Extraordinary Receipts” means any cash received by Global Parent or any of its Subsidiaries (for the avoidance of doubt, this includes the Excluded Entities) not in the ordinary course of business (and not consisting of proceeds described in Section 2.08(a) or (b) hereof), including, without limitation, (a) foreign, United States, state, or local Tax refunds, (b) pension plan reversions, (c) judgments, proceeds of settlements, or other consideration of any kind in connection with any cause of action, (d) [reserved], (e) indemnity payments, and (f) any purchase price adjustment received in connection with any purchase agreement, excluding for the avoidance of doubt proceeds from (i) the issuance of Capital Stock of Global Parent or the issuance of Capital Stock of any of its Subsidiaries (so long as such issuance is to its direct parent company that owns 100% of the Capital Stock of such Subsidiary prior to such issuance) and (ii) the issuance of Indebtedness (it being understood and agreed that the issuance of Indebtedness not permitted to be incurred pursuant to Section 6.01 shall remain subject to Section 2.08(d)).

 

Fair Share” has the meaning specified in Section 7.02.

 

Fair Share Contribution Amount” has the meaning specified in Section 7.02.

 

FATCA” means Sections 1471 through 1474 of the Internal Revenue Code, in effect as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Internal Revenue Code.

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Federal Funds Effective Rate” means, for any day, a rate per annum (expressed as a decimal, rounded upwards, if necessary, to the next higher 1/100 of 1%) equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (a) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Effective Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, (b) if such rate is not so published for any day, the Federal Funds Effective Rate for such day shall be the average of the quotations for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it and (c) if the Federal Funds Effective Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

 

Federal Reserve Bank of New York’s Website” means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org, or any successor source.

 

Fee Letters” means, collectively, the Citizens Fee Letter and the Wingspire Capital Fee Letter.

 

Financial Officer Certification” means, with respect to the financial statements for which such certification is required, the certification of the chief operating officer, chief financial officer, chief executive officer or other officer with similar responsibilities of the Lead Borrower that such financial statements fairly present, in all material respects, the financial condition of the Loan Parties (or Global Parent and its Subsidiaries, or Ultimate Parent and its Subsidiaries, as the case may be, in each case subject to Section 5.14) as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments.

 

Financial Plan” has the meaning specified in Section 5.01(i).

 

First Priority” means, with respect to any security interest or other Lien of the Administrative Agent purported to be created in any Collateral pursuant to any Collateral Document, (a) in the case of ABL Priority Collateral, that such Lien is the only Lien to which such Collateral is subject, other than any Permitted Lien, and that no such Permitted Lien has priority over such Lien of the Administrative Agent other than Permitted Liens having such priority by operation of applicable law or as may otherwise be expressly permitted to have such priority pursuant to the Loan Documents, and (b) in the case of Term Priority Collateral, that such Lien is the only Lien to which such Collateral is subject, other than any Permitted Lien, and that no such Permitted Lien has priority over such Lien of the Administrative Agent other than (i) Permitted Liens having such priority by operation of applicable law or as may otherwise be expressly permitted to have such priority pursuant to the Loan Documents and (ii) the Lien of the Term Agent to the extent permitted under clause (p) of the definition of “Permitted Liens”.

 

Fiscal Quarter” means a fiscal quarter of any Fiscal Year, which quarters shall generally end on (a) with respect to the first fiscal quarter of any Fiscal Year, the Saturday of the thirteenth week of such Fiscal Year, (b) with respect to the second fiscal quarter of any Fiscal Year, the Saturday of the twenty-sixth week of such Fiscal Year, (c) with respect to the third fiscal quarter of any Fiscal Year, the Saturday of the thirty-ninth week of such Fiscal Year, and (d) with respect to the last fiscal quarter of any Fiscal Year, the last day of such Fiscal Year, as such Fiscal Quarters may be amended in accordance with the provisions of Section 6.16 hereof.

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Fiscal Year” means the fiscal year of the Lead Borrower ending on the Saturday closest to December 31 of each calendar year (or such other date as may be permitted by Section 6.16).

 

Flood Certificate” means a “Standard Flood Hazard Determination Form” of the Federal Emergency Management Agency and any successor Governmental Authority performing a similar function.

 

Flood Documents” has the meaning specified in Section 9.11.

 

Flood Insurance Laws” means, collectively, (i) the National Flood Insurance Reform Act of 1994 (which comprehensively revised the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973) as now or hereafter in effect or any successor statute thereto, (ii) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto and (iii) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.

 

Flood Program” means the National Flood Insurance Program created by the U.S. Congress pursuant to the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973, the National Flood Insurance Reform Act of 1994 and the Flood Insurance Reform Act of 2004, in each case as amended from time to time, and any successor statutes.

 

Flood Zone” means an area identified by the Federal Emergency Management Agency (or any successor agency) as a “Special Flood Hazard Area” with respect to which flood insurance has been made available under Flood Insurance Laws.

 

Flow of Funds Agreement” means that certain Letter of Direction, dated as of the Closing Date, duly executed by Lead Borrower and any other parties thereto, in form and substance reasonably satisfactory to the Administrative Agent, in connection with the disbursement of the proceeds of the Loans to be made on the Closing Date in accordance with Section 4.35.

 

Franchise Agreement” means a franchising agreement between any Loan Party or any Subsidiary (excluding the Excluded Entities) thereof, as franchisor, and any other Person, as franchisee, pertaining to the establishment and operation of a business with operations comparable to the operations of the Lead Borrower and its Subsidiaries (excluding the Excluded Entities).

 

Franchise Disclosure Documents” means any uniform franchise offering circulars and franchise disclosure documents used by (and, to the extent required, filed by) any Loan Party or Subsidiary of a Loan Party (excluding the Excluded Entities) to comply with any applicable law, rule, regulation or order of any Governmental Authority.

 

Franchise Fees” shall mean each Loan Party’s and/or any Subsidiary’s (excluding the Excluded Entities) right to payment under Franchise Agreements, including, without limitation, all fees, royalties, revenues, charges, penalties and/or interest; provided that Franchise Fees shall not include any Account or other rights to payment arising from the sale of Inventory by a Grantor or Liberty Party to a franchisee.

 

Franchise Laws” means all applicable laws, rules, regulations, orders, binding guidance or other requirements of the United States Federal Trade Commission or any other Governmental Authority relating to the relationship between franchisor and franchisees or to the offer, sale, termination, non-renewal or transfer of a franchise.

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Franchisee Loan Program Agreement” means that certain Franchisee Loan Program Agreement, dated August 18, 2020, between JTH Tax, LLC and MetaBank, N.A., a copy of which has been provided to Administrative Agent, as in effect on the date hereof.

 

Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with respect to the L/C Issuers, such Defaulting Lender’s L/C Exposure other than such Defaulting Lender’s L/C Exposure that has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the Swingline Lender, such Defaulting Lender’s Swingline Exposure other than such Defaulting Lender’s Swingline Exposure that has been reallocated to other Lenders.

 

Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit in the ordinary course of its activities.

 

GAAP” means, subject to the limitations on the application thereof set forth in Section 1.02, United States generally accepted accounting principles in effect as of the date of determination thereof.

 

Global Parent” has the meaning ascribed thereto in the preamble to this Agreement.

 

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

 

Governmental Authorization” means any permit, license, authorization, plan, directive, consent order, or consent decree of or from any Governmental Authority.

 

Grantor” has the meaning specified in the Security Agreement.

 

Guaranteed Obligations” has the meaning specified in Section 7.01.

 

Guarantor” means (a) each Borrower (other than with respect to its own Secured Obligations), (b) Global Parent and (c) each Guarantor Subsidiary.

 

Guarantor Subsidiary” means each Subsidiary of Lead Borrower (other than a Borrower) that guarantees, pursuant to Article VII or otherwise, the Secured Obligations.

 

Guaranty” means (a) the guaranty of each Guarantor from time to time party hereto set forth in Article VII, and (b) each other guaranty, in form and substance satisfactory to Administrative Agent, made by any other Guarantor for the benefit of the Secured Parties guaranteeing all or part of the Secured Obligations.

 

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

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Highest Lawful Rate” means the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to any Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum non-usurious interest rate than applicable laws now allow.

 

Historical Financial Statements” means (a) all audited financial statements included in the definition of “Historical Financial Statements” (as defined in the Term Credit Agreement as in effect on the Closing Date) and (b) the unaudited consolidated and consolidating financial statements of Global Parent, the Lead Borrower and its Subsidiaries as at the end of and for the Fiscal Quarter ended June 30, 2020.

 

Incremental Assumption Agreement” means an Incremental Assumption Agreement in form and substance reasonably satisfactory to the Administrative Agent and the Lead Borrower, among the Lead Borrower, the Administrative Agent and each existing or additional Revolving Lender party thereto; provided, that for avoidance of doubt, no Lender not providing Incremental Commitments pursuant to such Incremental Assumption Agreement shall be required to be a party thereto.

 

Incremental Commitments” has the meaning assigned to such term in Section 2.12(a).

 

Indebtedness” means, as applied to any Person, without duplication, (a) all indebtedness for borrowed money, (b) that portion of obligations with respect to Capital Leases that is properly classified as a liability on a balance sheet in conformity with GAAP, (c) all obligations of such Person evidenced by notes, bonds, or similar instruments or upon which interest payments are customarily paid and all obligations in respect of notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money, (d) any obligation owed for all or any part of the deferred purchase price of property or services, including any deferred payment obligations in connection with an acquisition to the extent such deferred payment obligations are fixed and non-contingent (excluding any such obligations incurred under ERISA and excluding trade payables incurred in the ordinary course of business and repayable in accordance with customary trade terms), (e) all obligations created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person, (f) all indebtedness secured by any Lien on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is non-recourse to the credit of that Person, (g) the face amount of any letter of credit or letter of guaranty issued, bankers’ acceptances facilities, surety bonds, and similar credit transactions issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings, (h) the direct or indirect guaranty, endorsement (otherwise than for collection or deposit in the ordinary course of business), co-making, discounting with recourse, or sale with recourse by such Person of the obligation of another, (i) any obligation of such Person the primary purpose or intent of which is to provide assurance to an obligee that the obligation of the obligor thereof will be paid or discharged, or any agreement relating thereto will be complied with, or the holders thereof will be protected (in whole or in part) against loss in respect thereof, (j) any liability of such Person for an obligation of another through any agreement (contingent or otherwise) (i) to purchase, repurchase, or otherwise acquire such obligation or any security therefor, 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 (ii) to maintain the solvency or any balance sheet item, level of income, or financial condition of another if, in the case of any agreement described under subclauses (i) or (ii) of this clause (j), the primary purpose or intent thereof is as described in clause (i) above, (k) all obligations of such Person in respect of any exchange traded or over the counter derivative transaction, whether entered into for hedging or speculative purposes. The Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or joint venturer, unless such Indebtedness is expressly non-recourse to such Person.

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Indemnified Liabilities” means, collectively, any and all liabilities, obligations, losses, damages (including natural resource damages), penalties and claims (including Environmental Liabilities), and reasonable and documented out-of-pocket costs (including the costs of any investigation, study, sampling, testing, abatement, cleanup, removal, remediation, or other response action necessary to remove, remediate, clean up, or abate any Hazardous Materials), expenses, and disbursements of any kind or nature whatsoever (including the reasonable and documented fees and reasonable and documented out-of-pocket disbursements of counsel for Indemnitees in connection with any investigative, administrative, or judicial proceeding commenced or threatened in writing by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any reasonable and documented fees or expenses incurred by Indemnitees in enforcing this indemnity (limited, in the case of legal expenses, to the reasonable, documented and invoiced fees and reasonable, documented and invoiced out-of-pocket disbursements of one primary counsel (to be retained by the Administrative Agent) to all Indemnitees, taken as a whole, and, if reasonably necessary, one local counsel in any relevant material jurisdiction (which may include a single firm of counsel acting in multiple jurisdictions) and, solely in the case of an actual or perceived conflict of interest where any Indemnitee affected by such conflict informs Lead Borrower of such conflict, in each case, of a single additional firm of counsel in each relevant material jurisdiction for all similarly situated affected Indemnitees)), whether direct, indirect, or consequential and whether based on any federal, state, or foreign laws, statutes, rules, or regulations (including securities and commercial laws, statutes, rules, or regulations and Environmental Laws), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of (a) this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby (including Lenders’ agreement to make Credit Extensions or the use or intended use of the proceeds thereof, or any enforcement of any of the Loan Documents (including any sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty)), (b) the statements contained in any commitment letter delivered by any Lender to Ultimate Parent with respect to the transactions contemplated by this Agreement, or (c) any Environmental Liabilities or any Hazardous Materials relating to or arising from, directly or indirectly, any past or present activity, operation, land ownership, or practice of any Loan Party or any of its Subsidiaries.

 

Indemnified Taxes” has the meaning specified in Section 2.18(a).

 

Indemnitee” has the meaning specified in Section 10.03(a).

 

Initial Collateral Monitoring Period” means the period from the Closing Date through the date that is nine (9) months after the Closing Date (or such earlier date as may be agreed by each Initial Lender in its sole discretion).

 

Initial Lenders” means, collectively, (a) Citizens Bank, until the first time (if ever) after the Closing Date that the Total Credit Exposures of Citizens Bank and its Affiliates represent less than 35% of the Total Credit Exposures of all Lenders (after which time Citizens Bank shall no longer constitute an Initial Lender), and (b) Wingspire Capital, until the first time (if ever) after the Closing Date that the Total Credit Exposures of Wingspire Capital and its Affiliates represent less than 35% of the Total Credit Exposures of all Lenders (after which time Wingspire Capital shall no longer constitute an Initial Lender); in each case of the foregoing clauses (a) and (b), so long as such Lender is not a Defaulting Lender at such time of determination.

 - 35 - 

 

Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of any Debtor Relief Law.

 

Intellectual Property” has the meaning ascribed to such term in the Security Agreement.

 

Intercompany Subordination Agreement” means that certain Intercompany Subordination Agreement, dated as of the Closing Date, made by the Loan Parties and the other Persons party thereto in favor of the Administrative Agent, for the benefit of the Secured Parties, in form and substance satisfactory to the Administrative Agent.

 

Intercreditor Agreement” means the Intercreditor Agreement dated as of the date hereof between the Administrative Agent, Kayne Solutions Fund, L.P., and GACP Finance Co., LLC, as the same may be amended, restated, amended and restated, supplemented, replaced or otherwise modified from time to time in accordance with the provisions hereof and thereof.

 

Interest Payment Date” means (a) with respect to any ABR Loan, the first day of each month, (b) with respect to any LIBOR Loan, the last day of the Interest Period applicable thereto and, in the case of a LIBOR Loan with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period, (c) with respect to all Loans, the Maturity Date and (d) with respect to any Swingline Loan, the earlier of the maturity date selected therefor pursuant to Section 2.03(b)(iii) and the Maturity Date.

 

Interest Period” means, with respect to any LIBOR Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months (or, if made available by all of the Appropriate Lenders, twelve months) thereafter, as the Lead Borrower may elect, provided that: (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day, unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period, and (c) no Interest Period in respect of any Loan shall end after the Maturity Date. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period.

 

Internal Revenue Code” means the Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter, and any successor statute.

 

Internally Generated Cash” shall mean any Cash or Cash Equivalents of any Loan Party or Liberty Party that is not generated from an Asset Sale, a Casualty Event, an incurrence of Indebtedness, an issuance of Capital Stock or a capital contribution.

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Interpolated Screen Rate” means in relation to the LIBOR Rate for any Loan, the rate per annum determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the rate as displayed on the applicable Bloomberg page (or on any successor or substitute page or service providing quotations of interest rates applicable to Dollar deposits in the London interbank market comparable to those currently provided on such page, as reasonably determined by the Administrative Agent from time to time; in each case the “Screen Rate”) for the longest period (for which that Screen Rate is available) that is shorter than the applicable Interest Period and (b) the Screen Rate for the shortest period (for which that Screen Rate is available) that exceeds such Interest Period, in each case, at approximately 11:00 a.m., London time, on the Quotation Day for such Interest Period.

 

Inventory” has the meaning ascribed to such term in the Security Agreement.

 

Investment” means (a) any direct or indirect purchase or other acquisition by the Loan Parties or any of their Subsidiaries (excluding the Excluded Entities) of, or of a beneficial interest in, any of the Securities or all or substantially all of the assets of any other Person (or of any division or business line of such other Person), (b) any direct or indirect redemption, retirement, purchase, or other acquisition for value by any Subsidiary of Global Parent (excluding the Excluded Entities) from any Person, of any Capital Stock of such Person, (c) any direct or indirect loan, advance, or capital contributions by Global Parent or any of its Subsidiaries (excluding the Excluded Entities) to any other Person, including all indebtedness and accounts receivable from that other Person that are not current assets or did not arise from sales to that other Person in the ordinary course of business, and (d) any direct or indirect Guaranty of any obligations of any other Person. The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write ups, write downs, or write offs with respect to such Investment. For the avoidance of doubt, Investments do not include the acquisition, for no consideration, by JTH Tax, LLC, of loans due from franchisees under the Franchisee Loan Program Agreement.

 

ISP” means the International Standby Practices, International Chamber of Commerce Publication No. 590 (or such later version thereof as may be in effect at the applicable time of issuance)

 

Joinder” means a Joinder substantially in the form of Annex 1 to the Security Agreement delivered by a Loan Party pursuant to Section 5.10.

 

Joint Venture” means a joint venture, partnership, or other similar arrangement, whether in corporate, partnership, or other legal form; provided, that in no event shall any corporate Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party.

 

L/C Advance” has the meaning assigned to such term in Section 2.04(c)(iii).

 

L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the applicable L/C Honor Date or refinanced as a Revolving Borrowing.

 

L/C Credit Extension” means, with respect to any Letter of Credit, the issuance or renewal thereof or extension of the expiry date thereof, or the reinstatement or increase of the amount thereof or any amendment thereto.

 

L/C Disbursement” means a payment made by any L/C Issuer pursuant to a Letter of Credit.

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L/C Exposure” means, with respect to any Revolving Lender at any time, its Applicable Percentage of the L/C Obligations.

 

L/C Fronting Fee” has the meaning assigned to such term in Section 2.14(b)(ii).

 

L/C Honor Date” has the meaning assigned to such term in Section 2.04(c)(i).

 

L/C Issuer” means Citizens Bank and each other Revolving Lender that becomes an L/C Issuer pursuant to Section 2.04(h), each in its capacity as issuer of Letters of Credit hereunder.

 

L/C Obligations” means, at any time, with respect to all of the Revolving Lenders, the sum, without duplication, of (a) the undrawn portion of all Letters of Credit plus (b) the aggregate of all Unreimbursed Amounts in respect of Letters of Credit (unless refinanced as a Revolving Borrowing), including (without duplication) all L/C Borrowings.

 

L/C Participation Fee” has the meaning assigned to such term in Section 2.14(b)(i).

 

L/C Sublimit” means an amount equal to the lesser of (a) $15,000,000 and (b) the Revolving Credit Maximum Amount. The L/C Sublimit is a sublimit of the Revolving Commitments.

 

Lead Arranger” means Citizens Bank, in its capacity as lead arranger and bookrunner of the credit facility established under this Agreement.

 

Lead Borrower” has the meaning specified in the preamble hereto.

 

Lenders” means (a) the financial institutions listed on Appendix A (other than any such financial institution that has ceased to be a party hereto pursuant to an Assignment Agreement) and (b) any financial institution that has become a party hereto pursuant to an Assignment Agreement or pursuant to an Incremental Assumption Agreement. Unless the context clearly indicates otherwise, the term “Lenders” shall include the Swingline Lender.

 

Letter of Credit” means any letter of credit issued hereunder providing for the payment of cash upon the honoring of a presentation thereunder and shall include the Existing Letter of Credit. A Letter of Credit may be a commercial letter of credit or a standby letter of credit.

 

Letter of Credit Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by any L/C Issuer.

 

Letter of Credit Documents” means, with respect to each Letter of Credit, such Letter of Credit, any amendments thereto, any documents delivered in connection therewith, any Letter of Credit Application 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 (b) any collateral for such obligations.

 

Letter of Credit Expiration Date” means the day that is five (5) Business Days prior to the Maturity Date (or, if such day is not a Business Day, the next preceding Business Day).

 

Liberty Area Development Rights” means certain development rights allotted or sold, or able to be allotted or sold, to an area developer to market and sell territories within a specified geographic area to eligible franchisees.

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Liberty Buyer” means NextPoint Acquisition Corp., a special purpose acquisition corporation incorporated under the laws of British Columbia, Canada, and/or one or more of its Subsidiaries or Affiliates, as applicable.

 

Liberty Franchise Rights” means the rights of a franchisee of any Liberty Party within any specified geographic area.

 

Liberty Holdings” means Franchise Group Intermediate L 1, LLC, a Delaware limited liability company.

 

Liberty Indebtedness” has the meaning specified in Section 6.22(a).

 

Liberty Intercreditor Agreement” has the meaning specified in Section 6.22(a).

 

Liberty Parties” means Liberty Holdings and each of its Subsidiaries.

 

Liberty Sale” means the sale (including a sale consummated through one or more mergers) of all or any substantial portion of the Capital Stock or assets of the Liberty Parties to the Liberty Buyer.

 

Liberty Trigger Date” means the earlier to occur of (a) the date that is six (6) months after the Closing Date and (b) the date upon which Ultimate Parent or one or more of its Subsidiaries, as applicable, or the Liberty Buyer cease pursuing in good faith the Liberty Sale or declare their intention to cease pursuing or not to consummate the Liberty Sale.

 

Liberty/Revolution Top Parent” means Franchise Group Intermediate L, LLC, a Delaware limited liability company.

 

LIBOR Borrowing” means, as to any Borrowing, the LIBOR Loans comprising such Borrowing.

 

LIBOR Loan” means a Loan bearing interest based on the Adjusted LIBOR Rate.

 

LIBOR Rate” means, with respect to each day during each Interest Period pertaining to any applicable Loan in Dollars, the rate per annum determined by the Administrative Agent to be the arithmetic average of the London Interbank Offered Rates administered by the ICE Benchmark Administration (or any Person that takes over administration of such rate) for deposits in Dollars for a duration equal to or comparable to the duration of such Interest Period which appear on the relevant Bloomberg page (or such other commercially available source providing quotations of the London Interbank Offered Rates for deposits in Dollars as may be reasonably designated by the Administrative Agent from time to time) at or about 11:00 a.m. (London time) on the Quotation Day for such Interest Period; provided that if such rate is not available at such time for any reason, then the “LIBOR Rate” with respect to such Loan for such period shall be the Interpolated Screen Rate, where applicable. Each calculation by the Administrative Agent of the LIBOR Rate hereunder shall be conclusive and binding on the parties hereto for all purposes, absent manifest error. Notwithstanding the foregoing, for purposes of this Agreement, the LIBOR Rate shall at no time be less than 1.00% per annum.

 

Licensed Trademarks” has the meaning specified in Section 4.26.

 

Lien” means (a) any lien, mortgage, pledge, assignment, hypothecation, deed of trust, security interest, charge, or encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, and any lease in the nature thereof) and any option, trust, or other preferential arrangement having the practical effect of any of the foregoing, and (b) in the case of Securities, any purchase option, call, or similar right of a third party with respect to such Securities.

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Line Cap” means, at any time, the lesser of (i) the Revolving Credit Maximum Amount and (ii) the Borrowing Base.

 

Loan” means an extension of credit by a Lender to the Borrowers (or any of them) under Article II in the form of a Revolving Loan or a Swingline Loan.

 

Loan Document” means any of this Agreement, the Intercreditor Agreement, any Liberty Intercreditor Agreement, the Notes, if any, the Collateral Documents, the Flow of Funds Agreement, any Guaranty, the Intercompany Subordination Agreement, the Fee Letters, the Perfection Certificate, any other fee letter executed and delivered by any Loan Party to any Secured Party, each Incremental Assumption Agreement, each Letter of Credit Application, each Borrowing Base Certificate, and all other documents, instruments, certificates or agreements executed and delivered by a Loan Party for the benefit of Administrative Agent, any L/C Issuer or any Lender in connection herewith.

 

Loan Party” means each Borrower and each Guarantor.

 

Local Deposit Account” means a Deposit Account maintained by a Liberty Party with respect to (and used only for) one or more store locations.

 

Margin Stock” has the meaning specified in Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time.

 

Master Agreement” has the meaning assigned to such term in the definition of “Swap Agreement.”

 

Material ABL IP Rights” means such rights with respect to Intellectual Property (i) that is owned by or licensed to a Grantor and material to the conduct of any Grantor’s business or material to the marketing, sale or other disposition of the ABL Priority Collateral, (ii) that is reasonably necessary or material to permit the Administrative Agent to enforce its rights and remedies under the Loan Documents with respect to the ABL Priority Collateral, or (iii) the disposition of which would otherwise materially adversely affect the Net Orderly Liquidation Value of the ABL Priority Collateral.

 

Material Adverse Effect” means a material adverse effect on and/or material adverse developments with respect to (a) the business operations, properties, assets, condition (financial or otherwise) or liabilities of the Loan Parties taken as a whole, (b) the ability of the Loan Parties, taken as a whole, to perform their payment obligations under the applicable Loan Documents or (c) the rights and remedies, taken as a whole, of the Administrative Agent and the Lenders under the Loan Documents. Notwithstanding anything in the foregoing clause (a) to the contrary, any material adverse effect on and/or material adverse developments with respect to the business operations, properties, assets, condition (financial or otherwise) or liabilities of the Loan Parties taken as a whole substantially relating to the impacts of the COVID-19 Pandemic (including, without limitation, on account of (1) general business, industry or economic conditions or (2) local, regional, national or international political or social conditions, including the declaration of a national emergency, in each case, relating to the COVID-19 Pandemic) shall not be considered to be a Material Adverse Effect solely to the extent such effects and/or developments, as the case may be, occur prior to, but are no longer continuing as of, July 1, 2021.

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Material Intellectual Property” means Intellectual Property that is owned by a Grantor and the loss of which would reasonably be expected, either individually or in the aggregate, to have a material adverse effect on such Grantor’s business taken as a whole.

 

Material Real Estate Asset” means any fee owned Real Estate Asset of a Loan Party (x) in the case of each Specified Real Estate Asset, having a net fair market value in excess of $1,000,000, as reasonably estimated by the Lead Borrower in good faith in consultation with Administrative Agent after taking into account existing mortgages to the extent permitted hereunder and (y) in the case of each other Real Estate Asset, having a fair market value in excess of $1,000,000, as reasonably estimated by the Lead Borrower in good faith in consultation with the Administrative Agent.

 

Maturity Date” means the earlier to occur of (a) the Scheduled Maturity Date and (b) the “Maturity Date” (or equivalent term) as defined in the Term Credit Agreement; provided that if such day is not a Business Day, the Maturity Date shall be the Business Day immediately preceding such day.

 

Minimum Collateral Amount” means, with respect to any L/C Obligations at any time, an amount equal to 105% of such L/C Obligations at such time.

 

Moody’s” means Moody’s Investor Services, Inc.

 

Mortgage” means a mortgage, deed of trust, or other deed to secure debt, in form and substance reasonably satisfactory to the Administrative Agent, made by a Loan Party in favor of the Administrative Agent, for the benefit of the Secured Parties, granting a Lien on any Real Property securing the Secured Obligations and delivered to the Administrative Agent.

 

Multiemployer Plan” means any Employee Benefit Plan which is a “multiemployer plan” as defined in Section 3(37) or Section 4001(a)(3) of ERISA.

 

Narrative Report” means, with respect to the financial statements for which such narrative report is required, (a) a narrative report describing the operations of the Loan Parties in the form prepared for presentation to senior management thereof, and (b) a financial report package including management’s discussion and analysis of the financial condition and results of operations, in each case, for the applicable fiscal month, Fiscal Quarter or Fiscal Year and for the period from the beginning of the then current Fiscal Year to the end of such period to which such financial statements relate with comparison to and variances from the immediately preceding period and budget.

 

Net Orderly Liquidation Value” means, as of any date of determination, (a) with respect to Eligible Inventory, the net orderly liquidation value thereof, expressed as a percentage of book value, that is estimated to be realized in an orderly liquidation of such Inventory within a reasonable period of time, net of all associated costs and expenses of such liquidation, such percentage to be determined as to each category of Inventory and as specified in the most recent appraisal of Inventory received by the Administrative Agent pursuant to this Agreement, or (b) with respect to Eligible Rental Agreements, the net orderly liquidation value thereof, expressed as a percentage of the “Remaining Contractual Revenue” corresponding to Eligible Rental Agreements that are “Active Lease Contracts” (as described in the Eligible Rental Agreement Portfolio), that is estimated to be realized in an orderly, negotiated sale within a reasonable time period, net of all associated costs and expenses of such sale, from the most recent Eligible Rental Agreement Portfolio appraisal received by the Administrative Agent pursuant to this Agreement.

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Net Proceeds” means (a) with respect to any Asset Sale, an amount equal to: (i) Cash payments received by the Global Parent or any of its Subsidiaries (for the avoidance of doubt, this includes the Excluded Entities) from such Asset Sale, minus (ii) any bona fide direct costs incurred in connection with such Asset Sale to the extent paid or payable to non-Affiliates, including (A) income or gains Taxes payable by the seller as a result of any gain recognized in connection with such Asset Sale during the Tax period the sale occurs, (B) payment of the outstanding principal amount of, premium or penalty and interest on, any Indebtedness (other than the Loans) that is secured by a Lien on the stock or assets in question (including, for avoidance of doubt, in connection with the sale of any Specified Real Estate Assets, the existing mortgages thereon in favor of First Horizon Bank f/k/a First Tennessee Bank) and that is required to be repaid under the terms thereof as a result of such Asset Sale, and (C) a reasonable reserve for any indemnification payments (fixed or contingent) attributable to seller’s indemnities and representations and warranties to purchaser in respect of such Asset Sale undertaken by Global Parent or any of its Subsidiaries (for the avoidance of doubt, this includes the Excluded Entities) in connection with such Asset Sale; provided, that upon release of any such reserve, the amount released shall be considered Net Proceeds, and (b) with respect to any insurance, condemnation, taking, or other casualty proceeds, an amount equal to: (i) any Cash payments or proceeds received by Global Parent or any of its Subsidiaries (for the avoidance of doubt, this includes the Excluded Entities) (A) under any casualty, business interruption, or “key man” insurance policies in respect of any covered loss thereunder or (B) as a result of the condemnation or taking of any assets of Global Parent or any of its Subsidiaries (for the avoidance of doubt, this includes the Excluded Entities) by any Person pursuant to the power of eminent domain, condemnation, or otherwise, or pursuant to a sale of any such assets to a purchaser with such power under threat of such a taking, minus (ii) (A) any actual and reasonable costs incurred by Global Parent or any of its Subsidiaries (for the avoidance of doubt, this includes the Excluded Entities) in connection with the adjustment or settlement of any claims of Global Parent or any of its Subsidiaries (for the avoidance of doubt, this includes the Excluded Entities) in respect thereof, and (B) any bona fide direct costs incurred in connection with any sale of such assets as referred to in clause (b)(i)(B) of this definition to the extent paid or payable to non-Affiliates, including income Taxes payable as a result of any gain recognized in connection therewith (including, without limitation, Permitted Tax Payments).

 

Non-ABL Loan Party” means each Loan Party that is not an ABL Loan Party.

 

Non-ABL Subsidiary” means each Subsidiary of a Non-ABL Loan Party (other than a Subsidiary that is an ABL Loan Party or an ABL Subsidiary).

 

Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (a) requires the approval of all or all affected Lenders in accordance with the terms of Section 10.05(b) and (b) has been approved by the Administrative Agent and the Required Lenders.

 

Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting Lender at such time.

 

Nonrenewal Notice Date” has the meaning assigned to such term in Section 2.04(b)(iii).

 

Non-US Lender” has the meaning specified in Section 2.18(d)(ii).

 

Notes” means, collectively, the Revolving Loan Notes and the Swingline Loan Notes.

 

Noticed Cash Management Obligations” means all Secured Cash Management Obligations that are (a) owed to the Administrative Agent or any of its Affiliates or (b) owed to a Lender or an Affiliate of a Lender and such Person has executed and delivered a Secured Obligation Designation Notice to the Administrative Agent.

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Noticed Swap Agreement Obligations” means all Secured Swap Agreement Obligations that are (a) with a counterparty that is the Administrative Agent or any of its Affiliates or (b) with a counterparty that is a Lender or an Affiliate of a Lender and such counterparty has executed and delivered a Secured Obligation Designation Notice to the Administrative Agent.

 

Obligations” means the due and punctual payment and performance of (a) all debts, liabilities, obligations, fees, covenants and duties of, any Loan Party under or pursuant to each of the Loan Documents or otherwise with respect to any Loan or Letter of Credit and (b) subject to Section 10.02, and solely to the extent permitted to be incurred and charged to the Loan Parties (or any of them) pursuant to the Loan Documents, all costs and expenses incurred in connection therewith (including the costs of enforcement and collection of the foregoing, and including the fees, charges and disbursements of counsel), in the case of each of the foregoing clauses (a) and (b), whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest, expenses and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest, expenses and fees are allowed claims in such proceeding.

 

OFAC” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

 

OFAC Sanctions Programs” means (a) the Requirements of Law and Executive Orders administered by OFAC, including but not limited to, Executive Order No. 13224, and (b) the list of Specially Designated Nationals and Blocked Persons administered by OFAC, in each case, as renewed, extended, amended, or replaced.

 

Organizational Documents” means (a) with respect to any corporation, its certificate or articles of incorporation or organization, as amended, and its by-laws, as amended, (b) with respect to any limited partnership, its certificate of limited partnership, as amended, and its partnership agreement, as amended, (c) with respect to any general partnership, its partnership agreement, as amended, and (d) with respect to any limited liability company, its articles of organization or certificate of formation, as amended, and its operating agreement or limited liability company agreement, as amended. In the event any term or condition of this Agreement or any other Loan Document requires any Organizational Document to be certified by a secretary of state or similar governmental official, the reference to any such “Organizational Document” shall only be to a document of a type customarily certified by such governmental official.

 

Other Connection Taxes” has the meaning specified in Section 2.18(a).

 

Other Taxes” has the meaning specified in Section 2.18(b).

 

Outstanding Amount” means (a) with respect to any Loan on any date, the outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments thereof (including any refinancing of outstanding Unreimbursed Amounts under Letters of Credit or L/C Borrowings as a Revolving Borrowing) occurring on such date, and (b) with respect to any Letter of Credit, Unreimbursed Amount, L/C Borrowing or L/C Obligations on any date, the outstanding amount thereof on such date after giving effect to any related L/C Credit Extension occurring on such date and any other changes thereto as of such date, including as a result of any reimbursements of outstanding Unreimbursed Amounts under related Letters of Credit (including any refinancing of outstanding Unreimbursed Amounts under related Letters of Credit or related L/C Credit Extensions as a Revolving Borrowing) or any reductions in the maximum amount available for drawing under related Letters of Credit taking effect on such date.

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Overadvance” has the meaning assigned to such term Section 2.02(h).

 

Owned Trademarks” has the meaning specified in Section 4.26.

 

Parent Company” means each of Global Parent, Liberty/Revolution Top Parent, Vitamin Intermediate Parent and Vitamin Top Parent.

 

Participant Register” has the meaning specified in Section 10.06(h)(ii).

 

PATRIOT Act” has the meaning specified in Section 4.32.

 

Payment Conditions” means, with respect to any applicable transaction,

 

(a)       after giving Pro Forma Effect to such transaction, (A) Availability on the date of such transaction, and for each Business Day on a projected basis for the six-month period thereafter, shall be greater than or equal to the greater of (1) $30,000,000 and (2) 25% of the Line Cap, and (B) the ABL Fixed Charge Coverage Ratio for the then most recent four-Fiscal Quarter period for which financial statements have been (or are required to have been) delivered pursuant to Section 5.01(b), and on a projected basis for the respective four-Fiscal Quarter periods ending as of the last day of each of the two Fiscal Quarters thereafter, in each case determined on a Pro Forma Basis for such transaction (and any prior transactions made in reliance on Payment Conditions and included in the calculation of the ABL Fixed Charge Coverage Ratio on a Pro Forma Basis for such periods), shall be greater than or equal to 1.25 to 1.00; provided, that Payment Conditions may not be satisfied with respect to any transaction until after the date upon which financial statements have been delivered pursuant to Section 5.01(b) for the first full Fiscal Quarter ending after the Closing Date,

 

(b)       no Default or Event of Default shall have occurred and be continuing or would occur as a result thereof,

 

(c)       the Administrative Agent shall have received (i) at least five (5) Business Days’ prior written notice of such transaction (or such shorter period of prior notice as the Administrative Agent may agree to in its sole discretion) and (ii) a certificate of the chief operating officer, chief financial officer, chief executive officer or other officer with similar responsibilities of the Lead Borrower certifying as to compliance with the preceding clauses (a) and (b) and demonstrating (in reasonable detail) the calculations required thereby, and

 

(d)       except as otherwise approved in writing by each Initial Lender in its sole discretion, such transaction shall not occur during the Initial Collateral Monitoring Period.

 

PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.

 

Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code or Section 302 of ERISA.

 

Perfection Certificate” means a certificate, in the form attached hereto as Exhibit B, reasonably satisfactory to the Administrative Agent that provides information with respect to the assets of each Loan Party.

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Permitted Acquisition” means the purchase or other acquisition, by merger, consolidation or otherwise, by the Lead Borrower or any Subsidiary of any Capital Stock in, or all or substantially all the assets of (or all or substantially all the assets constituting a business unit, division, product line or line of business of), any Person; provided that (a) in the case of any purchase or other acquisition of Capital Stock in a Person, (i) such Person, upon the consummation of such purchase or acquisition, will be a Subsidiary (including as a result of a merger or consolidation between any Subsidiary and such Person), or (ii) such Person is merged into or consolidated with a Subsidiary and such Subsidiary is the surviving entity of such merger or consolidation, (b) in the case of any purchase or other acquisition of Capital Stock in a Person made by an ABL Loan Party or ABL Subsidiary, (i) such Person, upon the consummation of such purchase or acquisition, will be an ABL Subsidiary (including as a result of a merger or consolidation between any ABL Subsidiary and such Person), or (ii) such Person is merged into or consolidated with an ABL Subsidiary and such ABL Subsidiary is the surviving entity of such merger or consolidation, (c) with respect to each such purchase or other acquisition, all actions required to be taken with respect to such newly created or acquired Subsidiary (including each subsidiary thereof) or assets in order to satisfy the requirements set forth in Section 5.10, Section 5.11 or Section 5.13, as applicable, (or arrangements for the taking of such actions after the consummation of the Permitted Acquisition shall have been made that are reasonably satisfactory to the Administrative Agent) (unless such newly created or acquired Subsidiary is an Excluded Entity or is otherwise an Excluded Subsidiary), (d) after giving effect to any such purchase or other acquisition, no Event of Default shall have occurred and be continuing or would immediately result therefrom, (e) such acquisition shall not be hostile and shall have been approved by the Board and/or the stockholders or other equity holders of such Person, as applicable, (f) the total consideration paid in connection with such purchase or acquisition shall not exceed $1,000,000 in any Fiscal Year, (g) Borrowers have shall have provided the Administrative Agent with written notice of the proposed acquisition at least 3 Business Days prior to the anticipated closing date of the proposed acquisition and substantially contemporaneously with the closing of the acquisition shall have provided the Administrative Agent copies of the acquisition agreement and other material documents and deliverable relative to the proposed acquisition, and (h) in the case of any such purchase or other acquisition made by an ABL Loan Party or ABL Subsidiary, the Payment Conditions shall have been satisfied with respect thereto.

 

Permitted Discretion” means a good faith determination made by the Administrative Agent, exercising commercially reasonable business judgment from the perspective of a secured asset-based lender.

 

Permitted Holders” means (a) Vintage Capital Management, LLC, (b) Brian Kahn, (c) Lauren Kahn, (d) Tributum, L.P., (e) Stefac LP, (f) Vintage Tributum, L.P., (g) Kahn Capital Management, LLC, (h) Vintage Vista GP, LLC, (i) Andrew Laurence, (j) B. Riley FBR, Inc., (k) Bryant R. Riley, (l) any direct or indirect current or former equity holders of Buddy’s Newco, LLC or Franchise Group New Holdco, LLC, (m) Samjor Family LP, (n) Vintage RTO, L.P. and (o) any Affiliates, general partners, limited partners, investment managers, investment advisors, investment funds or direct or indirect equity holders, successors or assigns of any of the foregoing.

 

Permitted Indebtedness” means:

 

(a)       the Secured Obligations,

 

(b)       Indebtedness of (i) any ABL Loan Party or ABL Subsidiary to any other ABL Loan Party or ABL Subsidiary or (ii) any Non-ABL Loan Party or Non-ABL Subsidiary (other than the Excluded Entities) to any other Non-ABL Loan Party or Non-ABL Subsidiary (other than the Excluded Entities); provided, that (x) all such Indebtedness shall be evidenced by promissory notes and all such notes (to the extent evidencing Indebtedness owing to a Loan Party) shall be subject to a First Priority Lien pursuant to the Security Agreement, (y) all such Indebtedness shall be unsecured and subordinated in right of payment to the prior occurrence of the Termination Date pursuant to the terms of the Intercompany Subordination Agreement, and (z) all such Indebtedness owing by a Subsidiary that is not a Loan Party to a Loan Party shall be subject to Section 6.07,

 - 45 - 

 

(c)       Indebtedness incurred by the Loan Parties and their Subsidiaries arising from agreements providing for indemnification, adjustment of purchase or acquisition price, deferred purchase price or similar obligations, or from guaranties or letters of credit, surety bonds, or performance bonds securing the performance of such Loan Party or any such Subsidiary pursuant to such agreements, in connection with Permitted Acquisitions, the Acquisition or permitted dispositions of any business or assets of such Loan Party or such Subsidiary,

 

(d)       Indebtedness which may be deemed to exist pursuant to any guaranties, performance, surety, statutory, appeal, or similar obligations incurred in the ordinary course of business and Indebtedness constituting guaranties in the ordinary course of business of the obligations of suppliers, customers, franchisees, and licensees of the Loan Parties and their Subsidiaries (including, without limitation, Indebtedness consisting of take or pay obligations contained in supply agreements in the ordinary course of business, and including, without limitation, Indebtedness consisting of obligations contained in non-exclusive licenses of patents, trademarks, and other intellectual property rights granted by any Loan Party or any of its Subsidiaries in the ordinary course of business and not interfering in any respect with the ordinary conduct of the business of such Loan Party or any such Subsidiary),

 

(e)       Indebtedness in respect of Cash Management Services, netting services, automated clearinghouse arrangements, overdraft protections, and otherwise in connection with deposit accounts or from the honoring of a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business,

 

(f)       Indebtedness existing as of the Closing Date and described in Schedule 6.1, but not any extensions, renewals, or replacements of such Indebtedness except (i) renewals and extensions expressly provided for in the agreements evidencing any such Indebtedness as the same are in effect on the date of this Agreement, and (ii) refinancings and extensions of any such Indebtedness if the terms and conditions thereof are not less favorable to the obligor thereon or to Lenders than the Indebtedness being refinanced or extended (except that the interest rate on such Indebtedness shall be at the then prevailing market rate), and the average life to maturity thereof is greater than or equal to that of the Indebtedness being refinanced or extended; provided, that such Indebtedness permitted under the immediately preceding clause (i) or (ii) above shall not (A) include Indebtedness of an obligor that was not an obligor with respect to the Indebtedness being extended, renewed, or refinanced, (B) exceed in a principal amount the Indebtedness being renewed, extended, or refinanced (together with any premium, penalty, interest, fees and expenses), or (C) be incurred, created, or assumed if any Event of Default has occurred and is continuing or would result therefrom.

 

(g)       Permitted Purchase Money Indebtedness,

 

(h)       Indebtedness owing to insurance carriers and incurred to finance insurance premiums of Global Parent or any of its Subsidiaries in the ordinary course of business,

 

(i)       guarantees by (a) any ABL Loan Party or ABL Subsidiary of any Indebtedness or other obligations of any other ABL Loan Party or ABL Subsidiary permitted to be incurred hereunder or (b) any Non-ABL Loan Party or Non-ABL Subsidiary of any Indebtedness or other obligations of any Loan Party or Subsidiary (other than the Excluded Entities) permitted to be incurred hereunder,

 - 46 - 

 

(j)        Indebtedness (1) incurred by Sears Top Parent or any of its Subsidiaries arising under the Workers Comp L/C so long as the face amount thereof does not exceed $5,565,000, together with any additional amounts (in an aggregate additional face amount not exceeding $5,565,000) temporarily outstanding for no longer than ten (10) Business Days (or such later date as the Administrative Agent may approve) during the replacement process of the Workers Comp L/C as permitted by the definition of Workers Comp L/C and (2) incurred by the Lead Borrower or any of its Subsidiaries in respect of letters of credit, bank guarantees, warehouse receipts, bankers’ acceptances or similar instruments issued or created in the ordinary course of business, including in respect of workers compensation claims, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other reimbursement-type obligations regarding workers compensation claims,

 

(k)        Indebtedness under the Term Credit Agreement and the Term Documents so long as it remains subject to the terms of the Intercreditor Agreement and such Term Obligations in aggregate principal amount do not exceed the Maximum Term Principal Obligations (as defined in the Intercreditor Agreement),

 

(l)       Indebtedness in connection with Permitted Tax Payments made pursuant to clause (q) of the definition of Permitted Investments,

 

(m)       Indebtedness representing deferred compensation or stock-based compensation owed to employees, consultants or independent contractors of Global Parent or its Subsidiaries incurred in the ordinary course of business or consistent with past practice,

 

(n)       Indebtedness assumed after the Closing Date in connection with any Permitted Acquisition or other Investment permitted under Section 6.07; provided that such Indebtedness was not incurred in contemplation of such Permitted Acquisition or other Investment or any Person becoming a Loan Party; provided that any Indebtedness assumed pursuant to this clause (n) (other than, to the extent constituting Indebtedness, motor vehicle leases) shall not exceed in an aggregate principal amount of $2,500,000 at any time outstanding,

 

(o)       to the extent constituting Indebtedness, motor vehicle leases in the ordinary course of business, subject to Section 6.13,

 

(p)        Indebtedness of any Loan Party or its Subsidiaries entered into in the ordinary course of business pursuant to a Swap Agreement; provided that (i) such arrangements are not for speculative purposes and (ii) such Indebtedness shall be unsecured, except to the extent secured by a Permitted Lien,

 

(q)       Indebtedness of the Liberty Parties not to exceed $1,000,000 owing to First Horizon Bank (formerly First Tennessee Bank) in connection with a credit card program provided by such lender to the Liberty Parties from time to time,

 

(r)       [reserved],

 

(s)       unsecured Indebtedness owing to area developers and/or franchisees incurred by the Liberty Parties solely for the purpose of repurchasing Liberty Area Development Rights and/or Liberty Franchise Rights as permitted under clauses (n) and (o) of the definition of “Permitted Investments”; provided that (i) such Indebtedness shall not bear interest, and (ii) the aggregate outstanding principal amount of such Indebtedness shall not exceed $18,000,000 at any time,

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(t)       (i) other Indebtedness of the Liberty Parties in an aggregate principal amount not exceeding $5,000,000 at any time outstanding and (ii) other Indebtedness in an aggregate principal amount not exceeding $1,250,000 at any time outstanding, and

 

(u)       all premiums (if any), interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in clauses (a) through (t) above;

 

provided that, notwithstanding clauses (a) through (t) above to the contrary, no ABL Loan Party or ABL Subsidiary shall guaranty, or be jointly and severally liable for, any Indebtedness or other obligations (other than the Guaranteed Obligations and the Term Obligations) of (i) any Non-ABL Loan Party or Non-ABL Subsidiary, (ii) any Excluded Entity or (iii) any of the Liberty Parties.

 

Permitted Investments” means:

 

(a)       Investments in Cash and Cash Equivalents,

 

(b)       equity Investments owned as of the Closing Date in any Subsidiary of Global Parent and Investments made after the Closing Date (i) by any ABL Loan Party in any other ABL Loan Party (other than Lead Borrower), (ii) by any Non-ABL Loan Party in any other Non-ABL Loan Party, (iii) by any ABL Subsidiary that is not a Loan Party in any ABL Loan Party (other than Lead Borrower) or ABL Subsidiary, (iv) by any Non-ABL Subsidiary that is not a Loan Party in any Non-ABL Loan Party or Non-ABL Subsidiary, or (v) by Lead Borrower in any Non-ABL Loan Party to the extent funded with the proceeds of a concurrent capital contribution from Global Parent,

 

(c)       Investments (i) in any Securities received in satisfaction or partial satisfaction thereof from financially troubled account debtors, and (ii) deposits, prepayments, and other credits to suppliers made in the ordinary course of business consistent with the past practices of the Loan Parties and their Subsidiaries,

 

(d)       to the extent constituting an Investment, (1) Permitted Indebtedness and (2) purchases and acquisitions of inventory, supplies, materials or equipment or purchases, acquisitions, non-exclusive licenses or leases of other assets, Intellectual Property, or other rights, in each case in the ordinary course of business,

 

(e)       Consolidated Capital Expenditures of Global Parent, the Lead Borrower and their Subsidiaries (other than the Excluded Entities),

 

(f)       Permitted Acquisitions,

 

(g)       Investments existing as of the Closing Date and described in Schedule 6.7,

 

(h)       Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business,

 

(i)       advances in the form of prepayment of expenses that are expected to be due and payable in connection with operations of the Loan Parties and their Subsidiaries in the ordinary course of business, so long as such expenses are being paid in accordance with customary trade terms of the applicable Person,

 

(j)       the A Team Secured Note,

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(k)       Investments consisting of non-exclusive licenses of patents, trademarks, and other intellectual property rights granted by any Loan Party or any of its Subsidiaries in the ordinary course of business and not interfering in any respect with the ordinary conduct of the business of such Loan Party or any such Subsidiary,

 

(l)       promissory notes and other non-cash consideration received in connection with dispositions permitted by Section 6.09,

 

(m)        advances of payroll payments to employees in the ordinary course of business, and

 

(n)       so long as (x) no Default or Event of Default shall have occurred and be continuing or shall be caused thereby and (y) both prior and after giving effect to such repurchase, the Fixed Charge Coverage Ratio (as defined in the Term Credit Agreement as in effect on the Closing Date) is at least 0.20x greater than the then applicable level set forth in Section 6.08(a) of the Term Credit Agreement (as in effect on the Closing Date), repurchases made by the Liberty Parties of Liberty Area Development Rights; provided that (i) any such repurchase shall be made at a purchase price not to exceed four times the net revenue (i.e. the actual amount received by the area developer from franchise owners related to tax preparation royalties) for the applicable geographic area covered by such Liberty Area Development Rights for the most-recent trailing twelve-month period, (ii) the purchase price for any such repurchase will be paid only from Internally Generated Cash, direct or indirect capital contributions from Ultimate Parent, Indebtedness incurred in accordance with clause (s) of the definition of “Permitted Indebtedness” and/or forgiveness of loans and other advances made by the Liberty Parties to the applicable area developer, and (iii) the aggregate purchase price for repurchases of Liberty Area Development Rights shall not exceed $12,000,000 during any Fiscal Year,

 

(o)       so long as (x) no Default or Event of Default shall have occurred and be continuing or shall be caused thereby and (y) both prior and after giving effect to such repurchase, the Fixed Charge Coverage Ratio (as defined in the Term Credit Agreement as in effect on the Closing Date) is at least 0.20x greater than the then applicable level set forth in Section 6.08(a) of the Term Credit Agreement (as in effect on the Closing Date), repurchases made by the Liberty Parties of Liberty Franchise Rights; provided that (i) any such repurchase shall be made at a purchase price not to exceed the net tax return preparation revenue for the applicable franchise included in such Liberty Franchise Rights for the most-recent trailing twelve-month period, (ii) the purchase price for any such repurchase will be paid only from Internally Generated Cash, direct or indirect capital contributions from Ultimate Parent, Indebtedness incurred in accordance with clause (s) of the definition of “Permitted Indebtedness” and/or forgiveness of loans and other advances made by the Liberty Parties to the applicable franchisee, and (iii) the aggregate purchase price for repurchases of Liberty Franchise Rights shall not exceed $6,000,000 during any Fiscal Year,

 

(p)       loans and advances to franchisees made by the Liberty Parties in the ordinary course of business and consistent with past practice in connection with the sale of Liberty Franchise Rights; provided that (i) such loans and advances shall be evidenced by promissory notes and any such promissory notes with an individual value or more than $250,000 shall be pledged to the Administrative Agent, for the benefit of the Secured Parties, in accordance with the Loan Documents and (ii) the aggregate outstanding principal amount of such loans and advances made in reliance on this clause (q) shall not exceed $7,000,000 at any time,

 

(q)       the making of Permitted Tax Payments in the form of loans or advances,

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(r)       Investments in any Subsidiary of Global Parent made with the proceeds of a substantially concurrent capital contribution (in respect of Qualified Capital Stock) by any direct or indirect parent of Global Parent (including Ultimate Parent),

 

(s)       other Investments made by the Non-ABL Loan Parties and Non-ABL Subsidiaries and not otherwise described above in an aggregate amount not to exceed at any time $2,500,000 and at the time of making any such Investment no Event of Default shall have occurred and be continuing or would immediately result therefrom, and

 

(t)       so long as the Payment Conditions shall have been satisfied, other Investments made by the ABL Loan Parties and ABL Subsidiaries and not otherwise described above.

 

Permitted Liens” means:

 

(a)       Liens in favor of the Administrative Agent for the benefit of the Secured Parties granted pursuant to any Loan Document,

 

(b)       Liens for Taxes if obligations with respect to such Taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and reserves required by GAAP have been made,

 

(c)       statutory Liens of landlords, banks (and rights of set off), carriers, warehousemen, mechanics, repairmen, workmen, and materialmen, and other Liens imposed by law (other than any such Lien imposed pursuant to Section 430(k) of the Internal Revenue Code or by Section 303(k) of ERISA), in each case incurred in the ordinary course of business for amounts not overdue by more than thirty (30) days or which are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and reserves required by GAAP have been made,

 

(d)       Liens incurred in the ordinary course of business in connection with workers’ compensation, unemployment insurance, and other types of social security, or to secure appeal bonds or the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds, and other similar obligations (exclusive of obligations for the payment of borrowed money or other Indebtedness), so long as no foreclosure, sale, or similar proceedings have been commenced with respect to any portion of the Collateral on account thereof,

 

(e)       easements, rights of way, restrictions, encroachments, and other minor defects or irregularities in title, in each case which do not and will not interfere in any material respect with the ordinary conduct of the business of the Loan Parties and their Subsidiaries,

 

(f)       any interest or title of a lessor or sublessor under any lease of real estate permitted hereunder,

 

(g)       Liens solely on any cash earnest money deposits made by any Loan Party or any of its Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder,

 

(h)       purported Liens evidenced by the filing of precautionary UCC financing statements relating solely to operating leases of personal property entered into in the ordinary course of business,

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

 

(j)       any zoning or similar law or right reserved to or vested in any governmental office or agency to control or regulate the use of any real property,

 

(k)       non-exclusive licenses of patents, trademarks, and other intellectual property rights granted by any Loan Party or any of its Subsidiaries in the ordinary course of business and not interfering in any respect with the ordinary conduct of the business of such Loan Party or any such Subsidiary,

 

(l)       Liens in favor of banking or other financial institutions arising as a matter of law or relating exclusively to Cash Management Services,

 

(m)       Liens existing as of the Closing Date and described in Schedule 6.2,

 

(n)       Liens securing Permitted Purchase Money Indebtedness; provided, that any such Lien shall encumber only the asset subject to such Capital Lease or the asset acquired with the proceeds of such Indebtedness,

 

(o)       cash collateral in an aggregate amount at any time not exceeding 105% multiplied the face amount of the Workers Comp L/C, together with any additional cash collateral (in an aggregate additional amount not exceeding 105% off the face amount of any replacement Workers Comp L/C) temporarily outstanding for no longer than ten (10) Business Days (or such later date as Administrative Agent may approve) during the replacement process of the Workers Comp L/C as permitted by the definition of Workers Comp L/C,

 

(p)       Liens securing the Term Obligations to the extent permitted to be incurred pursuant to clause (k) of the definition of Permitted Indebtedness; provided that such Liens are at all times subject to the Intercreditor Agreement,

 

(q)       [reserved],

 

(r)       Liens in favor of Credit Card Issuers and Credit Card Processors arising in the ordinary course of business securing the obligation to pay customary fees and expenses in connection with credit card arrangements,

 

(s)       Liens in respect of any judgments that, individually or in the aggregate, would not constitute an Event of Default hereunder,

 

(t)       possessory Liens in favor of brokers and dealers in connection with the acquisition or dispositions of Permitted Investments, provided that such liens (i) attach only to such Investments and (ii) secure only obligations incurred in the ordinary course and arising in connection with the acquisition or disposition of such Investments and not any obligation in connection with Margin Stock,

 

(u)       any interest of, and Liens granted to, consignors in the ordinary course of business with respect to the consignment of goods to a Loan Party,

 

(v)       Liens constituting premium rebates securing financing arrangements with respect to insurance premiums,

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(w)       Liens existing on property or other assets at the time of its acquisition or existing on the property or other assets of any Person at the time such Person becomes a Loan Party, in each case after the Closing Date, and any modifications, replacements, renewals or extensions thereof; provided that (A) any such Lien was not created in contemplation of such acquisition or such Person becoming a Loan Party, (B) any such Lien does not extend to or cover any other assets or property (other than the proceeds or products thereof and other than after-acquired property subject to a Lien securing Indebtedness and other obligations incurred prior to such time that require or include, pursuant to their terms at such time, a pledge of after-acquired property, it being understood that such requirement shall not be permitted to apply to any property to which such requirement would not have applied but for such acquisition) and (C) any such Lien secures Indebtedness and other obligations are permitted under clause (g), clause (n) or clause (o) of the “Permitted Indebtedness” definition,

 

(x)       Liens on motor vehicles securing Indebtedness permitted by clause (o) of the definition of “Permitted Indebtedness”,

 

(y)       Liens on real property owned by JTH Court Plaza, LLC located at 2387 Liberty Way, Virginia Beach, VA 23456, to secure the obligations of the Liberty Parties under the credit card program referenced in clause (q) of the definition of “Permitted Indebtedness”,

 

(z)       Liens on Margin Stock to the extent that a prohibition on such Liens would violate Regulation U, and

 

(aa) other Liens securing obligations in an aggregate principal amount not exceeding $1,250,000 at any time outstanding.

 

Permitted Purchase Money Indebtedness” means, as of any date of determination, (A) Indebtedness (other than the Obligations, but otherwise including Capital Leases and purchase money Indebtedness) incurred after the Closing Date and at the time of, or within 180 days after, the acquisition, purchase, lease, construction, repair, replacement or improvement of any fixed assets for the purpose of financing all or any part of the acquisition, purchase, lease, construction, repair, replacement or improvement cost thereof and (B) any refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive refinancings thereof), in each case, in an aggregate principal amount outstanding at any one time not in excess of $10,000,000.

 

Permitted Tax Payments” means dividends, distributions, loans or advances from any Loan Party or Subsidiary to Global Parent or Ultimate Parent or any equity interest holders thereof (which may be by way of any applicable intermediate Loan Parties in between Global Parent and such other Loan Party or Subsidiary, if applicable) in the amounts required (or any lesser amount) for Global Parent, Ultimate Parent or such equity interest holders to pay, in each case without duplication, (a) franchise Taxes (and other fees and expenses) required to maintain their existence (or the existence of any of their Subsidiaries) to the extent such Taxes, fees and expenses are reasonably attributable to the operations of Ultimate Parent, Global Parent, Lead Borrower and its Subsidiaries, (b) with respect to any period where Global Parent, Lead Borrower or any of its Subsidiaries are members of a consolidated, combined or similar income tax group for U.S. federal and/or applicable state, local or foreign income tax purposes of which a direct or indirect parent of Global Parent or Lead Borrower is the common parent, the portion of any U.S. federal, state, local and/or foreign income taxes (including any alternative minimum taxes) of such tax group for which such common parent is liable that is attributable to the taxable income of Global Parent, Lead Borrower and Lead Borrower’s Subsidiaries, which payments by the ABL Loan Parties and ABL Subsidiaries are not in excess of the income tax liability that would have been payable by the ABL Loan Parties and the ABL Subsidiaries on a separate group basis if the ABL Loan Parties and the ABL Subsidiaries had paid income tax on a consolidated, combined or similar income tax group basis on behalf of a group consisting of only the ABL Loan Parties and the ABL Subsidiaries, reduced by any such taxes directly paid by Lead Borrower or Lead Borrower’s Subsidiaries (with respect to each such entity’s taxable income, on a stand-alone basis), and (c) the obligations of Ultimate Parent pursuant to the Income Tax Receivable Agreement, dated as of July 10, 2019, by and among Ultimate Parent and each of the TRA Holders (as defined in such agreement), which payments by the ABL Loan Parties and the ABL Subsidiaries shall be limited to the Tax Benefit Payment (as defined in such agreement) and any additional amounts related thereto, that correspond to the related Realized Tax Benefit (as defined in such agreement) attributable to the ABL Loan Parties and ABL Subsidiaries, as determined by Ultimate Parent in its reasonable discretion.

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Person” means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts, or other organizations, whether or not legal entities, and Governmental Authorities.

 

Phase I Report” means, with respect to any Real Property, a report that (a) conforms to the ASTM Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, E 1527, (b) was conducted no more than six months prior to the date such report is required to be delivered hereunder, by one or more environmental consulting firms reasonably satisfactory to the Administrative Agent, (c) includes an assessment of asbestos containing materials at such Real Property, and (d) is accompanied by an estimate of the reasonable worst case cost of investigating and remediating any Hazardous Materials activity identified in the Phase I Report as giving rise to an actual or potential material violation of any Environmental Law or as presenting a material risk of giving rise to a material Environmental Action.

 

Platform” means DebtX, Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system.

 

Prime Rate” means a rate per annum equal to the prime rate of interest announced from time to time by the Administrative Agent or its parent company (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes.

 

Pro Forma Basis” means, with respect to any transaction, that such transaction shall be deemed to have occurred as of the first day of the four-Fiscal Quarter period ending as of the most recent Fiscal Quarter end preceding the date of such transaction for which financial statements have been (or are required to have been) delivered pursuant to Section 5.01(b) (or, prior to the first date on which financial statements have been (or are required to have been) delivered pursuant to Section 5.01(b), as of the first day of the four-Fiscal Quarter period ending as of the most recent Fiscal Quarter end preceding the date of such transaction that were included in the Historical Financial Statements). Each of the terms “Pro Forma Compliance” and “Pro Forma Effect” shall have an analogous meaning.

 

Projections” has the meaning specified in Section 4.08.

 

Protective Advance” has the meaning assigned to such term Section 2.02(h).

 

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

 

Qualified Capital Stock” means and refers to any Capital Stock issued by Global Parent or Lead Borrower (and not by any other Person) that is not Disqualified Capital Stock.

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Qualified Cash” means, as of any date of determination, the amount of unrestricted Cash and Cash Equivalents of the Loan Parties that is in Deposit Accounts or in Securities Accounts, or any combination thereof, which such Deposit Account or Securities Account is subject to a Control Agreement (subject to the timing requirements set forth in Section 6.17) and is maintained by a branch office of the bank or securities intermediary located within the United States.

 

Quotation Day” means, with respect to any LIBOR Borrowing and any Interest Period, the day that is two (2) Business Days prior to the first day of such Interest Period.

 

Real Estate Asset” means, at any time of determination, any interest (fee, leasehold, or otherwise) then owned by any Loan Party in any real property.

 

Real Property” means any real property (including all buildings, fixtures, or other improvements located thereon) now, hereafter, or heretofore owned or leased by any Loan Party or any of their respective predecessors or Affiliates.

 

Refranchising Activity” means the sale of any retail locations owned or operated by a Loan Party to franchisee(s) to be owned and operated by such franchisee(s), with such franchisee(s) to provide royalties to a Loan Party in connection with the operation of such retail locations.

 

Register” has the meaning specified in Section 10.06(b).

 

Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

 

Reinvestment Amounts” has the meaning specified in Section 2.08(a).

 

Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, members, directors, officers, employees, agents, trustees, administrators, managers, advisors, attorneys-in-fact and representatives of such Person and of such Person’s Affiliates.

 

Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto.

 

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

 

Rental Agreements” means each rental agreement entered into by Buddy Top Parent or any of its Subsidiaries that are ABL Loan Parties with a customer of such ABL Loan Party in the ordinary course of business.

 

Reporting Trigger Event” means either of (a) the occurrence of an Event of Default, or (b) Availability being less than the greater of (i) $22,000,000 and (ii) 20% of the Line Cap at any time.

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Reporting Trigger Period” means the period commencing on the occurrence of a Reporting Trigger Event, and continuing until the date that (a) no Event of Default shall be continuing and (b) Availability is greater than or equal to the greater of (i) $22,000,000 and (ii) 20% of the Line Cap for a period of at least thirty (30) consecutive calendar days.

 

Request for Credit Extension” means (a) with respect to a Borrowing, conversion or continuation of Loans (other than Swingline Loans), a Committed Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit Application, and (c) with respect to a Swingline Loan, a Swingline Loan Notice.

 

Required Lenders” means one or more Lenders having Total Credit Exposures representing more than 50% of the Total Credit Exposures of all Lenders; provided that (i) if there are only two Lenders that are not Defaulting Lenders (with Lenders that are Affiliates of one another being considered as one Lender for purposes of this proviso), then Required Lenders means both such Lenders, and (ii) Required Lenders shall in any event include each Initial Lender. The Total Credit Exposure of any Defaulting Lender shall be disregarded in determining Required Lenders at any time.

 

Requirements of Law” means, with respect to any Person, collectively, the common law and all federal, state, provincial, local, foreign, multinational or international laws, statutes, codes, treaties, standards, rules and regulations, guidelines, ordinances, orders, judgments, writs, injunctions, decrees (including administrative or judicial precedents or authorities) and the interpretation or administration thereof by, and other determinations, directives, requirements or requests of, any Governmental Authority, in each case that are applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

 

Reserves” means, (1) without duplication of any other Reserves or items that are otherwise addressed or excluded through eligibility criteria or the definition of “Borrowing Base” or “Net Orderly Liquidation Value”, such reserves as Administrative Agent from time to time determines in its Permitted Discretion as being appropriate (a) to reflect the impediments to Administrative Agent’s ability to realize upon the Collateral, (b) to reflect claims and liabilities that Administrative Agent determines will need to be satisfied in connection with the realization upon the Collateral, (c) to reflect criteria, events, conditions, contingencies or risks which adversely affect any component of the Borrowing Base, or (d) to reflect that a Default or an Event of Default then exists; provided that, without limiting the generality of the foregoing, such Reserves may include, in Administrative Agent’s Permitted Discretion, (but are not limited to) reserves based on: (i) rent; (ii) customs duties, and other costs to release Inventory which is being imported into the United States; (iii) outstanding Taxes and other governmental charges, including, without limitation, ad valorem, real estate, personal property, sales, claims of the PBGC and other Taxes which may have priority over the interests of Administrative Agent in the Collateral; (iv) the aggregate remaining value at such time of outstanding merchandise credits of the Loan Parties, (v) deposits made by customers with respect to the purchase of goods or the performance of services and layaway obligations of the Loan Parties, (vi) reserves for reasonably anticipated changes in the Net Orderly Liquidation Value of Eligible Inventory and Eligible Rental Agreements between appraisals, (vii) warehousemen’s or bailee’s charges and other Permitted Liens which may have priority over the interests of Administrative Agent in the Collateral, (viii) commissions and other amounts due to Third Party Franchisees, (ix) rebates, discounts, warranty claims and returns, and (x) reserves as Administrative Agent from time to time determines in its Permitted Discretion as being appropriate to reflect the reasonably anticipated liabilities and obligations of the Loan Parties with respect to Secured Cash Management Obligations or Secured Swap Agreement Obligations then provided or outstanding, and (2) such reserves as may be established from time to time by Administrative Agent in its Permitted Discretion, without duplication of any other Reserves or items that are otherwise addressed or excluded through eligibility criteria or the definition of “Borrowing Base” or “Net Orderly Liquidation Value”, with respect to the determination of the (a) saleability, at retail, of the Eligible Inventory, which reflect such other factors as affect the market value of the Eligible Inventory or which reflect claims and liabilities that Administrative Agent determines will need to be satisfied in connection with the realization upon the Inventory and (b) collectability of the Eligible Rental Agreements, which reflect claims and liabilities that Administrative Agent determines will need to be satisfied in connection with the realization upon the Eligible Rental Agreements; provided that, without limiting the generality of the foregoing, such Reserves under this clause (2) may, in Administrative Agent’s Permitted Discretion, include (but are not limited to) reserves based on: (I) obsolescence; (II) seasonality; (III) Inventory which has been lost, misplaced, stolen, or is otherwise unaccounted for; (IV) imbalance; (V) change in Inventory character; (VI) change in Inventory composition; (VII) change in Inventory mix; (VIII) mark-downs (both permanent and point of sale); (IX) retail mark-ons and mark-ups inconsistent with prior period practice and performance, industry standards, current business plans or advertising calendar and planned advertising events and (X) discounts, reductions and other adjustments of amounts due under Rental Agreements consistent with the treatment provided for in the most recently delivered Borrowing Base Certificate or the most recent Eligible Rental Agreement Portfolio appraisal received by the Administrative Agent.

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Restricted Junior Payment” means (a) any dividend or other distribution, direct or indirect, on account of any shares of any class of Capital Stock of Global Parent or any of its Subsidiaries (other than the Excluded Entities) now or hereafter outstanding, except a dividend payable solely in shares of that class of Capital Stock to the holders of that class, (b) any redemption, retirement, sinking fund or similar payment, purchase, or other acquisition for value, direct or indirect, of any shares of any class of Capital Stock of Global Parent or any of its Subsidiaries (other than the Excluded Entities), (c) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options, or other rights to acquire shares of any class of Capital Stock of Global Parent or any of its Subsidiaries (other than the Excluded Entities), (d) management or similar fees (and related expenses) payable to any Permitted Holder or any of its Affiliates or any other Affiliates of any Loan Party, and (e) any payment or prepayment of principal of, premium, if any, or interest on, or redemption, purchase, retirement, defeasance (including in substance or legal defeasance), sinking fund, or similar payment with respect to, any subordinated Indebtedness (excluding, to the extent considered subordinated, the Term Obligations), in each case, whether such dividend, distribution or other payment is made in cash or other assets.

 

Revolution Holdings” means Franchise Group Intermediate R, LLC, a Delaware limited liability company.

 

Revolving Borrowing” means a Borrowing consisting of Revolving Loans of the same Type made, converted or continued on the same date and, in the case of LIBOR Loans, as to which a single Interest Period is in effect.

 

Revolving Commitment” means, with respect to each Revolving Lender, the commitment hereunder of such Lender to make Revolving Loans and to acquire participations in Letters of Credit and Swingline Loans in an aggregate outstanding amount not exceeding the amount of such Lender’s Revolving Commitment as set forth on Appendix A or in the Assignment Agreement pursuant to which such Lender shall have assumed its Revolving Commitment in accordance with Section 10.06, as applicable, as such Revolving Commitment may be adjusted from time to time pursuant to Section 2.05 or Section 2.12 or pursuant to assignments by or to such Lender pursuant to Section 10.06.

 

Revolving Credit Maximum Amount” means the aggregate amount of the Revolving Commitments at any time, as such amount may be increased or reduced from time to time pursuant to the terms hereof. The initial Revolving Credit Maximum Amount on the Closing Date is $125,000,000.

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Revolving Exposure” means, as to any Lender at any time, the sum of (a) the Outstanding Amount of its Revolving Loans, plus (b) its L/C Exposure, plus (c) its Swingline Exposure.

 

Revolving Facility” means the credit facility established hereunder with respect to the Revolving Commitments.

 

Revolving Lender” means a Lender having a Revolving Commitment or, if the Revolving Commitments have expired or terminated, having Revolving Exposure.

 

Revolving Loan” means a loan referred to in Section 2.01 and made pursuant to Section 2.02.

 

Revolving Loan Note” means, with respect to a Revolving Lender, a promissory note evidencing the Revolving Loans of such Lender payable to the order of such Lender (or, if required by such Lender, to such Lender and its registered assigns) substantially in the form of Exhibit J-1.

 

S&P” means Standard & Poor’s Ratings Group, a division of The McGraw Hill Corporation.

 

Sanctioned Entity” means (a) a country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its government, or (d) a Person resident in or determined to be resident in a country, in each case of clauses (a) through (d) that is a target of Sanctions, including a target of any comprehensive country sanctions program administered and enforced by OFAC.

 

Sanctioned Person” means, at any time, (a) any Person named on the list of Specially Designated Nationals and Blocked Persons maintained by OFAC or any other Sanctions-related list maintained by any relevant Sanctions authority, (b) a Person or legal entity that is a target of Sanctions, (c) any Person operating, organized, or resident in a country that is a Sanctioned Entity, or (d) any Person directly or indirectly owned or controlled (individually or in the aggregate) by or acting on behalf of any such Person or Persons described in clauses (a) through (c) above.

 

Sanctions” means individually and collectively, respectively, any and all economic, trade, financial, or other sanctions laws, regulations, or embargoes imposed, administered, or enforced from time to time by: (a) the United States of America, including, without limitation, those administered by OFAC or the U.S. Department of State, (b) the United Nations Security Council, or (c) any other governmental authority in any jurisdiction in which any Loan Party or any of their respective Subsidiaries is located or doing business.

 

Scheduled Maturity Date” means the fifth anniversary of the Closing Date, provided that if such day is not a Business Day, the Scheduled Maturity Date shall be the Business Day immediately preceding such day.

 

Sears Top Parent” means Franchise Group Intermediate S, LLC, a Delaware limited liability company.

 

Secured Cash Management Obligations” means all obligations of the Loan Parties and their Subsidiaries in respect of any Cash Management Services provided to any Loan Party or its Subsidiaries (whether absolute or contingent and howsoever and whenever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor)) that are (a) owed to the Administrative Agent or any of its Affiliates or (b) owed to a Lender or an Affiliate of a Lender.

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Secured Obligation Designation Notice” means a notice substantially in the form of Exhibit L executed and delivered to the Administrative Agent by a counterparty (other than the Administrative Agent and its Affiliates) to a Swap Agreement or an agreement to provide Cash Management Services in order that the obligations in respect thereof constitute Noticed Swap Agreement Obligations or Noticed Cash Management Obligations.

 

Secured Obligations” means, collectively, (a) the Obligations, (b) the Secured Cash Management Obligations and (c) the Secured Swap Agreement Obligations.

 

Secured Parties” means, collectively, (a) the Administrative Agent, (b) each Lender, (c) each L/C Issuer, (d) each Person to whom any Secured Cash Management Obligations are owed, (e) each counterparty to any Swap Agreement the obligations under which constitute Secured Swap Agreement Obligations, (f) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (g) the permitted successors and assigns of each of the foregoing.

 

Secured Swap Agreement Obligations” means all obligations of the Loan Parties and their Subsidiaries under each Swap Agreement to which any Loan Party or its Subsidiary is a party and that (a) is with a counterparty that is the Administrative Agent or any of its Affiliates or (b) is with a counterparty that is a Lender or an Affiliate of a Lender, provided that Secured Swap Agreement Obligations shall not include, with respect to any Guarantor, Excluded CEA Swap Obligations of such Guarantor.

 

Securities” means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated, or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares, or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase, or acquire, any of the foregoing.

 

Securities Account” means a securities account (as defined in the UCC).

 

Security Agreement” means the Security Agreement executed by the Loan Parties in favor of the Administrative Agent, for the benefit of the Secured Parties, substantially in the form of Exhibit G, as it may be amended, supplemented, or otherwise modified from time to time.

 

SOFR” with respect to any day means the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark, (or a successor administrator) on the Federal Reserve Bank of New York’s Website.

 

Sold Entity or Business” means any Person or any property or assets constituting a line of business or a division of a Person disposed of in a transaction permitted hereunder.

 

Solvent” means, with respect to any Person and its Subsidiaries (on a consolidated basis), that as of the date of determination, both (a)(i) the sum of the debt (including contingent liabilities) of such Person and its Subsidiaries (on a consolidated basis) does not exceed the present fair saleable value of the present assets of such Person and its Subsidiaries (on a consolidated basis), (ii) the capital of such Person and its Subsidiaries (on a consolidated basis) is not unreasonably small in relation to its business as contemplated on the date of determination, and (iii) such Person and its Subsidiaries (on a consolidated basis) have not incurred and do not intend to incur, or believe (nor should they reasonably believe) that they will incur, debts beyond their ability to pay such debts as they become due (whether at maturity or otherwise), and (b) such Person and its Subsidiaries (on a consolidated basis) are “solvent” within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5).

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Specified Event of Default” means an Event of Default described under Section 8.01(a), (c) (solely with respect to Section 5.01(a), (b), (c), (d) and (q) and Section 6.08), (f) or (g); provided, that, solely for purposes of Section 9.05, Section 10.06, and the definition of “Eligible Assignee”, any Event of Default pursuant to Section 8.01(c) shall constitute a Specified Event of Default only if such Event of Default occurs in (x) two consecutive Fiscal Quarters or (y) two Fiscal Quarters in any four-Fiscal Quarter period.

 

Specified Real Estate Assets” means the Real Estate Assets located at 1716 Corporate Landing Parkway and 2387 Liberty Way, each located in Virginia Beach, Virginia.

 

Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any basic, marginal, special, emergency, supplemental or other reserves) expressed as a decimal established by the Board of Governors of the Federal Reserve System to which the Administrative Agent is subject for eurocurrency funding (currently referred to as “eurocurrency liabilities” in Regulation D). Such reserve percentages shall include those imposed pursuant to Regulation D. LIBOR Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

 

Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture, or other business entity of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees, or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; provided, that in determining the percentage of ownership interests of any Person controlled by another Person, no ownership interest in the nature of a “qualifying share” of the former Person shall be deemed to be outstanding. Except as otherwise specified or as the context otherwise clearly requires, references to a Subsidiary shall be deemed to mean a Subsidiary of Global Parent.

 

Supermajority Lenders” means one or more Lenders having Total Credit Exposures representing at least 66 2/3% of the Total Credit Exposures of all Lenders; provided that (i) if there are only two Lenders that are not Defaulting Lenders (with Lenders that are Affiliates of one another being considered as one Lender for purposes of this proviso), then Supermajority Lenders means both such Lenders, and (ii) Supermajority Lenders shall in any event include each Initial Lender. The Total Credit Exposure of any Defaulting Lender shall be disregarded in determining Supermajority Lenders at any time.

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Swap Agreement” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

 

Swingline Borrowing” means a Borrowing consisting of Swingline Loans made on the same date.

 

Swingline Exposure” means, with respect to any Revolving Lender at any time, its Applicable Percentage of the Outstanding Amount of the Swingline Loans.

 

Swingline Lender” means Citizens Bank in its capacity as lender of Swingline Loans.

 

Swingline Loan” means a loan referred to and made pursuant to Section 2.03.

 

Swingline Loan Note” means with respect to the Swingline Lender, a promissory note evidencing the Swingline Loans of such Lender payable to the order of such Lender (or, if required by such Lender, to such Lender and its registered assigns) substantially in the form of Exhibit J-2.

 

Swingline Loan Notice” means a notice of a Swingline Borrowing pursuant to Section 2.03(b), which, if in writing, shall be substantially in the form of Exhibit A-2.

 

Swingline Sublimit” means $15,000,000. The Swingline Sublimit is a sublimit of the Revolving Commitments.

 

Tax” means any present or future tax, levy, impost, duty, assessment, charge, fee, deduction, or withholding (including backup withholding) imposed, levied, collected, withheld, or assessed by any Governmental Authority and all interest, penalties and additions to tax with respect thereto.

 

Term Agent” means (1) the Term Administrative Agent (as defined in the Intercreditor Agreement) and/or (2) the Term Collateral Agent (as defined in the Intercreditor Agreement), as the context may require.

 

Term Credit Agreement” shall have the meaning ascribed to such term in the Intercreditor Agreement.

 

Term Documents” shall have the meaning ascribed to such term in the Intercreditor Agreement.

 

Term Lenders” means the lenders under the Term Credit Agreement.

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Term Obligations” shall have the meaning ascribed to such term in the Intercreditor Agreement; provided that all Term Obligations are subject to the Intercreditor Agreement.

 

Term Priority Collateral” shall have the meaning ascribed to such term in the Intercreditor Agreement.

 

Term SOFR” means the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.

 

Termination Date” means the date upon which all Commitments have terminated, no Letters of Credit are outstanding (or if Letters of Credit remain outstanding, the same are Backstopped), and the Loans and L/C Obligations (other than with respect to the undrawn portion of outstanding Letters of Credit), together with all interest and fees related thereto and other Obligations (other than unasserted contingent indemnification and unasserted expense reimbursement obligations in each case not yet due and payable), have been paid in full in cash.

 

Third Party Franchisee Eligibility Requirements” means, collectively, each of the following:

 

(a)        The applicable ABL Loan Party has executed an agreement with the applicable Third Party Franchisee to operate a franchise under one of the brands as listed on Schedule 7.1 hereto, or any subsequent rebranding of such franchise, at a location owned or leased and operated by such Third Party Franchisee, substantially on the standard form agreements containing terms and conditions established by the ABL Loan Parties from time to time, which shall include (A) an acknowledgement from such Third Party Franchisee that the ABL Loan Parties, or Administrative Agent, acting on behalf of the ABL Loan Parties, are authorized to transfer proceeds of the Inventory consigned by such ABL Loan Party to such Third Party Franchisee from the bank account maintained by such Third Party Franchisee to an account in the name of a ABL Loan Party, and (B) an acknowledgement by the Third Party Franchisee that the applicable ABL Loan Party has granted a Lien to the Administrative Agent on the Inventory consigned by such ABL Loan Party to the Third Party Franchisee and an agreement by the Third Party Franchisee to reasonably cooperate with the Administrative Agent in the event of the exercise by the Administrative Agent of its rights and remedies with respect to such Lien;

 

(b)       The applicable ABL Loan Party has provided Administrative Agent with evidence that such ABL Loan Party has filed appropriate UCC financing statements against the applicable Third Party Franchisee evidencing the consignment arrangement between such ABL Loan Party and the applicable Third Party Franchisee with respect to the Inventory consigned by the such ABL Loan Party to the applicable Third Party Franchisee, and has taken all other action required under applicable Requirements of Law to obtain a valid, first priority perfected security interest in such Inventory (including, without limitation, providing notification to other secured parties of the applicable Third Party Franchisee as required by the UCC);

 

(c)       If requested by Administrative Agent, the applicable ABL Loan Party has provided the Administrative Agent with an assignment of the UCC financing statements set forth in clause (b) above;

 

(d)       The applicable ABL Loan Party has complied with all representations, warranties and covenants set forth herein and in the other Loan Documents relating to federal and state franchise and other regulatory Requirements of Law in connection with the operation of a franchise under one of the brands as listed on Schedule 7.1 (or any subsequent rebranding of such franchises) by the applicable Third Party Franchisee; and

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(e)       The agreements between the applicable ABL Loan Party and the applicable Third Party Franchisee provide that all amounts owed by such Third Party Franchisee to such ABL Loan Party shall be swept at least daily into an account of a ABL Loan Party which is subject to a Control Agreement.

 

For the purposes of paragraph (a) above, “reasonably cooperate with the Administrative Agent” means that the Third Party Franchisee will, at the Administrative Agent’s expense, (i) give the Administrative Agent and its representatives access during normal business hours to all Inventory consigned by the applicable ABL Loan Party to the Third Party Franchisee, (ii) permit the Administrative Agent and its representatives to take possession and control of the Inventory consigned by the applicable ABL Loan Party to the Third Party Franchisee, and to remove the Inventory from the premises of the Third Party Franchisee, (iii) to the extent not prohibited by applicable location occupancy agreements (such as leases), conduct “going out of business sales” and engage in similar activities with respect to the Inventory consigned by the applicable ABL Loan Party to the Third Party Franchisee, and (iv) take all other commercially reasonable actions with respect to the Inventory consigned by the applicable ABL Loan Party to the Third Party Franchisee that, upon Administrative Agent’s request, may be reasonably necessary to permit the Administrative Agent to exercise all of its rights and remedies with respect to the Lien on the Inventory consigned by such ABL Loan Party to the Third Party Franchisee.

 

Third Party Franchisees” means, as of the Closing Date, the individuals and entities listed in Schedule 1.1 as “third party franchisees”, and thereafter, such entities and any additional individual or entity that meets the Third Party Franchisee Eligibility Requirements.

 

Total Credit Exposure” means, as to any Lender at any time, the unused Commitments and Revolving Exposure of such Lender at such time.

 

Total Leverage Ratio” means the ratio as of the last day of any Fiscal Quarter or other date of determination of (a) Consolidated Total Debt as of such day, to (b) Consolidated EBITDA of the ABL Loan Parties and ABL Subsidiaries (excluding, for avoidance of doubt, the Non-ABL Loan Parties and Non-ABL Subsidiaries) for the four-Fiscal Quarter period ending on such date (or if such date of determination is not the last day of a Fiscal Quarter, for the four-Fiscal Quarter period ending as of the most recently concluded Fiscal Quarter).

 

Total Revolving Outstandings” means at any time, the aggregate Outstanding Amount of all Revolving Loans, Swingline Loans and L/C Obligations at such time.

 

Trade Announcements” has the meaning specified in Section 10.17.

 

Transaction Costs” means the fees, costs, and expenses payable by the Loan Parties in connection with the transactions contemplated by the Loan Documents and the repayment of Existing Indebtedness.

 

Transactions” means the transactions contemplated by the Loan Documents, including without limitation, (i) the execution and delivery of the Loan Documents, the creation of the Liens pursuant to the Collateral Documents and the initial Credit Extensions on the Closing Date, (ii) the repayment of Existing Indebtedness, and (iii) the payment of Transaction Costs.

 

Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBOR Rate or the Alternate Base Rate.

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UCC” means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.

 

UCP” means the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce (“ICC”) Publication No. 600 (or such later version thereof as may be in effect at the time of issuance).

 

Ultimate Parent” means Franchise Group, Inc., a Delaware corporation.

 

Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark Replacement Adjustment.

 

Unreimbursed Amount” has the meaning assigned to such term in Section 2.04(c)(i).

 

Vitamin Holdings” means Valor Acquisition, LLC, a Delaware limited liability company.

 

Vitamin Intermediate Parent” means Franchise Group Newco V, LLC, a Delaware limited liability company.

 

Vitamin Top Parent” means Franchise Group Intermediate V, LLC, a Delaware limited liability company.

 

Wholly Owned Subsidiary” means, as to any Person, (a) any corporation 100% of whose capital stock (other than directors’ qualifying shares or other nominal issuance in order to comply with local laws) is at the time owned by such Person and/or one or more Wholly Owned Subsidiaries of such Person, and (b) any partnership, association, joint venture, limited liability company, or other entity in which such Person and/or one or more Wholly Owned Subsidiaries of such Person have a 100% equity interest at such time. Notwithstanding the foregoing, Liberty/Revolution Top Parent shall be deemed a Wholly Owned Subsidiary of the Borrower so long as the only equity interests of Liberty/Revolution Top Parent that are not owned by the Borrower (or another Wholly Owned Subsidiary of the Borrower) are the Equity Grant.

 

Wingspire Capital” means Wingspire Capital LLC.

 

Wingspire Capital Fee Letter” means the fee letter, dated as of the Closing Date, by and between the Lead Borrower and Wingspire Capital, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

 

Workers Comp L/C” means that certain letter of credit number 777020160611-L issued on May 28, 2020 (as amended or replaced by a new or additional letter of credit from time to time) by Standard Chartered Bank for the benefit of ACE American Insurance Company and certain other beneficiaries thereof.

 

Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

 

Section 1.02            Accounting and Other Terms.

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(a)                All accounting terms not specifically defined herein shall be construed in accordance with GAAP; provided, that if Lead Borrower notifies Administrative Agent that Lead Borrower requests an amendment to any provision hereof to eliminate the effect of any Accounting Change occurring after the Closing Date or in the application thereof on the operation of such provision (or if Administrative Agent notifies Lead Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such Accounting Change or in the application thereof, then Administrative Agent and Lead Borrower agree that they will negotiate in good faith amendments to the provisions of this Agreement that are directly affected by such Accounting Change with the intent of having the respective positions of Lenders and Lead Borrower after such Accounting Change conform as nearly as possible to their respective positions immediately before such Accounting Change took effect and, until any such amendments have been agreed upon and agreed to by the Required Lenders, the provisions in this Agreement shall be calculated as if no such Accounting Change had occurred. When used herein, the term “financial statements” shall include the notes and schedules thereto. Notwithstanding anything to the contrary contained herein, all financial statements delivered hereunder shall be prepared, and all financial covenants contained herein shall be calculated, without giving effect to any election under the Statement of Financial Accounting Standards Board’s Accounting Standards Codification Topic 825 (or any similar accounting principle) permitting a Person to value its financial liabilities or Indebtedness at the fair value thereof.

 

(b)                Any terms used in this Agreement that are defined in the UCC shall be construed and defined as set forth in the UCC as in effect from time to time in the State of New York unless otherwise defined herein; provided, that to the extent that the UCC is used to define any term herein and such term is defined differently in different Articles of the UCC, the definition of such term contained in Article 9 of the UCC shall govern.

 

(c)                All terms used in this Agreement which are defined in Article 8 or Article 9 of the UCC as in effect from time to time in the State of New York and which are not otherwise defined herein shall have the same meanings herein as set forth therein; provided, that terms used herein which are defined in the UCC 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 except as Administrative Agent may otherwise determine.

 

Section 1.03            Construction. Unless the context of this Agreement or any other Loan Document clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any reference in this Agreement or in any other Loan Document to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties. Notwithstanding anything in the Agreement to the contrary, (y) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, or directives thereunder or issued in connection therewith and (z) all requests, rules, guidelines, or directives concerning capital adequacy promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority), or the United States or foreign regulatory authorities shall, in each case, be deemed to be enacted, adopted, issued, phased in, or effective after the date of this Agreement regardless of the date enacted, adopted, issued, phased in, or effective.

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Section 1.04            Time References. Unless the context of this Agreement or any other Loan Document clearly requires otherwise, all references to time of day refer to Eastern standard time or Eastern daylight saving time, as in effect in New York, New York on such day. For purposes of the computation of a period of time from a specified date to a later specified date, unless otherwise expressly provided, the word “from” means “from and including” and the words “to” and “until” each means “to and including;” provided, that with respect to computation of fees or interest payable to any Credit Party, such period shall in any event consist of at least one full day.

 

Section 1.05            Fiscal Periods. Unless the context of this Agreement or any other Loan Document clearly requires otherwise, all references to a fiscal month, Fiscal Quarter or Fiscal Year ending on a certain date shall be deemed to refer to the fiscal month, Fiscal Quarter or Fiscal Year, respectively, ending on or closest to such date; provided that this Section 1.05 shall not apply to any references to fiscal months, fiscal quarters or fiscal years that are expressly stated to relate to any Person other than a Loan Party.

 

Section 1.06            Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan”) or by Type (e.g., a “LIBOR Loan”) or by Class and Type (e.g., a “LIBOR Revolving Loan”). Borrowings may also be classified and referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “LIBOR Borrowing”) or by Class and Type (e.g., a “LIBOR Revolving Borrowing”).

 

Section 1.07            Interest; LIBOR Notification. The interest rate on LIBOR Loans is determined by reference to the LIBOR Rate, which is derived from the London interbank offered rate. The London interbank offered rate is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. In July 2017, the U.K. Financial Conduct Authority announced that, after the end of 2021, it would no longer persuade or compel contributing banks to make rate submissions to the ICE Benchmark Administration (together with any successor to the ICE Benchmark Administrator, the “IBA”) for purposes of the IBA setting the London interbank offered rate. As a result, it is possible that, in the future, the London interbank offered rate may become unavailable or may no longer be deemed an appropriate reference rate upon which to determine the interest rate on LIBOR Loans. In light of this eventuality, public and private sector industry initiatives are currently underway to identify new or alternative reference rates to be used in place of the London interbank offered rate. In the event that the London interbank offered rate is no longer available or in certain other circumstances as set forth in Section 2.15, an alternative rate of interest may be selected and implemented in accordance with the mechanism contained in such Section. The Administrative Agent does not warrant or accept responsibility for, nor shall the Administrative Agent have any liability with respect to, the administration, submission or any other matter related to the rates in the definition of “LIBOR Rate” or with respect to any comparable or successor rate thereto or replacement rate thereof, including, without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate, as it may or may not be adjusted pursuant to Section 2.15, will be similar to, or produce the same value or economic equivalence of, the LIBOR Rate or have the same volume or liquidity as did the London interbank offered rate prior to its discontinuance or unavailability.

 

Section 1.08            Divisions. For all purposes under the Loan Documents, in connection with Division: (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Capital Stock at such time.

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ARTICLE II

LOANS

 

Section 2.01            Revolving Commitments. Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, each Revolving Lender agrees, severally and not jointly, to make Revolving Loans to the Borrowers in Dollars from time to time during the Availability Period in an aggregate principal amount that will not result in (i) such Lender’s Revolving Exposure exceeding such Lender’s Revolving Commitment (except to the extent consented to by all Lenders in accordance with the express provisions of Section 2.02(h)), (ii) the Total Revolving Outstandings (other than any Overadvances and Protective Advances to the extent permitted hereunder) exceeding the Line Cap, or (iii) the Total Revolving Outstandings exceeding the Revolving Credit Maximum Amount (except to the extent consented to by all Lenders in accordance with the express provisions of Section 2.02(h)). Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrowers may borrow, prepay and reborrow Revolving Loans. Revolving Loans may be ABR Loans or LIBOR Loans, as further provided herein.

 

Section 2.02            Borrowings, Conversions and Continuations of Loans.

 

(a)                Each Borrowing (other than a Swingline Borrowing which shall be made in accordance with Section 2.03, an L/C Borrowing which shall be made in accordance with Section 2.04 and an Overadvance or Protective Advance which shall be made in accordance with Section 2.02(h)), each conversion of Loans from one Type to the other, and each continuation of LIBOR Loans shall be made upon the Lead Borrower’s irrevocable notice, to the Administrative Agent, which may be given by telephone. Each such notice must be made in writing (or in the case of telephonic notice, promptly confirmed in writing) substantially in the form of a Committed Loan Notice appropriately completed and signed by an Authorized Officer of the Borrower and received by the Administrative Agent (i) in the case of an ABR Borrowing, not later than 11:00 a.m. on the date of the proposed Borrowing, or (ii) in the case of any other Borrowing, not later than 11:00 a.m. three (3) Business Days before the date of the proposed Borrowing (or in each case, such later date or time as each of the Administrative Agent and each Lender may agree to in its sole discretion).

 

(b)                Each Borrowing (other than an Overadvance or Protective Advance) or conversion of LIBOR Loans shall be in a principal amount of the Borrowing Minimum or a whole multiple of the Borrowing Multiple in excess thereof. Each Committed Loan Notice (whether telephonic or written) shall specify (A) whether the Lead Borrower is requesting a Borrowing, a conversion of Loans from one Type to the other, or a continuation of LIBOR Loans, (B) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (C) the Class and principal amount of Loans to be borrowed, converted or continued, (D) the Type of Loans to be borrowed or to which existing Loans are to be converted, (E) if applicable, the duration of the Interest Period with respect thereto which shall be a period contemplated by the definition of the term “Interest Period”, and (F) the location and number of the Borrowers’ (or any Borrower’s) account to which funds are to be disbursed, which shall comply with the requirements of this Section 2.02. Notwithstanding anything in this Agreement to the contrary, if the Lead Borrower:

 

(i)                 requests a Borrowing of, conversion to, or continuation of LIBOR Loans in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month; and

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(ii)               fails to specify a Type of Loan in a Committed Loan Notice or fails to give a timely notice requesting a conversion or continuation, then the applicable Loans shall be made as, continued as, or converted to, ABR Loans.

For avoidance of doubt, the Borrowers and Lenders acknowledge and agree that any conversion or continuation of an existing Loan shall be deemed to be a continuation of that Loan with a converted interest rate methodology and not a new Loan. Any automatic conversion or continuation as provided above shall be effective as of the last day of the Interest Period then in effect with respect to the applicable LIBOR Loans.

 

(c)                Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly notify each Appropriate Lender of the amount of its Applicable Percentage of the applicable Class of Loans, and if no timely notice of a conversion or continuation is provided by the Lead Borrower, the Administrative Agent shall notify each Appropriate Lender of the details of any automatic conversion or continuation described in Section 2.02(b). In the case of each Borrowing, each Appropriate Lender shall make (or cause its Applicable Lending Office to make) the amount of its Loan available to the Administrative Agent, by transfer in immediately available funds to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders, not later than 1:00 p.m. on the Business Day specified in the applicable Committed Loan Notice. Upon satisfaction or waiver of the applicable conditions set forth in Section 3.02 (and, if such Borrowing is the initial Credit Extension, Section 3.01), the Administrative Agent shall make all funds so received available to the Borrowers (or any of them) in like funds as received by transfer to the account of the Borrowers (or any of them) designated in the Committed Loan Notice the amount of such funds; provided that if, on the date the Committed Loan Notice with respect to such Borrowing is given by the Lead Borrower, there are Swingline Loans or L/C Borrowings outstanding, then the proceeds of such Borrowing shall be applied first, to the payment in full of any such L/C Borrowings, second, to the payment in full of any such Swingline Loans, and third, to the Borrowers as provided above.

 

(d)                Except as otherwise provided herein, a LIBOR Loan may be continued or converted only on the last day of an Interest Period for such Loan unless the Borrowers pay the amount due, if any, under Section 2.17 in connection therewith. During the existence of an Event of Default, the Administrative Agent or the Required Lenders may require that (i) no Loans may be requested as, converted to or continued as LIBOR Loans and (ii) unless repaid, each LIBOR Loan be converted to an ABR Loan at the end of the Interest Period applicable thereto.

 

(e)                The Administrative Agent shall promptly notify the Lead Borrower and the Appropriate Lenders of the interest rate applicable to any Interest Period for LIBOR Loans upon determination of such interest rate. The determination of the Adjusted LIBOR Rate by the Administrative Agent shall be conclusive in the absence of manifest error.

 

(f)                 Anything in clauses (a) through (d) above to the contrary notwithstanding, after giving effect to all Borrowings, all conversions of Loans from one Type to the other, and all continuations of Loans as the same Type, there shall not be more than ten (10) Interest Periods in effect at any time for all Borrowings of LIBOR Loans.

 

(g)                The failure of any Appropriate Lender to make any Loan required to be made by it shall not relieve any other Appropriate Lender of its obligations hereunder, provided that the Commitments of the Lenders are several, and no Lender shall be responsible for any other Lender’s failure to make Loans as required. All Borrowings made on the Closing Date must be made as ABR Borrowings unless the Lead Borrower shall have given a Committed Loan Notice requesting a LIBOR Borrowing and provided an indemnity letter in form and substance satisfactory to the Administrative Agent extending the benefits of Section 2.17 to the Appropriate Lenders in respect of such Borrowings.

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(h)                Notwithstanding anything herein to the contrary, the Administrative Agent (acting in its capacity as the Swingline Lender, whether or not the Administrative Agent is otherwise the Swingline Lender) may, in its sole discretion and without any obligation to do so, make Swingline Loans to or on behalf of the Borrowers (or any of them) in Dollars from time to time through the Maturity Date (i) at the request of Lead Borrower (such Swingline Loan or Swingline Loans being herein referred to individually as an “Overadvance” and collectively, as “Overadvances”) and/or (ii) at any time if, in the case of this clause (ii), the Administrative Agent, in its Permitted Discretion, deems that such Loans are necessary or desirable (A) to protect all or any portion of the Collateral, (B) to enhance the likelihood, or maximize the amount of, repayment of the Loans and the other Secured Obligations, or (C) to pay any other amount chargeable to the Borrowers pursuant to this Agreement (such Swingline Loan or Swingline Loans being herein referred to individually as a “Protective Advance” and collectively, as “Protective Advances”), in each case of the foregoing clauses (i) and (ii) regardless of whether the conditions precedent set forth in Section 3.02 may be satisfied with respect to such Borrowing; provided, however, that (w) the aggregate amount of Overadvances and Protective Advances outstanding at any time shall not exceed the lesser of (1) 10% of the Borrowing Base or (2) $12,500,000, (x) unless otherwise consented to by Required Lenders, and notwithstanding anything in Section 2.03 to the contrary, each Overadvance or Protective Advance shall not individually be outstanding for more than sixty (60) consecutive days, (y) unless otherwise consented to by all Lenders, no Overadvances or Protective Advances shall be permitted to the extent that Overadvances or Protective Advances would cause the Total Revolving Outstandings to exceed the Revolving Credit Maximum Amount, and (z) any Initial Lender or the Required Lenders may at any time revoke the Administrative Agent’s authority to make further Overadvances (but not Protective Advances) by written notice to the Administrative Agent (with a copy to Lead Borrower), which revocation shall become effective prospectively upon the Administrative Agent’s receipt thereof. The Administrative Agent may, in its sole discretion, require any permitted Overadvance or Protective Advance to be made as Revolving Loans directly by the Revolving Lenders in accordance with their respective Applicable Percentages. All Overadvances and Protective Advances shall be repaid on demand, shall be secured by the Collateral and shall bear interest as provided in this Agreement for Swingline Loans or Revolving Loans, as the case may be, generally. For the avoidance of doubt, each Revolving Lender shall automatically acquire a risk participation in each such Overadvance and Protective Advance that is made as a Swingline Loan to the same extent as each other Swingline Loan, and the Administrative Agent (acting in its capacity as the Swingline Lender, whether or not the Administrative Agent is otherwise the Swingline Lender) shall have the right to refinance any such Overadvance or Protective Advance (by a Revolving Borrowing or by requiring the funding of such risk participations) in accordance with Section 2.03(c).

 

Section 2.03            Swingline Loans.

 

(a)                The Swingline. Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth and upon the agreements of the Revolving Lenders set forth in this Section 2.03, the Swingline Lender may in its sole discretion and without any obligation to do so make Swingline Loans to the Borrowers in Dollars from time to time on any Business Day after the Closing Date through the seventh (7th) Business Day preceding the Maturity Date; provided that after giving effect to each Swingline Loan, (i) the aggregate Outstanding Amount of Swingline Loans (other than any Overadvances and Protective Advances to the extent permitted hereunder) shall not exceed the Swingline Sublimit, (ii) the Total Revolving Outstandings (other than any Overadvances and Protective Advances to the extent permitted hereunder) shall not exceed the Line Cap, and (iii) the Total Revolving Outstandings shall not exceed the Revolving Credit Maximum Amount (except to the extent consented to by all Lenders in accordance with Section 2.02(h)); provided, further, that the Borrowers shall not use the proceeds of any Swingline Loan to refinance any outstanding Swingline Loan. Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrowers may borrow under this Section 2.03, prepay under Section 2.07, and reborrow under this Section 2.03.

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(b)                Borrowing Procedures. Each Swingline Borrowing shall be made upon the Lead Borrower’s irrevocable notice to the Swingline Lender, which may be given by telephone. Each such notice must be received by the Swingline Lender not later than 1:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, (ii) the requested borrowing date, which shall be a Business Day and (iii) the maturity date of the requested Swingline Loan which shall be not later than seven (7) Business Days after the making of such Swingline Loan. Each such telephonic notice must be confirmed promptly by hand delivery or facsimile (or transmitted by electronic communication, if arrangements for doing so have been approved by the Swingline Lender and the Administrative Agent) of a written Swingline Loan Notice to the Swingline Lender and the Administrative Agent, appropriately completed and signed by an Authorized Officer of the Lead Borrower. Promptly after receipt by the Swingline Lender of any telephonic, hand delivered or facsimiled (or electronically communicated, if arrangements for doing so have been approved by the Swingline Lender and the Administrative Agent) Swingline Loan Notice, the Swingline Lender will, if it is willing to make the requested Swingline Loan and provided that all applicable conditions in Section 3.02 are satisfied or waived, not later than 3:00 p.m. on the borrowing date specified in such Swingline Loan Notice, make the amount of its Swingline Loan available to the Borrowers (or any of them) by crediting the account of the Borrowers (or any of them) maintained with the Swingline Lender and notify the Administrative Agent thereof in writing.

 

(c)                Refinancing of Swingline Loans.

 

(i)                 The Swingline Lender at any time in its sole and absolute discretion may request, on behalf of the Borrowers (which hereby irrevocably authorizes the Swingline Lender to so request on its behalf), that each Revolving Lender make an ABR Revolving Loan in Dollars in an amount equal to such Lender’s Applicable Percentage of the amount of Swingline Loans then outstanding (or any portion thereof proposed to be refinanced as an ABR Revolving Loan). Such request shall be made in writing (which written request shall be deemed to be a Committed Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02, without regard to the minimum and multiples specified therein for the principal amount of ABR Loans. The Swingline Lender shall furnish the Lead Borrower with a copy of such Committed Loan Notice promptly after delivery thereof to the Administrative Agent or the Revolving Lenders. Each Revolving Lender shall make an amount equal to its Applicable Percentage of the amount specified in such Committed Loan Notice available to the Administrative Agent in immediately available funds in Dollars for the account of the Swingline Lender at the Administrative Agent’s Payment Office not later than 1:00 p.m. on the day specified in such Committed Loan Notice, whereupon, subject to Section 2.03(c)(ii), each Revolving Lender that so makes funds available shall be deemed to have made an ABR Revolving Loan to the Borrowers in such amount and the Swingline Loans shall be deemed to have been repaid in such amount. The Administrative Agent shall remit the funds so received to the Swingline Lender.

 

(ii)               If for any reason any Swingline Loan cannot be refinanced by a Revolving Borrowing in accordance with Section 2.03(c)(i), the request for ABR Revolving Loans submitted by the Swingline Lender as set forth therein shall be deemed to be a request by the Swingline Lender that each of the Revolving Lenders purchase for cash a risk participation in the relevant Swingline Loan in Dollars, and each Revolving Lender hereby irrevocably and unconditionally agrees to make such purchase in an amount equal to the product of such Lender’s Applicable Percentage multiplied by the amount of such Swingline Loan. Each Revolving Lender’s payment to the Administrative Agent for the account of the Swingline Lender pursuant to Section 2.03(c)(i) shall be deemed payment in respect of such participation.

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(iii)             If any Revolving Lender fails to make available to the Administrative Agent for the account of the Swingline Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(i), the Swingline Lender shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swingline Lender at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. A certificate of the Swingline Lender submitted to any Revolving Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.

 

(iv)              Each Revolving Lender’s obligation to make Revolving Loans or to purchase and fund risk participations in Swingline Loans pursuant to this Section 2.03(c) shall be absolute and unconditional and shall not be affected by any circumstance, provided that each Revolving Lender’s obligation to make Revolving Loans (but not to purchase and fund risk participations in Swingline Loans) pursuant to this Section 2.03(c) is subject to the conditions set forth in Section 3.02. No such funding of risk participations shall relieve or otherwise impair the obligation of the Borrowers to repay Swingline Loans, together with interest as provided herein.

 

(d)                Repayment of Participations.

 

(i)                 At any time after any Revolving Lender has purchased and funded a risk participation in a Swingline Loan, if the Swingline Lender receives any payment on account of such Swingline Loan, the Swingline Lender will promptly distribute to such Lender its Applicable Percentage of such payment (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s risk participation was funded).

 

(ii)               If any payment received by the Swingline Lender in respect of principal or interest on any Swingline Loan is required to be returned by the Swingline Lender under any of the circumstances described in Section 10.25 (including pursuant to any settlement entered into by the Swingline Lender in its discretion), each Revolving Lender shall pay to the Swingline Lender its Applicable Percentage thereof on demand by the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the Federal Funds Effective Rate. The Administrative Agent will make such demand upon the request of the Swingline Lender.

 

(e)                Interest for Account of Swingline Lender. Until each Revolving Lender funds its ABR Revolving Loan or risk participation pursuant to this Section 2.03 to refinance such Lender’s Applicable Percentage of any Swingline Loan, interest in respect of such Applicable Percentage shall be solely for the account of the Swingline Lender.

 

(f)                 Payments Directly to Swingline Lender. The Borrowers shall make all payments of principal and interest in respect of the Swingline Loans directly to the Swingline Lender and the Swingline Lender shall notify the Administrative Agent thereof.

 

Section 2.04            Letters of Credit.

 

(a)                The Letter of Credit Commitment.

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(i)                 Subject to the terms and conditions hereof and of any additional Letter of Credit Documents required by the applicable L/C Issuer and relying upon the representations and warranties herein set forth (A) based upon the agreements of the Revolving Lenders set forth in this Section 2.04, each L/C Issuer agrees (1) from time to time on any Business Day during the Availability Period to issue Letters of Credit denominated in Dollars for the account of the Borrowers (provided that any Letter of Credit may be for the joint account of the Borrowers and any Subsidiary of the Borrowers) and to amend or renew Letters of Credit previously issued by it, in accordance with Section 2.04(b), and (2) to honor conforming drafts under the Letters of Credit and (B) the Revolving Lenders severally agree to participate in Letters of Credit issued pursuant to this Section 2.04; provided that no L/C Issuer shall be obligated to make any L/C Credit Extension with respect to any Letter of Credit, and no Revolving Lender shall be obligated to participate in any such Letter of Credit, if immediately after giving effect to such L/C Credit Extension, (w) the aggregate L/C Obligations would exceed the L/C Sublimit, (x) the Revolving Exposure of any Revolving Lender would exceed such Lender’s Revolving Commitment (except to the extent consented to by all Lenders in accordance with the express provisions of Section 2.02(h)), (y) the Total Revolving Outstandings (other than any Overadvances and Protective Advances to the extent permitted hereunder) would exceed the Line Cap, or (z) the Total Revolving Outstandings would exceed the Revolving Credit Maximum Amount (except to the extent consented to by all Lenders in accordance with the express provisions of Section 2.02(h)).

 

(ii)               Each L/C Issuer shall be under no obligation to issue any Letter of Credit (and, in the case of clauses (B), (C) or (D) below, shall not issue any Letter of Credit) if:

 

(A)             any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such L/C Issuer from issuing such Letter of Credit, or any law applicable to such L/C Issuer or any directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such L/C Issuer shall prohibit, or direct that such L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which such L/C Issuer is not otherwise compensated hereunder) not in effect on the date of this Agreement, or shall impose upon such L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the date of this Agreement (for which such L/C Issuer is not otherwise compensated hereunder);

 

(B)              subject to Section 2.04(b)(iii), the expiry date of such requested Letter of Credit would occur more than twelve months after the date of issuance or last renewal;

 

(C)              the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless arrangements satisfactory to the L/C Issuer for the Backstopping of such Letter of Credit have been made prior to the issuance thereof;

 

(D)             the proceeds of which would be made available to any Person (i) to fund any activity or business of or with any Sanctioned Person, or in any country that is a Sanctioned Entity or (ii) in any manner that would result in a violation of any Sanctions by any party to this Agreement;

 

(E)              the issuance of such Letter of Credit would violate one or more policies of such L/C Issuer applicable to letters of credit or any laws binding upon such L/C Issuer;

 

(F)              the Letter of Credit is to be denominated in a currency other than Dollars;

 

(G)             any Revolving Lender is at that time a Defaulting Lender, unless such L/C Issuer has entered into arrangements, including the delivery of Cash Collateral, satisfactory to such L/C Issuer (in its sole discretion) with the Borrowers or such Defaulting Lender to eliminate such L/C Issuer’s actual or potential Fronting Exposure (after giving effect to Section 2.11(a)(iv)) with respect to such Defaulting Lender arising from either the Letter of Credit then proposed to be issued or such Letter of Credit and all other L/C Obligations as to which such L/C Issuer has actual or potential Fronting Exposure, as it may elect in its sole discretion; or

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(H)             the Letter of Credit is in an initial amount less than $25,000 (or such lesser amount as agreed to by such L/C Issuer and the Administrative Agent).

 

(iii)             No L/C Issuer shall be under any obligation to amend any Letter of Credit if (A) such L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

 

(b)                Procedures for Issuance and Amendment of Letters of Credit; Auto-Renewal Letters of Credit.

 

(i)                 Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Lead Borrower hand delivered or sent by facsimile (or transmitted by electronic communication, if arrangements for doing so have been approved by the applicable L/C Issuer) to the applicable L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by an Authorized Officer of the Lead Borrower. Such Letter of Credit Application must be received by the applicable L/C Issuer and the Administrative Agent not later than 1:00 p.m. at least three (3) Business Days prior to the proposed issuance date or date of amendment, as the case may be; or, in each case, such later date and time as the applicable L/C Issuer may agree in a particular instance in its sole discretion. In the case of a request