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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): June 3, 2022

 

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) (IRS Employer Identification No.)

 

109 Innovation Court, Suite J

Delaware, Ohio 43015

(Address of Principal Executive Offices) (ZIP Code)

 

(740) 363-2222

(Registrant’s telephone number, including area code)

 

Not Applicable

(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 (see General Instruction A.2. below):

 

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 Exchange Act:

 

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Common Stock, $0.01 par value 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.

 

On June 3, 2022, Franchise Group, Inc. (the “Company”), Valor Acquisition, LLC, (together with its subsidiaries that are also borrowers, the “TVS Borrowers”), Franchise Group Newco Intermediate AF, LLC (together with its subsidiaries that are also borrowers, the “AFG Borrowers”) and Franchise Group Newco PSP, LLC (together with its subsidiaries that are also borrowers, the “PSP Borrowers” and, together with the Company, the TVS Borrowers and the AFG Borrowers, the “ABL Borrowers”) entered into the Second Amendment (the “ABL Amendment”) to the Third Amended and Restated Loan and Security Agreement (as amended, the “FRG ABL Revolver Agreement” and the senior secured revolving loan facility thereunder, the “ABL Revolver”) by and among the ABL Borrowers, the guarantors from time to time party thereto (together with the ABL Borrowers, the “ABL Loan Parties”), the lenders and issuing bank from time to time party thereto and JPMorgan Chase Bank, N.A., as agent (the “ABL Agent”). The ABL Amendment amends the FRG ABL Revolver Agreement to, among other things, increase the revolving credit facility commitments to $250,000,000, change the reference rate from LIBOR to SOFR, amend certain negative covenants regarding investments for a time period specified therein, and limits the maximum principal amount of loans outstanding under the FRG ABL Revolver Agreement to $200,000,000 for a time period specified therein.

 

The description of the ABL Amendment is qualified in its entirety by reference to the text of the document that is attached as Exhibit 10.1 to this Current Report on Form 8-K.

 

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

 

The information contained in "Item 1.01 Entry into a Material Definitive Agreement" is incorporated herein by reference.

 

Item 9.01. Financial Statements and Exhibits.

 

d) Exhibits.

 

Exhibit
No.
  Description
     
10.1   Second Amendment to the Third Amended and Restated Loan and Security Agreement by and among the ABL Borrower, the guarantors party from time to time party thereto, the lenders and issuing bank from time to time party thereto, and JPMorgan Chase Bank, N.A., as agent
     
104   Cover Page Interactive Data File (embedded within Inline XBRL document)

 

 

 

SIGNATURES

 

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: June 6, 2022 By: /s/ Eric Seeton           
  Name: Eric Seeton
  Title: Chief Financial Officer

 

 

 

Exhibit 10.1

 

 

SECOND AMENDMENT TO
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This SECOND AMENDMENT TO THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated as of June 3, 2022 (this “Amendment”), among FRANCHISE GROUP, INC., a Delaware corporation (“FRG”), VALOR ACQUISITION, LLC, a Delaware limited liability company, FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC, a Delaware limited liability company, FRANCHISE GROUP NEWCO PSP, LLC, a Delaware limited liability company, each as a Borrower (as defined in the ABL Loan Agreement (as defined below)), the other Borrowers party to the ABL Loan Agreement, the Guarantors (as defined in the ABL Loan Agreement) party to the ABL Loan Agreement, each of the Lenders party to the ABL Loan Agreement on the date hereof and JPMORGAN CHASE BANK, N.A., in its capacities as administrative agent and collateral agent (in such capacities, the “Agent”), which amends that certain Third Amended and Restated Loan and Security Agreement, dated as of March 10, 2021 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof, the “ABL Loan Agreement”), by and among FRG, the other Borrowers from time to time party thereto, the Guarantors from time to time party thereto, the Lenders from time to time party thereto and the Agent. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Amended ABL Loan Agreement (as defined below).

 

WHEREAS, Section 11.4 of the ABL Loan Agreement permits certain amendments to the ABL Loan Agreement with the consent of the Borrowers, the Agent and each of the Lenders, including the amendments contemplated herein; and

 

WHEREAS, each Borrower, the Agent and each of the Lenders desire to enter into this Amendment in order to effect the amendments to the ABL Loan Agreement contemplated herein, in each case, on the terms and subject to the conditions set forth in Section 2.

 

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

 

Section 1.                   Amendments to the ABL Loan Agreement. Subject to the satisfaction (or waiver by the Lenders) of the conditions set forth in Section 2, the ABL Loan Agreement (including Schedule 1A thereto, but excluding all other Schedules and Exhibits thereto, which shall remain as in effect immediately prior to the Second Amendment Effective Date), shall be amended by inserting the language indicated in double underlined text (indicated textually in the same manner as the following example: underlined text) in Exhibit A hereto and by deleting the language indicated by strikethrough text (indicated textually in the same manner as the following example: stricken text) in Exhibit A hereto (the ABL Loan Agreement, as so amended, the “Amended ABL Loan Agreement”).

 

Section 2.                   Conditions to Effectiveness. The effectiveness of this Amendment is subject only to the satisfaction (or waiver by the Lenders) of the following conditions precedent (the date on which such conditions have been satisfied (or waived by the Lenders), the “Second Amendment Effective Date”):

 

(a)                the Agent shall have received (i) executed counterparts of this Amendment from each Loan Party, the Agent and each of the Lenders, (ii) a duly executed certificate from an Authorized Officer of the Administrative Borrower certifying that the conditions precedent set forth in clauses (b) and (c) of this Section 2 have been satisfied as of the Closing Date and (iii) such legal opinions, certificates, documents, instruments and agreements as the Agent shall reasonably request in connection with this Amendment, all in form and substance satisfactory to the Agent and its counsel;

 

 

 

(b)                all representations and warranties contained in the Amended ABL Loan Agreement and in the other Financing Agreements shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the Second Amendment Effective Date and after giving effect to this Amendment, except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date);

 

(c)                no Default or Event of Default shall exist or have occurred and be continuing on and as of the Second Amendment Effective Date and immediately after giving effect to this Amendment; and

 

(d)                the Agent shall have received all fees and other amounts due and payable on or prior to the date hereof, including, to the extent invoiced at least one Business Day prior to the Second Amendment Effective Date, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrowers under the Amended ABL Loan Agreement in connection with this Amendment.

 

Section 3.                   Post-Closing Obligations. From the Second Amendment Effective Date until the earlier of (a) Badcock becoming a Cross-Silo Loan Party and (b) the 120th day following the Second Amendment Effective Date, the aggregate principal amount of all Loans shall not exceed $200,000,000 at any time outstanding (the “Interim Loan Cap”). For the avoidance of doubt, the Interim Loan Cap shall not be given any other effect (including for purposes of the Borrowing Cap or considered in the calculation of Excess Availability and other related terms).

 

Section 4.                   Amendments; Counterparts. This Amendment may not be amended or waived except by an instrument in writing signed by each of the parties party hereto. This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Amendment shall be deemed to include Electronic Signatures (as defined below), deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be. “Electronic Signatures” means any electronic symbol or process attached to, or associated with, any contract or other record and adopted by a person with the intent to sign, authenticate or accept such contract or record.

 

Section 5.                   Governing Law, Jurisdiction and Waiver of Right to Trial by Jury. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AMENDMENT AND ANY DISPUTE ARISING OUT OF THE RELATIONSHIP BETWEEN THE PARTIES HERETO, WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK BUT EXCLUDING ANY PRINCIPLES OF CONFLICTS OF LAW OR OTHER RULE OF LAW THAT WOULD CAUSE THE APPLICATION OF THE LAW OF ANY JURISDICTION OTHER THAN THE LAWS OF THE STATE OF NEW YORK. The jurisdiction, service of process, and waiver of right to trial by jury provisions in Section 11.1 of the ABL Loan Agreement are incorporated herein by reference mutatis mutandis.

 

Section 6.                   Headings. The headings of this Amendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.

 

Section 7.                   Effect of Amendment.

 

2

 

(a)                On and after the Second Amendment Effective Date, each reference in the ABL Loan Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the ABL Loan Agreement, and each reference in the other Financing Agreement to the “Loan Agreement”, “thereunder”, “thereof” or words of like import referring to the ABL Loan Agreement, mean and are a reference to the ABL Loan Agreement as modified by this Amendment.

 

(b)                Except as expressly amended hereby, all of the terms and provisions of the ABL Loan Agreement and all other Financing Agreements are and shall remain in full force and effect and are hereby ratified and confirmed. In furtherance of the foregoing, each of the Loan Parties party hereto hereby irrevocably and unconditionally ratifies its grant of security interest and pledge under the Security Agreement and each Financing Agreement and confirms that the liens, security interests and pledges granted thereunder continue to secure the Obligations, including, without limitation, any additional Obligations resulting from or incurred pursuant to this Amendment.

 

(c)                Each of the Loan Parties as debtor, grantor, mortgagor, pledgor, guarantor, assignor, or in any other similar capacity in which such Loan Party grants liens or security interests in its property or otherwise acts as accommodation party, guarantor or indemnitor, as the case may be, hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under each of the Financing Agreements to which it is a party, (ii) ratifies and reaffirms each grant of a lien on, or security interest in, its property made pursuant to the Financing Agreements (including, without limitation, the grant of security made by such Loan Party pursuant to the Collateral Documents) and confirms that such liens and security interests continue to secure the Obligations under the Financing Agreements, in each case subject to the terms thereof, and (iii) in the case of each Guarantor, ratifies and reaffirms its guaranty of the Obligations pursuant to the Financing Agreements. The execution of this Amendment shall not operate as a waiver of any right, power or remedy of the Agent or Lenders, constitute a waiver of any provision of any of the Financing Agreements or serve to effect a novation of the Obligations.

 

(d)                The execution, delivery and performance of this Amendment shall not constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of the Agent or any Lender under, the ABL Loan Agreement or any of the other Financing Agreements. This Amendment shall be deemed to be a Financing Agreement as defined in the ABL Loan Agreement.

 

Section 8.                   No Novation. By its execution of this Amendment, each of the parties hereto acknowledges and agrees that the terms of this Amendment do not constitute a novation, but, rather, a supplement of a pre-existing indebtedness and related agreement, as evidenced by the Amended ABL Loan Agreement.

 

[Signature Pages Follow]

 

3

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.

 

  FRANCHISE GROUP, INC.
   
  By: /s/ Brian Kahn
  Name: Brian Kahn
  Title: President and Chief Executive Officer
   
   
  FRANCHISE GROUP NEWCO PSP, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
   
   
  FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC
   
  By: /s/ Will Powell
Name: Will Powell
Title: Chief Executive Officer and President
   
   
  VALOR ACQUISITION, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
   
   
  VITAMIN SHOPPE INDUSTRIES LLC
   
  By: /s/ Laura Coffey
  Name: Laura Coffey
  Title: Chief Financial Officer
   
   
  AMERICAN FREIGHT GROUP, LLC
   
  By: /s/ Will Powell
  Name: Will Powell
  Title: Chief Executive Officer and President

 

[Signature Page to Second Amendment to Third Amended and Restated Loan and Security Agreement]

 

  PET SUPPLIES “PLUS”, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
   
   
  VITAMIN SHOPPE MARINER, LLC
   
  By: /s/ Laura Coffey
  Name: Laura Coffey
  Title: Chief Financial Officer
   
   
  VITAMIN SHOPPE GLOBAL, LLC
   
  By: /s/ Laura Coffey
  Name: Laura Coffey
  Title: Chief Financial Officer
   
   
  VITAMIN SHOP FLORIDA, LLC
   
  By: /s/ Laura Coffey
  Name: Laura Coffey
  Title: Chief Financial Officer
   
   
  BETANCOURT SPORTS NUTRITION, LLC
   
  By: /s/ Laura Coffey
  Name: Laura Coffey
  Title: Chief Financial Officer
   
   
  VITAMIN SHOPPE PROCUREMENT SERVICES, LLC
   
  By: /s/ Laura Coffey
  Name: Laura Coffey
  Title: Chief Financial Officer
   
   
  VITAMIN SHOPPE FRANCHISING, LLC
   
  By: /s/ Laura Coffey
  Name: Laura Coffey
  Title: Chief Financial Officer
   
   

 

[Signature Page to Second Amendment to Third Amended and Restated Loan and Security Agreement]

 

  FRANCHISE GROUP INTERMEDIATE HOLDCO, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
   
   
  FRANCHISE GROUP INTERMEDIATE S, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
   
   
  AMERICAN FREIGHT HOLDINGS, LLC
   
  By: /s/ Will Powell
  Name:Will Powell
  Title: President
   
   
  AMERICAN FREIGHT, LLC
   
  By: /s/ Will Powell
  Name: Will Powell
  Title: President
   
   
  AMERICAN FREIGHT MANAGEMENT COMPANY, LLC
   
  By: /s/ Will Powell
  Name: Will Powell
  Title: Chief Executive Officer and President
   
   
  AMERICAN FREIGHT OUTLET STORES, LLC
   
  By: /s/ Will Powell
  Name: Will Powell
  Title: Chief Executive Officer and President
   
   
  OUTLET MERCHANDISE, LLC
   
  By: /s/ Will Powell
  Name:Will Powell
  Title: Chief Executive Officer and President
   
   

 

[Signature Page to Second Amendment to Third Amended and Restated Loan and Security Agreement]

 

  FRANCHISE GROUP NEWCO S, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: Chief Executive Officer
   
   
  AMERICAN FREIGHT FRANCHISING, LLC
   
  By: /s/ Will Powell
  Name: Will Powell
  Title: Chief Executive Officer and President
   
   
  AMERICAN FREIGHT FRANCHISOR, LLC
   
  By: /s/ Will Powell
  Name: Will Powell
  Title: Chief Executive Officer and President
   
   
  FRANCHISE GROUP NEW HOLDCO, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
   
   
  FRANCHISE GROUP INTERMEDIATE L, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
   
   
  FRANCHISE GROUP INTERMEDIATE V, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
   
   
  FRANCHISE GROUP NEWCO V, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
   
   

 

[Signature Page to Second Amendment to Third Amended and Restated Loan and Security Agreement]

 

  FRANCHISE GROUP INTERMEDIATE B, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
   
   
  BUDDY'S NEWCO, LLC
   
  By: /s/ Michael Bennett
  Name: Michael Bennett
  Title: Chief Executive Officer
   
   
  BUDDY'S FRANCHISING AND LICENSING LLC
   
  By: /s/ Michael Bennett
  Name: Michael Bennett
  Title: Chief Executive Officer
   
   
  AMERICAN FREIGHT FFO, LLC
   
  By: /s/ Will Powell
  Name: Will Powell
  Title: Chief Executive Officer and President
   
   
  FRANCHISE GROUP ACQUISITION TM, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
   
   
  FRANCHISE GROUP INTERMEDIATE PSP, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
   
   
  PSP MIDCO, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
   
   

 

[Signature Page to Second Amendment to Third Amended and Restated Loan and Security Agreement]

 

  PSP GROUP, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
   
   
  PSP SERVICE NEWCO, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
   
   
  PSP STORES, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
   
   
  PSP SUBCO, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
   
   
  PSP FRANCHISING, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
   
   
  PSP DISTRIBUTION, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
   
   
  FRANCHISE GROUP INTERMEDIATE BHF, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
   
   

 

[Signature Page to Second Amendment to Third Amended and Restated Loan and Security Agreement]

 

  FRANCHISE GROUP NEWCO BHF, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
   
   
  FRANCHISE GROUP INTERMEDIATE SL, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
   
   
  FRANCHISE GROUP NEWCO SL, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
   
   
  EDUCATE, INC.
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
   
   
  EDUCATE OPERATING COMPANY, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
   
   
  SYLVAN LEARNING, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
   
   
  LEARNING PARTNERSHIPS, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
   
   
  EDUCATE DIGITAL, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
   
   

 

[Signature Page to Second Amendment to Third Amended and Restated Loan and Security Agreement]

 

  SYLVAN IN-HOME, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
   
   
  EDUCATE CORPORATE CENTERS HOLDINGS, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
   
   
  LEARNING SYSTEM OF THE FUTURE, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
   
   
  SYLVAN LEARNING CENTERS, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
   
   
  OMEGA LEARNING CENTERS, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
   
   
  MARYLAND LEARNING CENTERS, LLC
   
  By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
   
   

 

[Signature Page to Second Amendment to Third Amended and Restated Loan and Security Agreement]

 

  JPMORGAN CHASE BANK, N.A., as the Agent and a Lender
   
  By: /s/ James A. Knight
Name: James A. Knight
Title: Executive Director
   
   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Second Amendment to Third Amended and Restated Loan and Security Agreement]

 

 

  CITIZENS BANK, N.A., as a Lender
   
  By: /s/ Peter Yelle
Name: Peter Yelle
Title: SVP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Second Amendment to Third Amended and Restated Loan and Security Agreement]

 

EXHIBIT A

 

Amended ABL Loan Agreement

 

 

 

 

 

 

 

 

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

 

 

 

THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

by and among

 

FRANCHISE GROUP, INC.,

VALOR ACQUISITION, LLC,
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC

and

FRANCHISE GROUP NEWCO PSP, LLC,

as Borrowers

 

THE OTHER BORROWERS FROM TIME TO TIME PARTY HERETO

 

THE OTHER LOAN PARTIES FROM TIME TO TIME PARTY HERETO

 

THE LENDERS, SWINGLINE LENDER AND ISSUING BANK FROM TIME TO TIME PARTY HERETO

 

and

 

JPMORGAN CHASE BANK, N.A.,
as Agent

 

Dated: March 10, 2021

 

 

 

 

 

TABLE OF CONTENTS

 

 

    Page
     
Section 1. DEFINITIONS 1
1.1Definitions. 1
1.2Limited Conditionality Acquisition. 8685
Section 2. CREDIT FACILITIES 8786
2.1Revolving Loans 8786
2.2Swingline Loans and Overadvances 8887
2.3Letters of Credit 8988
2.4Termination, Reductions or Increases of Aggregate Revolving Commitment Amounts 9594
2.5Revolving Commitments 97
2.6Bank Products 97
2.7Joint and Several Liability 9897
2.8Defaulting Lenders 9998
2.9Prepayment of Loans 101100
2.10Loans and Borrowings. 102101
2.11Requests for Borrowings. 102
2.12Interest Elections 103102
Section 3. INTEREST AND FEES 104
3.1Interest Payments 104
3.2Fees 105
3.3Increased Costs 106
3.4Alternate Rate of Interest; Illegality. 108107
3.5Withholding of Taxes; Gross-Up. 110111
3.6Mitigation of Obligations; Replacement of Lenders. 114
3.7Break Funding Payments 115
Section 4. CONDITIONS PRECEDENT 115116
4.1Conditions Precedent to Effectiveness 115116
4.2Conditions Precedent to All Loans and Letters of Credit 118119
Section 5. GRANT AND PERFECTION OF SECURITY INTEREST 119120
5.1Grant of Security Interest 119120
5.2Perfection of Security Interests 120121
Section 6. COLLECTION AND ADMINISTRATION 125126
6.1Borrowers’ Loan Accounts 125126
6.2Statements 126
6.3Collection of Accounts 126127
6.4Payments 128129
6.5[Reserved] 134135
6.6Authorization to Make Loans 134135

 

i

 

6.7Use of Proceeds 135
6.8Appointment of Administrative Borrower as Agent for Requesting Loans and Receipts of Loans and Statements 135136
6.9Pro Rata Treatment 136137
6.10Sharing of Payments, Etc 136137
6.11Settlement Procedures 137138
6.12Obligations Several; Independent Nature of Lenders’ Rights 139140
Section 7. COLLATERAL REPORTING AND COVENANTS 140141
7.1Collateral Reporting 140141
7.2Accounts Covenants 141142
7.3Inventory Covenants 142143
7.4Equipment and Real Property Covenants 143144
7.5Delivery of Instruments, Chattel Paper and Documents 144
7.6[Reserved]. 144145
7.7Power of Attorney 144145
7.8Right to Cure 146147
7.9Access to Premises 146147
Section 8. REPRESENTATIONS AND WARRANTIES 147148
8.1Corporate Existence, Power and Authority 147148
8.2Name; State of Organization; Chief Executive Office; Collateral Locations 148149
8.3Financial Statements; No Material Adverse Change 148149
8.4Priority of Liens; Title to Properties 149150
8.5Tax Returns 149150
8.6Litigation 149150
8.7Compliance with Applicable Laws 150151
8.8Environmental Compliance 150151
8.9Employee Benefits 151
8.10Bank Accounts 151152
8.11Intellectual Property 152
8.12Subsidiaries; Capitalization; Solvency 152153
8.13Labor Disputes 153154
8.14Restrictions on Subsidiaries 153154
8.15Material Contracts 153154
8.16Credit Card Agreements 154
8.17Investment Company Status 154155
8.18Accuracy and Completeness of Information 154155
8.19Survival of Warranties; Cumulative 154155
8.20Reaffirmation of Financing Agreements 155156
8.21Anti-Corruption Laws and Sanctions 155156
8.22Regulatory Compliance 155156
8.23Franchise Agreements 157158
8.24Affected Financial Institutions 157158

 

ii

 

Section 9. AFFIRMATIVE AND NEGATIVE COVENANTS 157158
9.1Maintenance of Existence 158
9.2[Reserved] 158159
9.3Compliance with Laws, Regulations, Etc 158159
9.4Payment of Taxes and Claims 159160
9.5Insurance 160
9.6Financial Statements and Other Information 161162
9.7Sale of Assets, Consolidation, Merger, Dissolution, Etc 164165
9.8Encumbrances 170
9.9Indebtedness 174
9.10Loans, Investments, Etc 180181
9.11Dividends and Redemptions 185186
9.12Transactions with Affiliates 187188
9.13Compliance with ERISA 190191
9.14Fiscal Year 190191
9.15Change in Business 190191
9.16Limitation of Restrictions Affecting Subsidiaries 190191
9.17Financial Covenant 192193
9.18Credit Card Agreements 192193
9.19License Agreements. 192193
9.20Foreign Assets Control Regulations, Etc 193194
9.21After-Acquired Real Property. 194195
9.22Costs and Expenses 195196
9.23Further Assurances 195196
9.24Permitted Payments of Indebtedness 199200
9.25Commodity Exchange Act Keepwell Provisions 200201
9.26Disbursement Cash Management Systems 200201
9.27Amendments to Financing Documents 200201
9.28Badcock 201202
9.29Anti-Commingling. 202203
9.30Franchise Agreements. 202203
9.31Post-Closing Obligations. 202203
Section 10. EVENTS OF DEFAULT AND REMEDIES 202203
10.1Events of Default 202203
10.2Remedies 204205
10.3Borrowers’ and Guarantors’ Obligations Upon Default 208209
10.4Sale of Inventory and Use of Intellectual Property 208209
Section 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW 208209
11.1Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver 208209
11.2Waiver of Notices 210211
11.3Collateral Waivers 210211
11.4Amendments and Waivers 210211
11.5Waiver of Counterclaims 213214

 

iii

 

11.6Indemnification; Limitation of Liability 213214
11.7Right of Setoff 214215
Section 12. THE AGENT 215216
12.1Appointment, Powers and Immunities 215216
12.2Reliance by Agent 215216
12.3Events of Default 216217
12.4Chase in its Individual Capacity 216217
12.5Indemnification 217218
12.6Acknowledgments of Lenders, Swingline Lender and Issuing Bank; Non-Reliance on Agent and Other Lenders 217218
12.7Failure to Act 219220
12.8Additional Loans 219220
12.9Concerning the Collateral and the Related Financing Agreements 220221
12.10Field Audit, Examination Reports and other Information; Disclaimer by Lenders 220221
12.11Collateral Matters 221222
12.12Agency for Perfection 222223
12.13Successor Agent 223224
12.14Other Agent Designations 223224
12.15Intercreditor Agreement 223224
12.16Posting of Communications 224225
12.17Certain ERISA Matters 225226
Section 13. TERM OF AGREEMENT; MISCELLANEOUS 227228
13.1Term 227228
13.2Interpretative Provisions 228229
13.3Notices 231
13.4Partial Invalidity 232233
13.5Confidentiality 232233
13.6Successors 233234
13.7Assignments; Participations 234
13.8Entire Agreement 236237
13.9USA Patriot Act 236237
13.10Counterparts; Integration; Effectiveness; Electronic Execution 237
13.11Restatement 238239
13.12Acknowledgment Regarding Any Supported QFCs 238239
13.13Acknowledgement and Consent to Bail-In of Affected Financial Institutions 239
13.14Intercreditor Agreement. 239240
13.15Release of Liens and Guarantees. 239240

 

iv

 

INDEX
TO
EXHIBITS AND SCHEDULES

 

Exhibit A Form of Assignment and Assumption
Exhibit B Information Certificate
Exhibit C Form of Compliance Certificate
Exhibit D Form of Borrowing Base Certificate
Exhibit E-1 Form of U.S. Tax Certificate
Exhibit E-2 Form of U.S. Tax Certificate
Exhibit E-3 Form of U.S. Tax Certificate
Exhibit E-4 Form of U.S. Tax Certificate
Exhibit F Form of Commitment Increase Agreement
Exhibit G Form of Additional Lender Agreement
Exhibit H Form of Borrower Joinder Agreement
Exhibit I Forms of Trademark Security Agreement, Copyright Security Agreement and Patent Security Agreement
   
Schedule 1A Revolving Commitments
Schedule 1B AFG Franchisees
Schedule 1C List of Names
Schedule 2.3 Existing Letters of Credit
Schedule 5.2(g) Commercial Tort Claims
Schedule 8.2(a) Chief Executive Offices and Mailing Addresses
Schedule 8.2(b) Other Locations
Schedule 8.4 Liens
Schedule 8.6 Litigation
Schedule 8.10 Bank Accounts
Schedule 8.11(a) Intellectual Property
Schedule 8.11(c) Intellectual Property Exceptions
Schedule 8.12 Affiliates and Subsidiaries, etc.
Schedule 8.13 Collective Bargaining Agreements
Schedule 8.15 Material Contracts
Schedule 8.16 Credit Card Agreements
Schedule 8.23 Franchise Agreements
Schedule 9.7(U) Specified Disposition
Schedule 9.9 Existing Indebtedness
Schedule 9.10 Loans and Advances
Schedule 9.12 Transactions with Affiliates
Schedule 9.16 Existing Restrictions
Schedule 9.31 Post-Closing Obligations

v

 

THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This Third Amended and Restated Loan and Security Agreement dated March 10, 2021 (this “Agreement”) is by and among Franchise Group, Inc., a Delaware corporation, Valor Acquisition, LLC, a Delaware limited liability company, Franchise Group Newco Intermediate AF, LLC, a Delaware limited liability company, Franchise Group Newco PSP, LLC, a Delaware limited liability company, and certain Subsidiaries of each of the foregoing, as Borrowers, the parties hereto from time to time as Guarantors, the parties hereto from time to time as lenders (each individually, a “Lender” and collectively, “Lenders” as hereinafter further defined) and JPMorgan Chase Bank, N.A., a national banking association, in its capacity as agent for the Lenders (in such capacity, “Agent” as hereinafter further defined).

 

WITNESSETH:

 

WHEREAS, Borrowers, Valor Acquisition, LLC, as parent and a guarantor, Agent and the lenders party thereto are parties to that certain Second Amended and Restated Loan and Security Agreement dated as of December 16, 2019 (as amended, supplemented or otherwise modified from time to time prior to the date hereof, the “Existing Credit Agreement”); and

 

WHEREAS, subject to the conditions precedent set forth herein, the parties hereto desire to amend and restate the Existing Credit Agreement in its entirety in the form of this Agreement.

 

NOW, THEREFORE, in consideration of the premises, the representations, warranties, covenants and agreements contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and subject to the satisfaction of each condition precedent contained in Section 4.1 hereof, the Existing Credit Agreement shall be amended and restated as of the Closing Date (as defined below) in the form of this Agreement. It is the intention of the parties hereto, and such parties hereby agree, that this Agreement supersedes and replaces the Existing Credit Agreement in its entirety, and that (a) such amendment and restatement shall operate to renew, amend and modify certain of the rights and obligations of the parties under the Existing Credit Agreement as provided herein, but shall not act as a novation thereof, and (b) the Liens securing the “Obligations” under and as defined in the Existing Credit Agreement shall not be extinguished, but shall be carried forward and shall secure such obligations and Indebtedness as renewed, amended, restated and modified hereby. The parties hereto further agree as follows:

 

Section 1.DEFINITIONS

 

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

 

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

 

ABL Priority Collateral” has the meaning assigned to such term in the Intercreditor Agreement.

 

ABR Borrowing” shall mean a Borrowing of ABR Loans.

 

1

 

ABR Loans” shall mean any Loans or portion thereof on which interest is payable based on the Alternate Base Rate in accordance with the terms thereof.

 

Accounts” shall have the meaning set forth in Article 9 of the UCC and includes, without limitation, as to each Borrower and Guarantor, all present and future rights of such Borrower and Guarantor to payment of a monetary obligation, whether or not earned by performance, which is not evidenced by Chattel Paper or an Instrument, (a) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for services rendered or to be rendered, (c) for a secondary obligation incurred or to be incurred, (d) arising out of the use of a credit or charge card or information contained on or for use with the card or (e) arising out of franchising agreements.

 

Account Debtor” shall have the meaning set forth in Article 9 of the UCC.

 

ACH Transactions” shall mean the automatic clearing house transfer of funds by Agent, any Lender or any of their respective Affiliates for the account of any Borrower or its Subsidiaries, in each case pursuant to agreements entered into with any Borrower or any of its Subsidiaries.

 

Acquired EBITDA” means, with respect to any Pro Forma Entity, for any period, the amount of EBITDA of such Pro Forma Entity (determined as if references to the Borrowers and their Subsidiaries in the definition of “EBITDA” were references to such Pro Forma Entity and its subsidiaries that will become Subsidiaries), all as determined on a consolidated basis for such Pro Forma Entity.

 

Acquired Entity or Business” has the meaning given such term in the definition of “EBITDA.”

 

Additional Lender Agreement” has the meaning assigned to such term in Section 2.4(d)(ii).

 

“Adjusted Daily Simple SOFR” means an interest rate per annum equal to (a) the Daily Simple SOFR, plus (b) 0.10%; provided that if the Adjusted Daily Simple SOFR as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.

 

Adjusted LIBOTerm SOFR Rate” means, with respect to any Eurodollar Borrowing for any Interest Period or for any ABR Borrowing, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBOTerm SOFR Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate, plus (b) 0.10%; provided that if the Adjusted Term SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.

 

Administrative Borrower” shall mean FRG, in its capacity as Administrative Borrower on behalf of itself and the other Borrowers pursuant to Section 6.8 hereof and its successors and assigns in such capacity.

 

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

 

2

 

Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.

 

Affiliate” shall mean, with respect to a specified Person, any other Person which directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with such Person. For the purposes of this definition, the term “control” (including with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by agreement or otherwise. Without limiting the foregoing, any Subsidiary of FRG shall be considered an Affiliate of the Borrowers for purposes of this Agreement.

 

AFG Borrowers” means (a) American Freight, LLC, a Delaware limited liability company, (b) AFG Intermediate and (c) American Freight Outlet Stores, LLC, a Delaware limited liability company.

 

AFG Borrowing Base” shall mean, at any time, the amount equal to:

 

(a)               the amount equal to:

 

(i)               90% of the amount of Eligible Credit Card Receivables of the AFG Borrowers at such time, plus

 

(ii)              85% of the amount of Eligible Accounts of the AFG Borrowers at such time, plus

 

(iii)             90% of the Net Recovery Percentage multiplied by the Value of the Eligible Inventory of the AFG Borrowers, net of any Inventory Reserves, in each case, at such time, minus

 

(b)               the Availability Reserves;

 

provided that (1) the aggregate amount of Eligible Inventory of the AFG Borrowers that is (x) Inventory that is consigned to AFG Franchisees or (y) Inventory at locations owned or leased by AFG Franchisees shall not exceed, in the aggregate for clauses (x) and (y), the amount equal to 10% of the AFG Borrowing Base at any time and (2) the aggregate amount of Eligible Accounts of the AFG Borrowers in respect of Franchisee Receivables shall not exceed the amount equal to 10% of the AFG Borrowing Base at any time.

 

The amounts of Eligible Inventory of the AFG Borrowers shall be determined based on the amount of applicable Inventory set forth in the inventory record maintained by the Borrowers.

 

Agent shall have the right to establish Reserves against or sublimits in the AFG Borrowing Base in such amounts and with respect to such matters as Agent shall deem reasonably necessary or appropriate in its Permitted Discretion, based on new information received by Agent and after Agent has completed its updated field audits, examinations and appraisals of the Collateral; provided, however, that, so long as no Event of Default has occurred and is continuing, Agent shall give to Administrative Borrower five Business Days’ telephonic or electronic notice if (A) Agent establishes new categories of Reserves, (B) Agent changes the methodology of calculating Reserves or (C) Agent establishes new categories of sublimits in the AFG Borrowing Base; provided further that, during such five Business Day-period, no Borrowing may be drawn or Letter of Credit issued to the extent any Revolving Exposure Limitations would be exceeded after giving effect to any such Reserves or sublimit modifications. The foregoing notwithstanding, in the event Agent establishes Reserves to preserve or protect or maximize the value of the Collateral during the continuance of an Event of Default, Agent shall only provide Administrative Borrower with notice at the time such Reserves are established.

 

3

 

Accounts, Credit Card Receivables and Inventory of the AFG Borrowers shall only be Eligible Accounts, Eligible Credit Card Receivables and Eligible Inventory, as applicable, to the extent that (x) Agent has conducted and completed a field examination, appraisal and other due diligence with respect thereto and (y) the criteria for Eligible Accounts, Eligible Credit Card Receivables and Eligible Inventory set forth herein, as applicable, are satisfied with respect thereto in accordance with this Agreement (or such other or additional criteria as Agent may, at its option, establish with respect thereto in accordance with this Agreement and subject to such Reserves as Agent may establish in its Permitted Discretion).

 

The AFG Borrowing Base shall be determined at any time by Agent, on the basis of the most recently delivered Borrowing Base Certificate, as adjusted by Agent for any changes in Reserves or otherwise in accordance with the terms hereof.

 

AFG Borrowing Cap” shall mean, the amount, calculated at any date, equal to the lesser of (i) $100,000,000 and (ii) the AFG Borrowing Base in effect at such time.

 

AFG Excess Availability” shall mean, the amount, as determined by Agent, calculated at any date, equal to: (a) the AFG Borrowing Cap minus (b) the Aggregate Revolving Exposure owing by the AFG Borrowers.

 

AFG Franchise Agreement” means a franchising agreement between any AFG Borrower, as franchisor, and any other Person, as franchisee, pertaining to the establishment and operation of a business with operations comparable to the operations of AFG Intermediate and its Subsidiaries.

 

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

 

(a)               the applicable AFG Borrower has executed an agreement with the applicable AFG Franchisee to operate a franchise under one of the brands as listed on Schedule 1C hereto, or any subsequent rebranding of such franchise, at a location owned or leased and operated by such AFG Franchisee, substantially on the standard form agreements containing terms and conditions established by the AFG Borrowers from time to time, which shall include (A) an acknowledgement from such AFG Franchisee that the AFG Borrowers, or Agent acting on behalf of the AFG Borrowers, are authorized to transfer proceeds of the Inventory consigned by such AFG Borrower to such AFG Franchisee from the bank account maintained by such AFG Franchisee to an account in the name of an AFG Borrower and (B) an acknowledgement by the AFG Franchisee that the applicable AFG Borrower has granted a Lien to Agent on the Inventory consigned by such AFG Borrower to the AFG Franchisee and an agreement by the AFG Franchisee to reasonably cooperate with Agent in the event of the exercise by Agent of its rights and remedies with respect to such Lien;

 

4

 

(b)               the applicable AFG Borrower has provided Agent with evidence that such AFG Borrower has filed appropriate UCC financing statements against the applicable AFG Franchisee evidencing the consignment arrangement between such AFG Borrower and the applicable AFG Franchisee with respect to the Inventory consigned by the such AFG Borrower to the applicable AFG 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 AFG Franchisee as required by the UCC);

 

(c)               if requested by Agent, the applicable AFG Borrower has provided the Agent with an assignment of the UCC financing statements set forth in clause (b) above;

 

(d)               the applicable AFG Borrower has complied in all material respects with all representations, warranties and covenants set forth herein and in the other Financing Agreements 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 1C (or any subsequent rebranding of such franchises) by the applicable AFG Franchisee; and

 

(e)               the agreements between the applicable AFG Borrower and the applicable AFG Franchisee provide that all amounts owed by such AFG Franchisee to such AFG Borrower shall be swept at least daily into an account of an AFG Borrower which is subject to a Deposit Account Control Agreement.

 

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

 

AFG Franchisees” means, as of the Closing Date, the individuals and entities listed in Schedule 1B as “AFG franchisees”, and thereafter, such entities and any additional individual or entity that meets the AFG Franchisee Eligibility Requirements.

 

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

 

AFG Loan Party” means (a) each AFG Borrower and (b) without duplication of clause (a), each Loan Party that is a Subsidiary of an AFG Borrower.

 

5

 

Agent” shall mean JPMorgan Chase Bank, N.A., in its capacity as agent on behalf of Lenders pursuant to the terms hereof and any replacement or successor agent hereunder.

 

Agent Fee Letter” shall mean the amended and restated administrative agent fee letter, dated as of January 29, 2021, by and among FRG, PSP Newco and Agent, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

 

Agent Payment Account” shall mean account no. XXXXX9773 of Agent at Chase, or such other account of Agent as Agent may from time to time designate to Administrative Borrower as the Agent Payment Account for purposes of this Agreement and the other Financing Agreements.

 

Aggregate Borrowing Base” means the sum of the AFG Borrowing Base, the PSP Borrowing Base and the TVS Borrowing Base.

 

Aggregate Revolving Commitment Amounts” shall mean, at any time, the sum of the Revolving Commitments, as the same may be adjusted pursuant to Section 2.4. As of the ClosingSecond Amendment Effective Date, the Aggregate Revolving Commitment Amounts are $150,000,000250,000,000.

 

Aggregate Revolving Exposure” shall mean, at any time, the aggregate amount of Revolving Exposure of all Revolving Lenders.

 

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 NYFRB Rate in effect on such day plus ½ of 1% and (c) the Adjusted LIBOTerm SOFR Rate for a one month Interest Period onas published two U.S. Government Securities Business Days prior to such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%, provided that, for the purpose of this definition, the Adjusted LIBOTerm SOFR Rate for any day shall be based on the LIBO Screen Rate (or if the LIBO Screen Rate is not available for such one month Interest Period, the Interpolated Rate)Term SOFR Reference Rate at approximately 11:005:00 a.m. LondonChicago time on such day (or any amended publication time for the Term SOFR Reference Rate, as specified by the CME Term SOFR Administrator in the Term SOFR Reference Rate methodology). Any change in the Alternate Base Rate due to a change in the Prime Rate, the NYFRB Rate or the Adjusted LIBOTerm SOFR Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the Adjusted LIBOTerm SOFR Rate, respectively. If the Alternate Base Rate is being used as an alternate rate of interest pursuant to Section 3.4 (for the avoidance of doubt, only until the Benchmark Replacement has been determined pursuant to Section 3.4(c)), then the Alternate Base Rate shall be the greater of clause (a) and (b) above and shall be determined without reference to clause (c) above. For the avoidance of doubt, if the Alternate Base Rate as determined pursuant to the foregoing would be less than 1.00%, such rate shall be deemed to be 1.00% for purposes of this Agreement.

 

Ancillary Document” has the meaning assigned to it in Section 13.10(b).

 

6

 

Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Borrowers, the Guarantors or any of their respective Subsidiaries from time to time concerning or relating to bribery or corruption.

 

Applicable Borrowers” means (a) with respect to any AFG Loan Party, the AFG Borrowers, (b) with respect to any PSP Loan Party, the PSP Borrowers and (c) with respect to any TVS Loan Party, the TVS Borrowers.

 

Applicable Borrowing Cap” means (a) with respect to any AFG Loan Party, the AFG Borrowing Cap, (b) with respect to any PSP Loan Party, the PSP Borrowing Cap and (c) with respect to any TVS Loan Party, the TVS Borrowing Cap.

 

Applicable Margin” means, for any day, with respect to any Revolving Loan, the applicable rate per annum set forth below under the caption “Revolver ABR Spread”, “Revolver Term Benchmark Spread” or “Revolver EurodollarRFR Spread”, as the case may be, based upon the Borrowers’ Average Excess Availability for the prior fiscal quarter as of the most recent determination date, provided that until the delivery to Agent, pursuant to Section 7.1(a)(i), of the Borrowers’ Borrowing Base Certificate for the fiscal month ended March 31, 2021, the “Applicable Margin” shall be the applicable rate per annum set forth below in Category 2:

 

Average Excess Availability Revolver
ABR Spread
Revolver Term Benchmark Spread Revolver EurodollarRFR Spread

Category 1:

 

Average Excess Availability greater than or equal to 66% of the Borrowing Cap

 

0.75% 1.75% 1.75%

Category 2:

 

Average Excess Availability less than 66% but greater than or equal to 33% of the Borrowing Cap

 

1.00% 2.00% 2.00%

Category 3:

 

Average Excess Availability less than 33% of the Borrowing Cap

 

1.25% 2.25% 2.25%

 

For purposes of the foregoing, (a) the Applicable Margin shall be determined as of the end of each fiscal quarter of the Borrowers based upon the Borrowers’ Average Excess Availability for the prior fiscal quarter upon Agent’s receipt of the Borrowers’ Borrowing Base Certificate delivered pursuant to Section 7.1(a)(i) and (b) each change in the Applicable Margin resulting from a change in the Borrowers’ Average Excess Availability for the prior fiscal quarter shall be effective during the period commencing on and including the date of delivery to Agent of such Borrowing Base Certificate indicating such change and ending on the date immediately preceding the effective date of the next such change, provided that the Borrowers’ Average Excess Availability shall be deemed to be in Category 3 at the option of Agent or at the request of the Required Lenders if the Borrowers fail to deliver the Borrowing Base Certificate required to be delivered by them pursuant to Section 7.1(a)(i), during the period from the expiration of the time for delivery thereof until such Borrowing Base Certificate is delivered.

 

7

 

Approved Bank” has the meaning assigned to such term in the definition of the term “Cash Equivalents.”

 

Approved Electronic Platform” has the meaning assigned to it in Section 12.16(a).

 

Asset Sale” shall mean:

 

(a)               the sale, lease, conveyance or other disposition of any assets or rights; and

 

(b)               the issuance of Capital Stock in any of the Borrowers or the Subsidiary Guarantors or the sale of Capital Stock in any of the Borrowers or the Subsidiary Guarantors (in each case other than issuing directors’ qualifying shares, nominal shares issued to foreign nationals to the extent required by applicable Requirement of Law and other than issuing Capital Stock to the Borrower or a Subsidiary).

 

Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:

 

(i)                 any single transaction or series of related transactions that involves assets having a fair market value of less than $5,000,000;

 

(ii)              a transfer of assets between or among any Loan Parties;

 

(iii)            an issuance of Capital Stock by a Loan Party to a Loan Party;

 

(iv)             the sale or lease of products, services, inventory, equipment, leasehold improvements, fixtures or accounts receivable in the ordinary course of business and any sale or other disposition of damaged, worn-out or obsolete assets, and assets that are no longer used or useful, or economically impracticable to maintain, in the ordinary course of business (including allowing any registration or application for registration of any Intellectual Property that is no longer used or useful, or economically practicable to maintain, to lapse, go abandoned, be dedicated to the public domain or be invalidated);

 

(v)               the sale or other disposition of cash or Cash Equivalents;

 

(vi)             any license, sublicense, covenant not to sue, or similar agreement with respect to patents, trademarks, registrations thereof and other Intellectual Property (a) made in the ordinary course of business or (b) that do not materially interfere with the business of the Borrowers or Guarantors, taken as a whole;

 

8

 

(vii)          any release of intangible claims or rights in connection with the loss or settlement of a bona-fide lawsuit, dispute or other controversy;

 

(viii)        leases or subleases in the ordinary course of business to third persons not interfering in any material respect with the business of the Borrowers or any of the Guarantors; and

 

(ix)             an Investment permitted under Section 9.10 and any dividend or other distribution (whether in cash, securities or other property) with respect to any Capital Stock of the Borrowers and the Subsidiary Guarantors that are expressly permitted under Section 9.11.

 

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

 

Authorized Officer” shall mean the individuals holding the position of president, treasurer, vice president of finance, chief executive officer, chief financial officer or controller of Administrative Borrower, or if no such officers have been appointed or elected, the sole member of the Administrative Borrower.

 

Availability Reserves” shall mean all Reserves other than Inventory Reserves.

 

Available Equity Amount” means a cumulative amount equal to:

 

(a)                the net proceeds received in cash or Cash Equivalents of new public or private issuances after the Closing Date of Qualified Equity Interests (excluding any Qualified Equity Interests used for, or otherwise having the effect of increasing, any other basket under this Agreement) of the Administrative Borrower, plus

 

(b)                capital contributions received by the Administrative Borrower after the Closing Date in cash or Cash Equivalents (and the fair market value (as determined in good faith by the Administrative Borrower) of non-cash capital contributions) in respect of Qualified Equity Interests (excluding any Qualified Equity Interests used for, or otherwise having the effect of increasing, any other basket under this Agreement), plus

 

(c)                the net cash proceeds received by a Borrower or any Subsidiary from Indebtedness and Disqualified Equity Interest issuances issued after the Closing Date and which have been exchanged or converted into Qualified Equity Interests, plus

 

(d)                returns, profits, distributions and similar amounts received in (or converted into) cash or Cash Equivalents (and the fair market value (as determined in good faith by the Administrative Borrower) of non-cash returns, profits, distributions and similar amounts) by the Borrower or any Subsidiary on Investments made using the Available Equity Amount (not to exceed the original amount of such Investments).

 

Available General RP Capacity Amount” means (i) the amount of dividends and distributions that may be paid or made at the time of determination pursuant to 9.11(l) plus (ii) the amount of prepayments, redemptions, purchases, defeasances and other payments in respect of any Permitted Subordinated Indebtedness that may be made at the time of determination pursuant to Section 9.24(j)(A) minus (iii) the sum of the amount of the Available General RP Capacity Amount utilized by a Borrower or any Subsidiary prior to such time to pay or make (a) dividends or distributions pursuant to Section 9.11(l), (b) prepayments, redemptions, purchases, defeasances and other payments in respect of any Permitted Subordinated Indebtedness pursuant to Section 9.24(j)(A), (c) Investments pursuant to Section 9.10(hh)(A)(ii) utilizing the Available General RP Capacity Amount or (d) prepayments, redemptions, purchases, defeasances and other payments in respect of any Indebtedness pursuant to Section 9.24(j)(B) utilizing the Available General RP Capacity Amount.

 

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Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark (or component thereof) or payment period for interest calculated with reference to such Benchmark (or component thereof), as applicable, that is or may be used for determining the length of an Interest Period for any term rate or otherwise, for determining any frequency of making payments of interest calculated pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to clause (gf) of Section 3.4.

 

Average Excess Availability” means, for any period, the average daily Excess Availability during such period, as determined by the Agent’s system of records.

 

Badcock” means W.S. Badcock Corporation, a Florida corporation.

 

Badcock Acquisition” means the “Badcock Acquisition” as defined in the First Amendment.

 

Badcock Collateral” means (i) prior to the Badcock Joinder Date, any and all assets, whether real or personal, tangible or intangible, on which Liens are purported to be granted pursuant to the applicable Badcock Security Documents as security for the First Lien Obligations, the Second Lien Obligations or any Badcock Term Obligations, as the case may be, and (ii) from and after the Badcock Joinder Date, any and all assets, whether real or personal, tangible or intangible, on which Liens are purported to be granted pursuant to the applicable Collateral Documents as security for the Obligations.

 

Badcock First Lien Agent” means JPMorgan Chase Bank, N.A., as administrative agent and collateral agent under the Badcock First Lien Credit Agreement or any successor thereto acting in such capacities.

 

Badcock First Lien Credit Agreement” means that certain First Lien Credit Agreement, dated as of the First Amendment Effective Date, among the Administrative Borrower and certain Subsidiaries of the Administrative Borrower, as borrowers, the Badcock First Lien Agent and the lenders from time to time party thereto, as in effect on the First Amendment Effective Date as the same may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof (including by reference to the ABL Intercreditor Agreement and the First Lien/Second Lien Intercreditor Agreement).

 

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Badcock First Lien Term Loan Documents” shall have the meaning ascribed to the term “Loan Documents” in the Badcock First Lien Credit Agreement.

 

Badcock Joinder Date” shall have the meaning set forth in Section 9.23(a)(ii) hereof.

 

Badcock Second Lien Agent” means Alter Domus (US) LLC, as administrative agent and collateral agent under the Badcock Second Lien Credit Agreement or any successor thereto acting in such capacities.

 

Badcock Second Lien Credit Agreement” means that certain Second Lien Credit Agreement, dated as of the First Amendment Effective Date, among the Administrative Borrower and certain Subsidiaries of the Administrative Borrower, as borrowers, the Badcock Second Lien Agent and the lenders from time to time party thereto, as in effect on the First Amendment Effective Date as the same may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof (including by reference to the ABL Intercreditor Agreement and the First Lien/Second Lien Intercreditor Agreement).

 

Badcock Second Lien Term Loan Documents” shall have the meaning ascribed to the term “Loan Documents” in the Badcock Second Lien Credit Agreement.

 

Badcock Security Documents” means (i) the “Badcock Security Documents” as defined in the First Lien Credit Agreement, (ii) the “Badcock Security Documents” as defined in the Second Lien Credit Agreement, (iii) the “Badcock Security Documents” as defined in the Badcock First Lien Credit Agreement and (iv) the “Badcock Security Documents” as defined in the Badcock Second Lien Credit Agreement.

 

Badcock Term Obligations” means, collectively, (i) the Secured Obligations (as defined in the Badcock First Lien Credit Agreement) and (ii) the Secured Obligations (as defined in the Badcock Second Lien Credit Agreement).

 

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

 

Bail-In Legislation” means, (a) 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, regulation, rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).

 

Bank Products” shall mean any one or more of the following types of services or facilities provided to any Loan Party or its Subsidiaries by a Bank Product Provider: (a) credit cards for commercial customers (including, without limitation, “commercial credit cards” and purchasing cards), (b) stored value cards, (c) treasury management services (including, without limitation, controlled disbursement, ACH Transactions, return items, overdrafts and interstate depository network services), (d) foreign exchange contracts, and (e) Hedge Agreements and coin and currency lines.

 

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Bank Product Providers” shall mean Agent, any Lender and any of their respective Affiliates that may, from time to time, provide any Bank Products to a Loan Party or any Subsidiary of a Loan Party; each sometimes being referred to herein individually as a “Bank Product Provider”.

 

Bank Product Reserve” shall mean any and all reserves that Agent may establish from time to time with the written consent of the Administrative Borrower, to reflect any obligations, liabilities or indebtedness (contingent or otherwise) of any Loan Party or its Subsidiaries to Agent or any Bank Product Provider arising under or in connection with any Bank Products or as such Bank Product Provider may otherwise require in connection therewith to the extent that such obligations, liabilities or indebtedness constitute Obligations as such term is defined herein or otherwise receive the benefit of the security interest of Agent in the Collateral. The Administrative Borrower hereby consents to the establishment of a Bank Product Reserve with respect to any obligations, liabilities or indebtedness (contingent or otherwise) of any Loan Party or its Subsidiaries to Agent, any Lender or any of their respective Affiliates (whether outstanding on the Closing Date or incurred thereafter) arising under or in connection with any Bank Products existing on the Closing Date, and Agent agrees to maintain such Bank Product Reserve to the extent Agent is notified of such Bank Products and the amounts thereof in accordance with the requirements of this Agreement.

 

Benchmark” means, initially, LIBOwith respect to any (i) RFR Loan, the Daily Simple SOFR or (ii) Term Benchmark Loan, the Term SOFR Rate; provided that if a Benchmark Transition Event, a Term SOFR Transition Event or an Early Opt-in Election, as applicable, and its and the related Benchmark Replacement Date have occurred with respect to LIBOthe Daily Simple SOFR or Term SOFR Rate, as applicable, or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (c) or clause (d) of Section 3.4.

 

Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Agent for the applicable Benchmark Replacement Date:

 

(1) the sum of: (a) Term SOFR and (b) the related Benchmark Replacement Adjustment;

 

(21) the sum of: (a)Adjusted Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment; or

 

(32) the sum of: (a) the alternate benchmark rate that has been selected by the Agent and the Administrative Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark 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 benchmark rate as a replacement for the then-current Benchmark for dollar-denominated syndicated credit facilities at such time in the United States and (b) the related Benchmark Replacement Adjustment;.

 

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provided that, in the case of clause (1), such Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes such rate from time to time as selected by the Agent in its reasonable discretion; provided further that, notwithstanding anything to the contrary in this Agreement or in any other Financing Agreement, upon the occurrence of a Term SOFR Transition Event, and the delivery of a Term SOFR Notice, on the applicable Benchmark Replacement Date the “Benchmark Replacement” shall revert to and shall be deemed to be the sum of (a) Term SOFR and (b) the related Benchmark Replacement Adjustment, as set forth in clause (1) of this definition (subject to the first proviso above).

 

If the Benchmark Replacement as determined pursuant to clause (1), or (2) or (3) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Financing Agreements.

 

Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement:

 

, 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 (1) for purposes of clauses (1) and (2) of the definition of “Benchmark Replacement,” the first alternative set forth in the order below that can be determined by the Agent:

 

(a) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that has been selected or recommended by the Relevant Governmental Body for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor;

 

(b) the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Benchmark for the applicable Corresponding Tenor; and

 

(2) for purposes of clause (3) of the definition of “Benchmark Replacement,” 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 thethe Agent and the Administrative Borrower for the applicable Corresponding Tenor 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 such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date and/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 such Benchmark with the applicable Unadjusted Benchmark Replacement for dollar-denominated syndicated credit facilities; at such time.

 

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provided that, in the case of clause (1) above, such adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement Adjustment from time to time as selected by the Agent in its reasonable discretion.

 

Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement and/or any Term Benchmark Loan, any technical, administrative or operational changes (including changes to the definition of “Alternate Base Rate,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Agent decides in its reasonable discretion may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Agent in a manner substantially consistent with market practice (or, if the Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Financing Agreements).

 

Benchmark Replacement Date” means, with respect to any Benchmark, the earliest to occur of the following events with respect to thesuch then-current Benchmark:

 

(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 such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or

 

(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the first date of the publicon which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be no longer representative; provided that such non-representativeness will be determined by reference to the most recent statement or publication of information referenced therein;in such clause (3) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.

 

(3) in the case of a Term SOFR Transition Event, the date that is 30 days after the date a Term SOFR Notice is provided to the Lenders and the Administrative Borrower pursuant to Section 3.4(d); or

 

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(4) in the case of an Early Opt-in Election, the sixth Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, so long as the Agent has not received, by 5:00 p.m. (New York City time) on the fifth Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in Election from Lenders comprising the Required Lenders.

 

For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).

 

Benchmark Transition Event” means, with respect to any Benchmark, the occurrence of one or more of the following events with respect to thesuch then-current Benchmark:

 

(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely,; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);

 

(2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the NYFRB, the CME Term SOFR Administrator, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), in each case, which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely,; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or

 

(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer, or as of a specified future date will no longer be, representative.

 

For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).

 

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Benchmark Unavailability Period” means, with respect to any Benchmark, the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced thesuch then-current Benchmark for all purposes hereunder and under any Financing Agreement in accordance with Section 3.4 and (y) ending at the time that a Benchmark Replacement has replaced thesuch then-current Benchmark for all purposes hereunder and under any Financing Agreement in accordance with Section 3.4.

 

Beneficial Ownership Certification” means a certification regarding beneficial ownership or control as required by the Beneficial Ownership Regulation.

 

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

 

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

 

BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

 

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

 

Board” means, with respect to any Person, (a) in the case of any corporation, the board of directors of such Person or any committee thereof duly authorized to act on behalf of such board, (b) in the case of any limited liability company, the board of managers, board of directors, manager or managing member of such Person or the functional equivalent of the foregoing or any committee thereof duly authorized to act on behalf of such board, manager or managing member, (c) in the case of any partnership, the board of directors or board of managers of the general partner of such Person and (d) in any other case, the functional equivalent of the foregoing.

 

Borrower Joinder Agreement” shall mean a joinder agreement in substantially the form of Exhibit H hereto and otherwise in form and substance acceptable to Agent.

 

Borrowers” shall mean, collectively, the following (together with their respective successors and assigns): (a) FRG (provided that, for any Borrowing in which FRG is a Borrower, FRG shall be deemed to be an AFG Borrower, a PSP Borrower or a TVS Borrower, as applicable, for all purposes of this Agreement with respect to such Borrowing, depending on whether FRG has designated that such Borrowing will utilize the AFG Borrowing Base, the PSP Borrowing Base or the TVS Borrowing Base); (b) the AFG Borrowers; (c) the PSP Borrowers; (d) the TVS Borrowers; and (e) any other Person that at any time after the Closing Date becomes a Borrower pursuant to the terms hereof, including, without limitation, Section 9.23 hereof and by the execution of a Borrower Joinder Agreement; each sometimes being referred to herein individually as a “Borrower”; provided that, notwithstanding anything to the contrary herein or in any other Financing Document, unless Badcock shall be joined hereto as a Borrower on the Badcock Joinder Date, Badcock shall not be a Borrower for any purpose in any Financing Agreement.

 

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Borrowing” means (a) Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar RateTerm Benchmark Loans, as to which a single Interest Period is in effect, (b) Swingline Loans and (c) Overadvances.

 

Borrowing Base” means the AFG Borrowing Base, the PSP Borrowing Base or the TVS Borrowing Base, as applicable.

 

Borrowing Base Certificate” shall mean a certificate substantially in the form of Exhibit D hereto, as such form may from time to time be modified by Agent to reflect modifications to the AFG Borrowing Base, the PSP Borrowing Base, the TVS Borrowing Base and the Aggregate Borrowing Base and the reporting requirements pursuant to the terms of this Agreement, which is duly completed (including all schedules thereto) and executed by the chief financial officer, a vice president of finance, a controller or other appropriate financial officer of Administrative Borrower (or if no such officer has been appointed or elected, the sole member of Administrative Borrower) reasonably acceptable to Agent and delivered to Agent.

 

Borrowing Cap” shall mean, the amount, calculated at any date, equal to the lesser of (i) the Aggregate Revolving Commitment Amounts and (ii) the Aggregate Borrowing Base, in each case, in effect at such time.

 

Borrowing Request” means a request by the Administrative Borrower for a Borrowing in accordance with Section 2.11.

 

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

 

Business Day” shall mean any day on which Agent is open for the transaction of business(other than a Saturday, or a Sunday, or other day on which commercial banks are authorized or required to close under the laws of the State of New York, except that if a determination of a Business Day shall relate to any Eurodollar Rate Loans, the term Business Day shall also exclude any day on which banks are not open for general business in London.) on which banks are open for business in New York City or Chicago; provided that in relation to RFR Loans and any interest rate settings, fundings, disbursements, settlements or payments of any such RFR Loan, or any other dealings of such RFR Loan, any such day that is only a U.S. Government Securities Business Day.

 

Capital Expenditures” shall mean, for any period, any expenditure of money under a Capital Lease or for the lease, purchase or other acquisition of any capital asset, or for the purchase or construction of assets, or for improvements or additions thereto, which are capitalized on a Person’s balance sheet, but excluding (i) any such expenditure to the extent of trade-ins thereon and (ii) reimbursed leasehold improvements.

 

Capital Leases” shall mean, 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, 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); provided, that lease liabilities and associated expenses recorded by FRG and its Subsidiaries (or any other applicable Persons) pursuant to Financial Accounting Standards Board Accounting Standards Update No. 2016-02, Leases (Topic 842) (“FAS 842”), shall not be treated as Indebtedness and shall not be included in Interest Expense or Fixed Charges, unless the corresponding leases would have been treated as Capital Leases under GAAP as in effect prior to the adoption of FAS 842 (in which case such leases shall be treated as Capital Leases, and the interest component of such Capital Leases shall be included in Interest Expense and Fixed Charges); provided further, that, to the extent requested by Agent, the Borrowers shall provide to Agent and, as applicable, the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such amounts or ratio made before and after giving effect to FAS 842.

 

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

 

Capitalized Software Expenditures” means, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities) by the Borrowers and their Subsidiaries during such period in respect of purchased software or internally developed software and software enhancements that, in conformity with GAAP, are or are required to be reflected as capitalized costs on the consolidated balance sheet of the Borrowers and their Subsidiaries.

 

Cash Equivalents” shall mean, at any time, (a) dollars, euros, Swiss francs, Sterling, Canadian dollars, or such other currencies held by it from time to time in the ordinary course of business, (b) readily marketable obligations issued or directly and fully guaranteed or insured by the government or any agency or instrumentality of (i) the United States, (ii) the United Kingdom, (iii) Canada, (iv) Switzerland or (v) any member nation of the European Union rated A (or the equivalent thereof) or better by S&P and A2 (or the equivalent thereof) or better by Moody’s, having average maturities of not more than 24 months from the date of acquisition thereof; provided that the full faith and credit of such country or such member nation of the European Union is pledged in support thereof, (c) time deposits with, or certificates of deposit or bankers’ acceptances of, any commercial bank that (i) is a Lender or (ii) has combined capital and surplus of at least $250,000,000 in the case of U.S. banks and $100,000,000 (or the dollar equivalent as of the date of determination) in the case of foreign banks (any such bank in the foregoing clauses (i) or (ii) being an “Approved Bank”), in each case with average maturities of not more than 12 months from the date of acquisition thereof, (d) commercial paper and variable or fixed rate notes issued by an Approved Bank (or by the parent company thereof) or any variable or fixed rate note issued by, or guaranteed by, a corporation rated A-2 (or the equivalent thereof) or better by S&P or P-2 (or the equivalent thereof) or better by Moody’s, in each case with average maturities of not more than 12 months from the date of acquisition thereof, (e) repurchase agreements entered into by any Person with an Approved Bank, a bank or trust company (including any of the Lenders) or recognized securities dealer covering securities described in clauses (b) and (c) above, (f) marketable short-term money market and similar highly liquid funds substantially all of the assets of which are comprised of securities of the types described in clauses (b) through (e) above, (g) securities with average maturities of 24 months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, the United Kingdom, Canada, Switzerland, a member of the European Union or by any political subdivision or taxing authority of any such state, member, commonwealth or territory having an investment grade rating from either S&P or Moody’s (or the equivalent thereof), (h) investments with average maturities of 12 months or less from the date of acquisition in mutual funds rated AA- (or the equivalent thereof) or better by S&P or Aa3 (or the equivalent thereof) or better by Moody’s, (i) instruments equivalent to those referred to in clauses (a) through (h) above denominated in euros or any other foreign currency comparable in credit quality and tenor to those referred to above and customarily used by corporations for cash management purposes in any jurisdiction outside the United States to the extent reasonably required in connection with any business conducted by any Subsidiary organized or incorporated in such jurisdiction, (j) investments, classified in accordance with GAAP as current assets of the Borrower or any Subsidiary, in money market investment programs that are registered under the Investment Company Act of 1940 or that are administered by financial institutions having capital of at least $250,000,000 or its equivalent, and, in either case, the portfolios of which are limited such that substantially all of such investments are of the character, quality and maturity described in clauses (a) through (i) of this definition, (k) demand deposit accounts holding cash, (l) interest bearing instruments with a maximum maturity of 180 days in respect of which the obligor is a G7 government or other G7 governmental agency or a G7 financial institution with credit ratings from S&P of at least “A-2” or the equivalent thereof or from Moody’s of at least “P-2” or the equivalent thereof, (m) other short-term investments of a type analogous to the foregoing utilized by Foreign Subsidiaries, (n) investment funds investing at least 90% of their assets in securities of the types described in clauses (a) through (m) above and (o) any guarantee or indemnity for the obligations of a Subsidiary in connection with a Subsidiary claiming exemption from audit, the preparation and filing of its accounts or other similar exemptions (including under section 394C, 448C or 479C of the Companies Act 2006 or other similar or equivalent provisions).

 

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Cash Management Obligations” means (a) obligations of a Borrower or any Subsidiary in respect of any overdraft and related liabilities arising from treasury, depository, cash pooling arrangements and cash management services or any automated clearing house transfers of funds and (b) other obligations in respect of netting services, employee credit or purchase card programs and similar arrangements.

 

Casualty Event” means any event that gives rise to the receipt by a Borrower or any Subsidiary of any insurance proceeds or condemnation awards, in each case, in respect of any equipment, fixed assets or real property (including any improvements thereon) to replace or repair such equipment, fixed assets or real property.

 

Change in Law” means the occurrence after the date of this Agreement (or, with respect to any Lender, such later date on which such Lender becomes a party to this Agreement) of any of the following: (a) the adoption of 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) compliance by any Lender, the Swingline Lender or the Issuing Bank (or, for purposes of Section 3.3(b), by any lending office of such Lender or by such Lender’s, the Swingline Lender’s or the Issuing Bank’s holding company, if any) with any request, guideline, requirement or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements or directives thereunder or issued in connection therewith or in the implementation thereof, and (y) all requests, rules, guidelines, requirements or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.

 

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Change of Control” means (x) the acquisition of beneficial ownership, directly or indirectly, by any Person or group, other than the Permitted Holders (directly or indirectly, including through one or more holding companies), of Capital Stock representing 35% or more of the aggregate ordinary voting power represented by the issued and outstanding Capital Stock in the Administrative Borrower and the percentage of the aggregate ordinary voting power so held is greater than the percentage of the aggregate ordinary voting power represented by the Equity Interests in the Administrative Borrower held by the Permitted Holders, unless the Permitted Holders (directly or indirectly, including through one or more holding companies) otherwise have the right (pursuant to contract, proxy or otherwise), directly or indirectly, to designate, nominate or appoint (and do so designate, nominate or appoint) a majority of the Board of the Administrative Borrower, (y) other than as a result of a disposition permitted hereunder, the failure of FRG to own directly or indirectly 100% of the total outstanding Capital Stock of any other Borrower or any Person that becomes a Borrower after the date hereof or (z) any “change of control” or similar event under the First Lien Credit Agreement, the Second Lien Credit Agreement, the First Lien Badcock Credit Agreement or the Second Lien Badcock Credit Agreement.

 

For purposes of this definition, (i) “beneficial ownership” shall be as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act, (ii) the phrase “Person or group” is within the meaning of Section 13(d) or 14(d) of the Exchange Act, but excluding any employee benefit plan of such Person or “group” and its subsidiaries and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan, and (iii) if any Person or “group” includes one or more Permitted Holders, the issued and outstanding Equity Interests of the Administrative Borrower directly or indirectly owned by the Permitted Holders that are part of such Person or “group” shall not be treated as being owned by such Person or “group” for purposes of determining whether clause (c) of this definition is triggered.

 

Chase” shall mean JPMorgan Chase Bank, N.A., a national banking association, in its individual capacity, and its successors.

 

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

 

Closing Date” shall mean March 10, 2021.

 

“CME Term SOFR Administrator” means CME Group Benchmark Administration Limited as administrator of the forward-looking term Secured Overnight Financing Rate (SOFR) (or a successor administrator).

 

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

 

Collateral” shall have the meaning set forth in Section 5.1 hereof. For the avoidance of doubt, prior to the Badcock Joinder Date, in no event shall any assets of Badcock constitute “Collateral”.

 

Collateral Access Agreement” shall mean an agreement in writing, in form and substance reasonably satisfactory to Agent, from any lessor of premises to any Borrower or Guarantor, or any other Person to whom any Collateral is consigned or who has custody, control or possession of any such Collateral or is otherwise the owner or operator of any premises on which any of such Collateral is located, in favor of Agent (or in favor of Agent and the First Lien Agent) with respect to the Collateral at such premises or otherwise in the custody, control or possession of such lessor, consignee or other Person, inter alia, acknowledges the first priority security interest of Agent in such Collateral, agrees to waive (or subordinate on terms acceptable to Agent) any and all claims such lessor, consignee, processor or other person may, at any time, have against such Collateral, whether for storage or otherwise, and agrees to permit Agent access to, and the right to remain on, the premises of such lessor, consignee, processor or other person so as to exercise Agent’s rights and remedies and otherwise deal with such Collateral, and in the case of any customs broker, cargo consolidator, freight forwarder, consignee or other person who at any time has custody, control or possession of any bills of lading or other documents of title, agrees to hold such Collateral, acknowledges that it holds and will hold possession of the Collateral for the benefit of the Agent and the First Lien Agent and agrees to follow all instructions of Agent or the First Lien Agent (as the case may be) with respect thereto.

 

Collateral Documents” shall mean, collectively, the Pledge Agreement, each Guaranty, the Deposit Account Control Agreements, the Investment Property Control Agreements and any other agreements, instruments and documents executed in connection with this Agreement that are intended to create, perfect or evidence liens to secure the Obligations, including, without limitation, all other security agreements, deposit account control agreements, pledge agreements, subordination agreements, pledges, powers of attorney, assignments, financing statements and all other written matter whether theretofore, now or hereafter executed by any Borrower or any Guarantor and delivered to Agent, in each case as may be amended, restated, supplemented or otherwise modified from time to time.

 

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 dividend or other distribution, 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 Aggregate Borrowing Base constituting 5% or more of the Aggregate Borrowing Base (on a net basis, after giving effect to all applicable advance rates, Net Recovery Percentages 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.

 

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Commercial Tort Claims” shall have the meaning set forth in Article 9 of the UCC.

 

Commitment Increase Agreement” has the meaning assigned to such term in Section 2.4(d)(ii).

 

Commodity Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute, and any regulations promulgated thereunder.

 

Compliance Period” shall mean any period commencing on the first date on which Excess Availability is less than the greater of (a) 12.5% of the Borrowing Cap or (b) $18,750,000, in each case for three consecutive days, and continuing until the date that both (x) Excess Availability exceeds the greater of (i) 12.5% of the Borrowing Cap or (ii) $18,750,000 for 60 consecutive days and (y) no Default or Event of Default then exists and is continuing.

 

Consolidated Cash Balance” means, at any time, the aggregate amount of cash and Cash Equivalents, marketable securities, treasury bonds and bills, certificates of deposit, investments in money market funds, and commercial paper, in each case, held or owned by (either directly or indirectly), credited to the account of or would otherwise be required to be reflected as an asset on the balance sheet of the Loan Parties.

 

Consolidated Cash Interest Charges” means, for any period, the total interest expense of the Administrative Borrower and its Subsidiaries for such period determined on a consolidated basis net of any interest income, which shall be determined on a cash basis only and solely in respect of Indebtedness of the type described in the definition of Total Indebtedness and excluding, for the avoidance of doubt, (i) any non-cash interest expense and any capitalized interest, whether paid or accrued, (ii) the amortization of original issue discount resulting from the issuance of Indebtedness at less than par, (iii) amortization of deferred financing costs, debt issuance costs, commissions, fees and expenses (including agency costs, amendment, consent or other front end, one-off or similar non-recurring fees), (iv) any expenses resulting from discounting of indebtedness in connection with the application of recapitalization accounting or purchase accounting, (v) penalties or interest related to taxes and any other amounts of non-cash interest resulting from the effects of acquisition method accounting or pushdown accounting, (vi) the accretion or accrual of, or accrued interest on, discounted liabilities (other than Indebtedness) during such period, (vii) non-cash interest expense attributable to the movement of the mark-to-market valuation of obligations under hedging agreements or other derivative instruments pursuant to FASB Accounting Standards Codification No. 815-Derivatives and Hedging, (viii) any one-time cash costs associated with breakage in respect of Hedge Agreements for interest rates, (ix) any payments with respect to make whole premiums, commissions or other breakage costs of any Indebtedness, (x) all non-recurring interest expense consisting of liquidated damages for failure to timely comply with registration rights obligations, all as calculated on a consolidated basis in accordance with GAAP, (xi) expensing of bridge, arrangement, structuring, commitment, fronting or other financing fees, (xii) fees and expenses (including any penalties and interest relating to Taxes but excluding any bona fide interest expense) associated with the consummation of the Transactions, (xiii) agency fees paid to the administrative agents and collateral agents under any credit facilities or other debt instruments or documents and (xiv) fees (including any ticking fees) and expenses (including any penalties and interest relating to Taxes) associated with any Investment not prohibited by Section 9.10 or the issuance of Capital Stock or Indebtedness (in each case excluding any bona fide interest expense).

 

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Consolidated Net Income” means, for any period, the net income (loss) of the Borrowers and their Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, excluding, without duplication,

 

(a)                extraordinary (as defined under GAAP as in effect prior to FASB Update No. 2015-01), unusual, or non-recurring gains or losses for such period,

 

(b)                the cumulative effect of a change in accounting principles during such period;

 

(c)                any Transaction Costs incurred during such period,

 

(d)                any fees, costs and expenses (including (x) any transaction or retention bonus or similar payment and (y) any indemnities) incurred during such period, or any amortization thereof for such period, in connection with or in relation to any acquisition (including any acquisition of a franchisee), non-recurring costs to acquire equipment to the extent not capitalized in accordance with GAAP, Investment, recapitalization, asset disposition, non-competition agreement, incurrence, issuance or repayment of debt or similar transaction, issuance of equity securities, option buyouts, refinancing transaction or amendment or other modification of or waiver or consent relating to any debt instrument or similar transaction (in each case, including the Transaction Costs and any such transaction consummated prior to the Closing Date and any such transaction undertaken but not completed) and any charges or non-recurring merger costs incurred during such period as a result of any such transaction, in each case whether or not successful (including, for the avoidance of doubt, the effects of expensing all transaction-related expenses in accordance with FASB Accounting Standards Codification 805 and gains or losses associated with FASB Accounting Standards Codification 460),

 

(e)                any income (loss) (and all fees and expenses or charges relating thereto) for such period attributable to the early extinguishment of Indebtedness, hedging agreements or other derivative instruments,

 

(f)                 accruals and reserves that are established or adjusted as a result of the Transactions or any Permitted Acquisition or other Investment not prohibited under this Agreement in accordance with GAAP (including any adjustment of estimated payouts on Earn-Outs) or changes as a result of the adoption or modification of accounting policies during such period,

 

(g)                stock-based award compensation expenses (including any one-time compensation related to unvested options outstanding as of the Closing Date),

 

(h)                any income (loss) attributable to deferred compensation plans or trusts,

 

(i)                 any income (loss) from Investments recorded using the equity method,

 

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(j)                 the amount of any expense required to be recorded as compensation expense related to contingent transaction consideration,

 

(k)                any unrealized gain or loss due solely to fluctuations in currency values and the related tax effects, determined in accordance with GAAP,

 

(l)                 [Reserved],

 

(m)              (A) the amount of management, monitoring, consulting and advisory fees, indemnities and related expenses paid or accrued in such period (including any termination fees payable in connection with the early termination of management and monitoring agreements) and (B) the amount of expenses relating to payments made to option holders of the Administrative Borrower or any of its direct or indirect parent companies in connection with, or as a result of, any distribution being made to shareholders of such Person or its direct or indirect parent companies, which payments are being made to compensate such option holders as though they were shareholders at the time of, and entitled to share in, such distribution, in each case, to the extent permitted in the Financing Agreements,

 

(n)                any costs or expenses incurred by the Borrowers or any Subsidiary pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement, any severance agreement or any stock subscription or shareholder agreement, to the extent that such costs or expenses are non-cash or otherwise funded with cash proceeds contributed to the capital of the Borrowers or net proceeds received in cash or Cash Equivalents of an issuance of Capital Stock of the Borrowers (other than Disqualified Equity Interests),

 

(o)                the Consolidated Net Income of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that Consolidated Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders, and

 

(p)                any non-cash goodwill impairment charges or other intangible asset impairment charges incurred subsequent to the date of this Agreement resulting from the application of ASC 350 or other non-cash asset impairment charges incurred subsequent to the date of this Agreement resulting from the application of SFAS 144.

 

There shall be included in Consolidated Net Income, without duplication, the amount of any cash tax benefits related to the tax amortization of intangible assets in such period. There shall be excluded from Consolidated Net Income for any period the effects from applying acquisition method accounting, including applying acquisition method accounting to inventory, property and equipment, loans and leases, software and other intangible assets and deferred revenue (including deferred costs related thereto and deferred rent) required or permitted by GAAP and related authoritative pronouncements (including the effects of such adjustments pushed down to the Borrowers and their Subsidiaries), as a result of the Transactions, any acquisition or Investment consummated prior to the Closing Date and any Permitted Acquisitions (or other Investment not prohibited hereunder) or the amortization or write-off of any amounts thereof.

 

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In addition, to the extent included in the Consolidated Net Income of such Person and its Subsidiaries, notwithstanding anything to the contrary in the foregoing, Consolidated Net Income shall (i) exclude any expenses and charges that are reimbursed by indemnification or other reimbursement provisions in connection with any acquisition or other investment or any sale, conveyance, transfer or other disposition of assets permitted hereunder and (ii) include the amount of business interruption insurance proceeds received and, to the extent covered by insurance and actually reimbursed, or, so long as the Administrative Borrower has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extent that such amount is (A) not denied by the applicable carrier in writing within 180 days and (B) in fact reimbursed within 365 days of the date of such evidence (with a deduction for any amount so added back to the extent not so reimbursed within such 365 days), expenses with respect to liability or casualty events or business interruption.

 

Control” shall have the meaning set forth in Article 8 or, if applicable, in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the UCC.

 

Copyright License” means any written agreement or license now or hereafter in effect, granting to or from any Person any use right under any Copyright now or hereafter owned by any other Person or that such other Person otherwise has the right to license, and all rights of any such Person under any such agreement or license.

 

Copyrights” means (a) all copyright rights in any work arising under the copyright laws of the United States or any other jurisdiction, whether as author, assignee, transferee or otherwise, (b) all registrations and applications for registration of any such copyright, including registrations, supplemental registrations and pending applications for registration in the United States Copyright Office and (c) all extensions, renewals, and restorations thereof.

 

Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.

 

Covered Entity” means any of the following:

 

(a)               a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);

 

(b)               a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or

 

(c)               a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

 

Covered Party” has the meaning assigned to it in Section 13.12.

 

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.

 

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Credit Card Acknowledgments” shall mean, collectively, the agreements by Credit Card Issuers or Credit Card Processors who are parties to Credit Card Agreements in favor of Agent acknowledging Agent’s first priority security interest, for and on behalf of Lenders, in the monies due and to become due to a Borrower (including, without limitation, credits and reserves) under the Credit Card Agreements, and agreeing to transfer all such amounts to the Blocked Accounts, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced pursuant to their terms, sometimes being referred to herein individually as a “Credit Card Acknowledgment”.

 

Credit Card Agreements” shall mean all agreements entered into on, prior and after the date hereof by any Borrower or for the benefit of any Borrower, in each case with any Credit Card Issuer or any Credit Card Processor, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, including, but not limited to, the agreements set forth on Schedule 8.16 hereto.

 

Credit Card Issuer” shall mean any Person (other than FRG and 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, Japan Credit Bureau (a/k/a JCB Co.), Diners Club, Carte Blanche and other non-bank credit or debit cards, including, without limitation, credit or debit cards issued by or through American Express Travel Related Services Company, Inc., and Novus Services, Inc., and other issuers approved by the Agent.

 

Credit Card Processor” shall mean any servicing or processing agent or any factor or financial intermediary (other than FRG and its Subsidiaries) who facilitates, services, processes or manages the credit authorization, billing transfer and/or payment procedures with respect to any Borrower’s sales transactions involving credit card or debit card purchases by customers using credit cards or debit cards issued by any Credit Card Issuer.

 

Credit Card Receivables” shall mean, collectively, (a) all present and future rights of any Borrower to payment from any Credit Card Issuer or Credit Card Processor arising from sales of goods or rendition of services to customers who have purchased such goods or services using a credit or debit card and (b) all present and future rights of any Borrower to payment from any Credit Card Issuer, Credit Card Processor or other third party in connection with the sale or transfer of Credit Card Receivables arising pursuant to the sale of goods or rendition of services to customers who have purchased such goods or services using a credit card or a debit card, including, but not limited to, all amounts at any time due or to become due from any Credit Card Issuer or Credit Card Processor under the Credit Card Agreements or otherwise which, in the case of both clause (a) and (b) above, have been earned by performance by such Borrower but not yet been paid to such Borrower by the Credit Card Issuer or the Credit Card Processor, as applicable.

 

Credit Facility” shall mean the Loans, Swingline Loans and Letters of Credit provided to or for the benefit of any Borrower pursuant to Sections 2.1, 2.2 and 2.3 hereof.

 

Cross-Silo Loan Party” means (a) with respect to the AFG Loan Parties, (i) the PSP Loan Parties and (ii) TVS Loan Parties, (b) with respect to the PSP Loan Parties, (i) the AFG Loan Parties and (ii) the TVS Loan Parties and (c) with respect to the TVS Loan Parties, (i) the AFG Loan Parties and (ii) the PSP Loan Parties.

 

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Daily Simple SOFR” means, for any day, (a “SOFR, with the conventions for this rate (which will include a lookback) being established by the Agent in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for business loans; provided that, if the Agent decides that any such convention is not administratively feasible for the Agent, then the Agent may establish another convention in its reasonable discretion. Rate Day”), a rate per annum equal to SOFR for the day that is five (5) U.S. Government Securities Business Days prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Administrative Borrower.

 

Deemed Eligible Credit Card Receivables” has the meaning assigned to it in the definition of “PSP Borrowing Base”.

 

Deemed Eligible Inventory” has the meaning assigned to it in the definition of “PSP Borrowing Base”.

 

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

 

Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

 

Defaulting Lender” shall mean any Revolving Lender, as determined by Agent, that has (a) failed to fund any portion of its Revolving Loans or participations in Letters of Credit or Swingline Loans within three Business Days of the date required to be funded by it hereunder, (b) notified any Borrower, Agent, the Swingline Lender, the Issuing Bank or any Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or under other agreements in which it commits to extend credit, (c) failed, within three Business Days after request by Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Revolving Loans and participations in then outstanding Letters of Credit and Swingline Loans, (d) otherwise failed to pay over Agent or any other Lender any other amount required to be paid by it hereunder within three Business Days of the date when due, unless the subject of a good faith dispute, or (e) (i) become or is insolvent or has a parent company that has become or is insolvent or (ii) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment.

 

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Deposit Accounts” shall have the meaning set forth in Article 9 of the UCC.

 

Deposit Account Control Agreement” shall mean an agreement in writing, in form and substance reasonably satisfactory to Agent, by and among Agent, the First Lien Agent (if a party thereto), the Second Lien Agent (if a party thereto), Borrowers or Guarantor with a Deposit Account at any bank and the bank at which such Deposit Account is at any time maintained which provides that such bank will comply with instructions originated by Agent directing disposition of the funds in the Deposit Account without further consent by such Borrower or Guarantor upon the occurrence of an Event of Default or upon the commencement of a Compliance Period and at all times during the continuance of such Event of Default or Compliance Period, and has such other terms and conditions as Agent may reasonably require including as to any such agreement with respect to any Blocked Account, providing that all items received or deposited in the Blocked Accounts are the property of Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers and, except as otherwise agreed with the corresponding bank and with such other appropriate or customary exceptions for agreements of this kind, that the bank has no lien upon, or right to set off against, the Blocked Accounts, the items received for deposit therein, or the funds from time to time on deposit therein and that the bank will upon the occurrence of an Event of Default or upon the commencement of a Compliance Period and at all times during the continuance of such Event of Default or Compliance Period, wire, or otherwise transfer, in immediately available funds, on a daily basis to the Agent Payment Account all funds received or deposited into the Blocked Accounts.

 

Designated Non-Cash Consideration” means the fair market value of non-cash consideration received by the Borrower or a Subsidiary in connection with a disposition pursuant to Section 6.5(U) that is designated as Designated Non-Cash Consideration pursuant to a certificate of an Authorized Officer of the Administrative Borrower, setting forth the basis of such valuation (which amount will be reduced by the fair market value of the portion of the non-cash consideration converted to cash within 180 days following the consummation of the applicable disposition or, if converted to cash after 180 days, the lesser of (a) the consideration in cash or cash equivalents received from such conversion and (b) the fair market value of such non-cash consideration at the time of such conversion).

 

Disposed EBITDA” means, with respect to any Sold Entity or Business for any period through (but not after) the date of such disposition, the amount for such period of EBITDA of such Sold Entity or Business (determined as if references to the Borrowers and their Subsidiaries in the definition of the term “EBITDA” (and in the component financial definitions used therein) were references to such Sold Entity or Business and its subsidiaries), all as determined on a consolidated basis for such Sold Entity or Business.

 

Disqualified Equity Interest” means, with respect to any Person, any Capital Stock in such Person that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, either mandatorily or at the option of the holder thereof), or upon the happening of any event or condition:

 

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(a)                matures or is mandatorily redeemable or contains any mandatory put, redemption or repayment provision (other than solely for Capital Stock in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Capital Stock), whether pursuant to a sinking fund obligation or otherwise;

 

(b)                is convertible or exchangeable, either mandatorily or at the option of the holder thereof, for Indebtedness or Capital Stock (other than solely for Capital Stock in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Capital Stock);

 

(c)                is redeemable (other than solely for Capital Stock in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Capital Stock) or is required to be repurchased by such Person or any of its Affiliates, in whole or in part, at the option of the holder thereof; or

 

(d)                in the case of any preferred Capital Stock, provides for scheduled payments of dividends and/or distributions in cash;

 

in each case, on or prior to the date ninety-one (91) days after the Maturity Date; provided, however, that (i) an Capital Stock in any Person that would not constitute a Disqualified Equity Interest but for terms thereof giving holders thereof the right to require such Person to redeem or purchase such Capital Stock upon the occurrence of an “asset sale” or a “change of control” or similar event shall not constitute a Disqualified Equity Interest if any such requirement becomes operative only after, or payment thereunder is subject to the prior, repayment in full of all the Loans and all other Obligations that are accrued and payable and the termination of the Revolving Commitments, (ii) if an Capital Stock in any Person is issued pursuant to any plan for the benefit of employees of the Administrative Borrower or any of its subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute a Disqualified Equity Interest solely because it may be required to be repurchased by the Administrative Borrower or any of its subsidiaries in order to satisfy applicable statutory or regulatory obligations of such Person and (iii) any Capital Stock in any Person that would not constitute a Disqualified Equity Interest but for a requirement of payment of dividends or distributions in violation of clauses (a) or (b) above shall not constitute a Disqualified Equity Interest if the terms of such Capital Stock (x) give the applicable issuer the option to elect to pay such dividends or distributions on a non-cash basis and (y) do not require the cash payment of dividends or distributions at any time that such cash payment is not permitted under Section 9.11 or Section 9.24 or would result in an Event of Default hereunder.

 

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.

 

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

 

dollars” or “$” refers to lawful money of the U.S., unless the context clearly otherwise indicates.

 

E-Payables Agreement” shall mean that certain Bank of America Corporate Purchasing Card Agreement, dated as of June 7, 2007, by and among the parties thereto, including TVS and Bank of America, N.A.

 

E-Payables Reserve” shall mean any Reserves implemented by Agent pursuant to clause (b)(ii) of the definition of Obligations related to the E-Payables Agreement.

 

Early Opt-in Election” means, if the then-current Benchmark is LIBO Rate, the occurrence of:

 

(1)       a notification by the Agent to (or the request by the Administrative Borrower to the Agent to notify) each of the other parties hereto that at least five currently outstanding dollar-denominated syndicated credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review), and

 

(2)       the joint election by the Agent and the Administrative Borrower to trigger a fallback from LIBO Rate and the provision by the Agent of written notice of such election to the Lenders.

 

Earn-Outs” means, with respect to any Person, obligations of such Person arising from Permitted Acquisitions or other Investments permitted hereunder which are payable to the sellers thereunder in their capacity as such based on the achievement of specified financial results or other criteria or milestones over time.

 

EBITDA” means, for any period, Consolidated Net Income for such period, plus:

 

(a)                without duplication and to the extent already deducted (and not added back) in arriving at such Consolidated Net Income, the sum of the following amounts for such period:

 

(i)                 total Interest Expense and, to the extent not reflected in such total Interest Expense, the sum of (A) premium payments, debt discount, fees, charges and related expenses incurred in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets plus (B) the portion of rent expense with respect to such period under Capital Leases that are treated as interest expense in accordance with GAAP plus (C) the implied interest component of synthetic leases with respect to such period plus (D) any losses on hedging obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, net of interest income and gains on such hedging obligations or such derivative instruments plus (E) bank and letter of credit fees and costs of surety bonds in connection with financing activities, plus (F) amortization or write-off of deferred financing fees, debt issuance costs, debt discount or premium, terminated hedging obligations and other commissions, financing fees and expenses and, adjusted, to the extent included, to exclude any refunds or similar credits received in connection with the purchasing or procurement of goods or services under any purchasing card or similar program;

 

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(ii)              provision for taxes based on income, profits, revenue or capital and sales taxes, including federal, foreign, state, franchise, excise, and similar taxes paid or accrued during such period (including in respect of repatriated funds) including penalties and interest related to such taxes or arising from any tax examinations;

 

(iii)            Non-Cash Charges;

 

(iv)             [reserved];

 

(v)               net cash received from A Team and its Subsidiaries and utilized to repay or prepay Indebtedness;

 

(vi)             severance, relocation, integration and facilities’ opening costs and expenses and other business optimization costs and expenses and operating improvements (including related to new product introductions and any operating expenses, losses or charges related to the implementation of cost savings initiatives, operating expense reductions and other similar initiatives), recruiting fees, signing costs, reserve, retention, recruiting, relocation and signing bonuses and expenses, transition costs, costs related to closure/consolidation of facilities, internal costs in respect of strategic initiatives and curtailments or modifications to pension and post-retirement employee benefit plans (including any settlement of pension liabilities), contract terminations, professional and consulting fees incurred in connection with any of the foregoing and other one-time and nonoperational costs and expenses;

 

(vii)          restructuring costs, charges, accruals or reserves (including restructuring and integration costs related to acquisitions and adjustments to existing reserves), whether or not classified as restructuring expense on the consolidated financial statements;

 

(viii)        the amount of any non-controlling interest consisting of income attributable to non-controlling interests of third parties in any Non-Wholly Owned Subsidiary deducted (and not added back in such period) in calculating Consolidated Net Income, excluding cash distributions in respect thereof;

 

(ix)             [reserved];

 

(x)               any non-cash loss attributable to the mark to market movement in the valuation of any Capital Stock, and hedging obligations or other derivative instruments (in each case, including pursuant to Financial Accounting Standards Codification No. 815—Derivatives and Hedging);

 

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(xi)             any loss relating to amounts paid in cash prior to the stated settlement date of any hedging obligation that has been reflected in Consolidated Net Income for such period;

 

(xii)          any gain relating to hedging obligations that has been reflected in Consolidated Net Income in prior periods and excluded from EBITDA pursuant to clause (c)(iv) below;

 

(xiii)        any net pension or other post-employment benefit costs representing amortization of unrecognized prior service costs, actuarial losses, including amortization of such amounts arising in prior periods, amortization of the unrecognized net obligation (and loss or cost) existing at the date of initial application of FASB Accounting Standards Codification 715, and any other items of a similar nature;

 

(xiv)         charges, losses, lost profits, expenses (including litigation expenses, fee and charges) or write-offs to the extent indemnified or insured by a third party, including expenses or losses covered by indemnification provisions or by any insurance provider in connection with the Transactions, a Permitted Acquisition or any other acquisition or Investment, disposition or any Event of Loss, in each case, to the extent that coverage has not been denied and so long as such amounts are actually reimbursed in cash within one year after the related amount is first added to EBITDA pursuant to this clause (xiv) (and if not so reimbursed within one year, such amount shall be deducted from EBITDA during the next measurement period);

 

(xv)           cash receipts (or any netting arrangements resulting in reduced cash expenses) not included in EBITDA in any period to the extent non-cash gains relating to such receipts were deducted in the calculation of EBITDA pursuant to clause (c) below for any previous period and not added back;

 

(xvi)         Earn-Out payments, contingent consideration obligations (including to the extent accounted for as bonuses or otherwise) and adjustments thereof and purchase price adjustments incurred in connection with the PSP Acquisition and/or any acquisition or other investment (including any acquisition or other investment consummated prior to the Closing Date) which are paid or accrued during the applicable period;

 

(xvii)      other adjustments (i) identified to Agent prior to the Closing Date, (ii) set forth in (A) the Model or (B) the quality of earnings report prepared by independent registered public accountants of recognized national standing or any other accounting firm reasonably acceptable to the Agent and delivered to the Agent in connection with the Transactions or (iii) contemplated by the PSP Acquisition Agreement; and

 

(xviii)    without duplication and solely for the purpose of Section 9.17 and not for any other purpose under this Agreement, (x) Cure Amounts (as defined in the First Lien Credit Agreement) received pursuant to the Cure Right (as defined in the First Lien Credit Agreement) in accordance with Section 7.02 of the First Lien Credit Agreement (without giving effect to any amendments, restatements, supplements or other modifications thereto) and (y) Cure Amounts (as defined in the Second Lien Credit Agreement) received pursuant to the Cure Right (as defined in the Second Lien Credit Agreement) in accordance with Section 7.02 of the Second Lien Credit Agreement (without giving effect to any amendments, restatements, supplements or other modifications thereto); plus

 

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(b)                without duplication, (i) the amount of “run rate” cost savings, operating expense reductions and synergies related to any of the Transactions, any Specified Transaction, any restructuring, any business optimization activities, cost saving initiatives and operating improvements or other initiatives, actions or events (each of the foregoing, an “Event”) that are reasonably identifiable and projected by the Administrator Borrower in good faith to result from actions that either have been taken, with respect to which substantial steps have been taken or that are expected to be taken within 18 months after the date of consummation of such Event (or, if the underlying Event is any of the Transactions, within 18 months after the Closing Date) (including actions initiated prior to the Closing Date) (in the good faith determination of the Administrative Borrower) (which cost savings, operating expense reductions and synergies shall be added to EBITDA until fully realized and calculated on a pro forma basis as though such cost savings, operating expense reductions and synergies had been realized on the first day of the relevant period), net of the amount of actual benefits realized from such actions; provided that no cost savings, operating expense reductions or synergies shall be added pursuant to this clause (b) to the extent duplicative of any expenses or charges relating to such cost savings, operating expense reductions, other operating improvements or synergies that are included above or in the definition of “pro forma basis” (it being understood and agreed that “run rate” shall mean the full recurring benefit that is associated with any action taken); provided, further that the aggregate amount of addbacks to EBITDA pursuant this clause (b) for any period, excluding any addbacks for such period pursuant to this clause (b) where the underlying Event is any of the Transactions, shall not exceed 20.0% of EBITDA for such period (calculated after giving effect to such addbacks); less

 

(c)                without duplication and to the extent included in arriving at such Consolidated Net Income, the sum of the following amounts for such period:

 

(i)                 non-cash gains (excluding any non-cash gain to the extent it represents the reversal of an accrual or reserve for a potential cash item that reduced Consolidated Net Income or EBITDA in any prior period and any non-cash gains attributable to accrual of revenue or recording of receivables in the ordinary course of business);

 

(ii)              any non-cash gain attributable to the mark to market movement in the valuation of any Capital Stock, and hedging obligations or other derivative instruments (in each case, including pursuant to Financial Accounting Standards Codification No. 815—Derivatives and Hedging);

 

(iii)            any gain relating to amounts received in cash prior to the stated settlement date of any hedging obligation that has been reflected in Consolidated Net Income in such period;

 

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(iv)             any loss relating to hedging obligations that has been reflected in Consolidated Net Income in prior periods and excluded from EBITDA pursuant to clauses (a)(xi) and (a)(xii) above;

 

(v)               the amount of any non-controlling interest consisting of loss attributable to non-controlling interests of third parties in any Non-Wholly Owned Subsidiary added (and not deducted in such period) to Consolidated Net Income;

 

(vi)             non-cash gains increasing Consolidated Net Income of such Person for such period, excluding any non-cash gains to the extent they represent the reversal of an accrual or cash reserve for a potential cash item that reduced EBITDA in any prior period, any non-cash gains with respect to cash actually received in a prior period so long as such cash did not increase EBITDA in such prior period, and any non-cash gains attributable to accrual of revenue or recording of receivables in the ordinary course of business; and

 

(vii)          any amount included in Consolidated Net Income of such Person for such period attributable to non-controlling interests pursuant to the application of FASB Accounting Standards Codification Topic 810-10-45;

 

in each case, as determined on a consolidated basis for the Borrower and its Subsidiaries in accordance with GAAP; provided that:

 

(I)                to the extent included in Consolidated Net Income, there shall be excluded in determining EBITDA currency translation gains and losses related to currency remeasurements of assets or liabilities (including the net loss or gain resulting from hedging agreements for currency exchange risk and revaluations of intercompany balances),

 

(II)              to the extent included in Consolidated Net Income, there shall be excluded in determining EBITDA for any period any adjustments resulting from the application of Financial Accounting Standards Codification No. 815—Derivatives and Hedging,

 

(III)           there shall be included in determining EBITDA for any period, without duplication, (A) to the extent not included in Consolidated Net Income, the Acquired EBITDA of any Person, property, business or asset acquired by the Borrower or any Subsidiary during such period to the extent not subsequently sold, transferred or otherwise disposed of (but not including the Acquired EBITDA of any related Person, property, business or assets to the extent not so acquired) (each such Person, property, business or asset acquired, including pursuant to the Transactions, an “Acquired Entity or Business”), based on the Acquired EBITDA of such Pro Forma Entity for such period (including the portion thereof occurring prior to such acquisition or conversion) determined on a historical pro forma basis and (B) in the case of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting, the EBITDA of such Person multiplied by the ownership percentage of the Borrower or applicable Subsidiary therein;

 

(IV)          there shall be (A) to the extent included in Consolidated Net Income, excluded in determining EBITDA for any period the Disposed EBITDA of any Person, property, business or asset sold, transferred or otherwise disposed of, closed or classified as discontinued operations in accordance with GAAP (other than (x) if so classified on the basis that it is being held for sale unless such sale has actually occurred during such period and (y) for periods prior to the applicable sale, transfer or other disposition, if the Disposed EBITDA of such Person, property, business or asset is positive (i.e., if such Disposed EBITDA is negative, it shall be added back in determining EBITDA for any period)) by the Borrower or any Subsidiary during such period (each such Person, property, business or asset so sold, transferred or otherwise disposed of, closed or classified, a “Sold Entity or Business”), based on the Disposed EBITDA of such Sold Entity or Business for such period (including the portion thereof occurring prior to such sale, transfer, disposition, closure, classification or conversion) determined on a historical pro forma basis and (B) to the extent not included in Consolidated Net Income, included in determining EBITDA for any period in which a Sold Entity or Business is disposed, an adjustment equal to the Pro Forma Disposal Adjustment with respect to such Sold Entity or Business (including the portion thereof occurring prior to such disposal) as specified in the Pro Forma Disposal Adjustment certificate delivered to the Agent (for further delivery to the Lenders); and

 

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(V)             to the extent included in Consolidated Net Income, there shall be excluded in determining EBITDA any non-cash expense (or income) as a result of adjustments recorded to contingent consideration liabilities relating to the Transaction or any Permitted Acquisition (or other Investment permitted hereunder).

 

Notwithstanding the foregoing, EBITDA shall be deemed to equal (a) $127,130,374 for the fiscal quarter of the Administrative Borrower ended on or about March 31, 2020, (b) $80,121,961 for the fiscal quarter of the Administrative Borrower ended on or about June 30, 2020, (c) $73,342,974 for the fiscal quarter of the Administrative Borrower ended on or about September 30, 2020, (d) $59,648,397 for the fiscal quarter of the Administrative Borrower ended on or about December 31, 2020 and (e) $25,460,393 for the fiscal month of the Administrative Borrower ended on or about January 31, 2021 (it being understood that such amounts are subject to adjustments, as and to the extent otherwise contemplated in this Agreement, in connection with any calculation on a pro forma basis); provided that such amounts of EBITDA for any such fiscal quarter shall be adjusted to include, without duplication, any cost savings that would otherwise be included pursuant to clause (b) of this definition.

 

ECP” shall mean an “eligible contract participant” as defined in Section 1(a)(18) of the Commodity Exchange Act and the applicable rules and regulations issued by the Commodity Futures Trading Commission and/or the Securities and Exchange Commission.

 

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.

 

Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.

 

Electronic System” means any electronic system, including e-mail, e-fax, web portal access for such Borrower and any other Internet or extranet-based site, whether such electronic system is owned, operated or hosted by the Agent, the Swingline Lender or the Issuing Bank and any of its respective Related Parties or any other Person, providing for access to data protected by passcodes or other security system.

 

Eligible Accounts” shall mean, at any time, the Accounts of a Borrower which Agent determines in its Permitted Discretion are eligible as the basis for the extension of Loans and Swingline Loans and the issuance of Letters of Credit. Eligible Accounts shall be calculated, without duplication of any Reserves, net of customer deposits, unapplied cash, taxes, finance charges, service charges, discounts, credits, allowances, and rebates. Without limiting Agent’s Permitted Discretion provided herein, Eligible Accounts shall not include any Account of a Borrower:

 

(a)               which is not subject to a first priority perfected security interest in favor of Agent;

 

(b)               which is subject to any lien other than (i) a lien in favor of Agent and (ii) a Permitted Encumbrance or a Lien permitted pursuant to Section 9.8(s), in each case, which does not have priority over the lien in favor of Agent;

 

(c)               (i) with respect to which the scheduled due date is more than 60 days after the date of the original invoice therefor, (ii) which, is unpaid more than 90 days after the date of the original invoice therefor or more than 60 days after the original due date, therefor (“Overage”) (when calculating the amount under this clause (ii), for the same Account Debtor, Agent shall include the net amount of such Overage and add back any credits, but only to the extent that such credits do not exceed the total gross receivables from such Account Debtor, or (iii) which has been written off the books of such Borrower or otherwise designated as uncollectible;

 

(d)               which is owing by an Account Debtor for which more than 50% of the Accounts owing from such Account Debtor and its Affiliates are ineligible hereunder;

 

(e)               which is owing by an Account Debtor to the extent the aggregate amount of Accounts owing from such Account Debtor and its Affiliates to (i) such Borrower exceeds 10% of the aggregate amount of Eligible Accounts of such Borrower or (ii) all TVS Borrowers exceeds 10% of the aggregate amount of Eligible Accounts of all TVS Borrowers;

 

(f)                with respect to which any covenant, representation, or warranty contained in this Agreement or any other Financing Agreement has been breached in any material respect or is not true in any material respect;

 

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(g)               which (i) does not arise from the sale of goods or performance of services in the ordinary course of business, (ii) is not evidenced by an invoice or other documentation satisfactory to Agent in its Permitted Discretion which has been sent to the Account Debtor, (iii) represents a progress billing, (iv) is contingent upon such Borrower’s completion of any further performance, (v) represents a sale on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment, cash-on-delivery or any other repurchase or return basis, (vi) relates to payments of interest and (vii) constitutes a Franchisee Receivable, other than a Franchisee Receivable arising after the Closing Date owing by a franchisee that has been approved by Agent in its Permitted Discretion;

 

(h)               for which the goods giving rise to such Account have not been shipped to the Account Debtor or for which the services giving rise to such Account have not been performed by such Borrower or if such Account was invoiced more than once;

 

(i)                 with respect to which any check or other instrument of payment has been returned uncollected for any reason;

 

(j)                 which is owed by an Account Debtor which has (i) applied for, suffered, or consented to the appointment of any receiver, custodian, trustee, or liquidator of its assets, (ii) had possession of all or a material part of its property taken by any receiver, custodian, trustee or liquidator, (iii) filed, or had filed against it, any request or petition for liquidation, reorganization, arrangement, adjustment of debts, adjudication as bankrupt, winding-up, or voluntary or involuntary case under any state or federal bankruptcy laws (other than post-petition accounts payable of an Account Debtor that is a debtor-in-possession under the United States Bankruptcy Code and reasonably acceptable to Agent), (iv) admitted in writing its inability, or is generally unable to, pay its debts as they become due, (v) become insolvent or (vi) ceased operation of its business;

 

(k)               which is owed by any Account Debtor which has sold all or a substantially all of its assets;

 

(l)                 which is owed by an Account Debtor which (i) does not maintain its chief executive office in the U.S. or (ii) is not organized under applicable law of the U.S. or any state of the U.S. unless, in either case, such Account is backed by a Letter of Credit acceptable to Agent which is in the possession of, and is directly drawable by, Agent;

 

(m)             which is owed in any currency other than U.S. dollars;

 

(n)               which is owed by (i) the government (or any department, agency, public corporation, or instrumentality thereof) of any country other than the U.S. unless such Account is backed by a Letter of Credit acceptable to Agent which is in the possession of, and is directly drawable by, Agent, or (ii) the government of the U.S., or any department, agency, public corporation, or instrumentality thereof, unless the Federal Assignment of Claims Act of 1940, as amended (31 U.S.C. § 3727 et seq. and 41 U.S.C. § 15 et seq.), and any other steps necessary to perfect the lien of Agent in such Account have been complied with to Agent’s satisfaction;

 

(o)               which is owed by any Affiliate of any Borrower or any Guarantor or any employee, officer, director, agent or stockholder of any Borrower, any Guarantor or any of their Affiliates;

 

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(p)               which, for any Account Debtor, exceeds a credit limit determined by Agent in its Permitted Discretion, to the extent of such excess;

 

(q)               which is owed by an Account Debtor or any Affiliate of such Account Debtor to which any Borrower or any Guarantor is indebted, but only to the extent of such indebtedness, or is subject to any security, deposit, progress payment, retainage or other similar advance made by or for the benefit of an Account Debtor, in each case to the extent thereof;

 

(r)                which is subject to any counterclaim, deduction, defense, setoff or dispute but only to the extent of any such counterclaim, deduction, defense, setoff or dispute;

 

(s)                which is evidenced by any promissory note, chattel paper, or instrument;

 

(t)                 which is owed by an Account Debtor (i) located in any jurisdiction which requires filing of a “Notice of Business Activities Report” or other similar report in order to permit such Borrower to seek judicial enforcement in such jurisdiction of payment of such Account, unless such Borrower has filed such report or qualified to do business in such jurisdiction or (ii) which is a Sanctioned Person;

 

(u)               with respect to which such Borrower has made any agreement with the Account Debtor for any reduction thereof, other than discounts and adjustments given in the ordinary course of business, or any Account which was partially paid and such Borrower created a new receivable for the unpaid portion of such Account;

 

(v)               which does not comply in all material respects with the requirements of all applicable laws and regulations, whether Federal, state or local, including without limitation the Federal Consumer Credit Protection Act, the Federal Truth in Lending Act and Regulation Z of the Federal Reserve Board;

 

(w)             which is for goods that have been sold under a purchase order or pursuant to the terms of a contract or other agreement or understanding (written or oral) that indicates or purports that any Person other than such Borrower has or has had an ownership interest in such goods, or which indicates any party other than such Borrower as payee or remittance party;

 

(x)               which was created on cash on delivery terms;

 

(y)               which is (i) a Credit Card Receivable or (ii) an Account generated by a consumer lease or rental agreement or arrangement (including a Rental Agreement); or

 

(z)               which is owing to Buddy Top Parent or any of its Subsidiaries.

 

In the event that an Account of a Borrower which was previously an Eligible Account ceases to be an Eligible Account hereunder, such Borrower or Administrative Borrower shall notify thereof on and at the time of submission to Agent of the next Borrowing Base Certificate. In determining the amount of an Eligible Account of a Borrower, the face amount of an Account may, in Agent’s Permitted Discretion, be reduced by, without duplication, to the extent not reflected in such face amount, (i) the amount of all accrued and actual discounts, claims, credits or credits pending, promotional program allowances, price adjustments, finance charges or other allowances (including any amount that such Borrower may be obligated to rebate to an Account Debtor pursuant to the terms of any agreement or understanding (written or oral)) and (ii) the aggregate amount of all cash received in respect of such Account but not yet applied by such Borrower to reduce the amount of such Account.

 

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Eligible Credit Card Receivables” shall mean, the gross amount of Credit Card Receivables of Borrowers that are subject to a valid, first priority and fully perfected security interest in favor of the Agent for itself and the Secured Parties, which conform to all applicable warranties contained herein, less, without duplication:

 

(a)               the sum of all Credit Card Receivables:

 

(i)                 for which Agent has not received a Credit Card Acknowledgment pursuant to Section 9.31 if the Credit Card Agreement exists on the Closing Date (or if the Credit Card Agreement is entered into after the Closing Date, no later than 90 days after the date of such Credit Card Agreement or such later date as is acceptable to Agent);

 

(ii)              which are unpaid more than five Business Days after the date of the sale of Inventory giving rise to such Credit Card Receivable;

 

(iii)            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 Agent in its Permitted Discretion;

 

(iv)             which are generated by a consumer lease or rental agreement or arrangement (including a Rental Agreement);

 

(v)               which are owing to Buddy Top Parent or any of its Subsidiaries; and

 

(b)               amounts owing to Credit Card Issuers or Credit Card Processors in connection with the Credit Card Agreements.

 

Without limiting the foregoing, to qualify as an Eligible Credit Card Receivable, a Credit Card Receivable shall indicate no Person other than a Borrower as payee or remittance party.

 

Eligible Depository Bank” means:

 

(a)               Any Lender or any of its Affiliates;

 

(b)               Bank of America, N.A.; or

 

(c)               Any other Person who is a commercial bank or financial institution having total assets in excess of $1,000,000,000; organized under the laws of any country that is a member of the Basel Accord and the Organization of Economic Cooperation and Development, or a political subdivision of any such country, so long as such bank or financial institution is acting through a branch or agency located in the United States.

 

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Eligible Inventory” shall mean, as to each Borrower, Inventory of such Borrower consisting of finished goods held for resale in the ordinary course of the business of such Borrower that satisfy the criteria set forth below as reasonably determined by Agent. Eligible Inventory shall not include:

 

(a)               work-in-process;

 

(b)               raw materials;

 

(c)               spare parts for Equipment;

 

(d)               packaging and shipping materials;

 

(e)               supplies used or consumed in such Borrower’s business;

 

(f)                Inventory located (i) at premises other than a premise which is owned or leased by any Borrower or (ii) in any third party warehouse or in the possession of a bailee (other than a third party processor) unless Agent has received, subject to Section 9.31, a Collateral Access Agreement in respect of such premises on terms and conditions reasonably satisfactory to Agent (it being understood that (1) Inventory of the TVS Borrowers which is in-transit from any location of the TVS Borrowers permitted herein to another such location shall be considered Eligible Inventory solely with respect to the TVS Borrowing Base; provided that (x) it otherwise satisfies the criteria for Eligible Inventory set forth herein and is not in-transit more than ten consecutive days and (y) the aggregate amount of Eligible Inventory of the TVS Borrowers consisting of in-transit Inventory shall not exceed the amount equal to 10% of the TVS Borrowing Base at any time, (2) Inventory of the AFG Borrowers which is in-transit from any location of the AFG Borrowers permitted herein to another such location shall be considered Eligible Inventory solely with respect to the AFG Borrowing Base; provided that (x) it otherwise satisfies the criteria for Eligible Inventory set forth herein and is not in-transit more than ten consecutive days and (y) the aggregate amount of Eligible Inventory of the AFG Borrowers consisting of in-transit Inventory shall not exceed the amount equal to 10% of the AFG Borrowing Base at any time and (3) Inventory of the PSP Borrowers which is in-transit from any location of the PSP Borrowers permitted herein to another such location shall be considered Eligible Inventory solely with respect to the PSP Borrowing Base; provided that (x) it otherwise satisfies the criteria for Eligible Inventory set forth herein and is not in-transit more than ten consecutive days and (y) the aggregate amount of Eligible Inventory of the PSP Borrowers consisting of in-transit Inventory shall not exceed the amount equal to 10% of the PSP Borrowing Base at any time);

 

(g)               Inventory subject to a security interest or lien in favor of any Person other than Agent except those permitted in this Agreement that are subject to an intercreditor agreement in form and substance satisfactory to Agent between the holder of such security interest or lien and Agent and those liens described in clause (j) below;

 

(h)               bill and hold goods;

 

(i)                 Inventory which is past its expiration date;

 

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(j)                 Inventory that is not subject to the first priority, valid and perfected security interest of Agent except in the case of those non-consensual statutory liens described in Section 9.8(c)(i) hereof, liens permitted under Section 9.8(s) so long as such liens are subject to the Intercreditor Agreement, and landlord, warehouseman or similar liens (i) in respect of which Agent has established a Reserve (if and only to the extent establishment of a Reserve is permitted by the terms hereof), (ii) for which no Reserve is provided by the terms hereof, or (iii) in respect of which premises Agent has received a Collateral Access Agreement pursuant to which the landlord, warehouseman or bailee, as applicable, has either waived or subordinated its lien on terms and conditions reasonably satisfactory to Agent;

 

(k)               returned Inventory which is not held for sale in the ordinary course of business;

 

(l)                 damaged and/or defective Inventory;

 

(m)             Inventory (i) purchased or sold on consignment or (ii) solely with respect to the AFG Borrowing Base, that is consigned by an AFG Borrower to a Person which is not a Borrower or a Subsidiary of a Borrower, other than Inventory that is consigned to AFG Franchisees for which the AFG Borrowers have met the AFG Franchisee Eligibility Requirements;

 

(n)               Inventory located outside the United States of America, unless approved by Agent in writing;

 

(o)               Inventory that is subject to any licensing arrangement or any other Intellectual Property or other proprietary rights of any Person, the effect of which would be to limit the ability of the Agent, or any Person selling the Inventory on behalf of the Agent, to sell such Inventory in enforcement of the Agent’s Liens without further consent or payment to the licensor or such other Person (unless such consent has then been obtained);

 

(p)               Inventory which has been acquired from a Sanctioned Person;

 

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

 

(r)                Inventory of Buddy Top Parent or any of its Subsidiaries.

 

The criteria for Eligible Inventory set forth above may only be changed and any new criteria for Eligible Inventory may only be established by Agent in its good faith based on either: (i) an event, condition or other circumstance arising after the date hereof, or (ii) an event, condition or other circumstance existing on the date hereof to the extent Agent has no written notice thereof from a Borrower prior to the date hereof in either case under clause (i) or (ii) which materially and adversely affects or could reasonably be expected to materially and adversely affect the Inventory, its value or the amount that would be received by Agent from the sale or other disposition or realization upon such Inventory as determined by Agent in its good faith and commercially reasonable determination. Any Inventory that is not Eligible Inventory shall nevertheless be part of the Collateral.

 

Eligible Transferee” shall mean (a) any Lender; (b) the parent company of any Lender and/or any Affiliate of such Lender which is at least 50% owned by such Lender or its parent company; (c) any Person that is engaged in the business of making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Lender or with respect to any Lender that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor, in each case is approved by Agent, the Swingline Lender, the Issuing Bank and, unless an Event of Default under Section 10.1(a), Section 10.1(g) or Section 10.1(h) has occurred and is continuing at the time any assignment is effected hereunder, Administrative Borrower (such approval not to be unreasonably withheld, conditioned or delayed by Administrative Borrower, provided, that, (i) Administrative Borrower’s failure to consent to an assignment to a “distressed debt” purchaser, a “vulture” fund or other similar assignee or buyer shall not be deemed unreasonable and (ii) no such consent shall be required in connection with any assignment to another Lender or to an Affiliate of any Lender); and (d) any other commercial bank, financial institution or “accredited investor” (as defined in Regulation D under the Securities Act of 1933) approved by Agent, the Swingline Lender, the Issuing Bank (each such approval not to be unreasonably withheld, conditioned or delayed) and, unless an Event of Default under Section 10.1(a), Section 10.1(g) or Section 10.1(h) has occurred and is continuing at the time any assignment is effected hereunder, Administrative Borrower, provided that (i) neither any Borrower nor any Guarantor or any Affiliate of any Borrower or Guarantor shall qualify as an Eligible Transferee; (ii) no Person to whom any Indebtedness which is in any way subordinated in right of payment to any other Indebtedness of any Borrower or Guarantor shall qualify as an Eligible Transferee, except, in each case, as Agent may otherwise specifically agree; and (iii) a competitor of Borrowers shall not be deemed an “Eligible Transferee” under any circumstances except after the occurrence of either (A) an Event of Default for non-payment of any principal amount of Obligations owing hereunder or (B) the occurrence of an Event of Default with respect to any Borrower or Guarantor set forth in Section 10.1(g) or Section 10.1(h) hereof.

 

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Environmental Events” shall have the meaning set forth in Section 9.3(b) hereof.

 

Environmental Laws” shall mean all foreign, Federal, State and local laws (including common law), rules, codes, licenses, permits (including any conditions imposed therein), authorizations, legally binding judicial or administrative decisions, injunctions or agreements between Borrower and any Governmental Authority, (a) relating to pollution and the protection, preservation or restoration of the environment (including air, water vapor, surface water, ground water, drinking water, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), (b) relating to the exposure of humans to, or the use, storage, recycling, treatment, generation, manufacture, processing, distribution, transportation, handling, labeling, production, release or disposal, or threatened release, of hazardous, toxic or dangerous substances, materials, and wastes, or (c) imposing requirements with regard to recordkeeping, notification, disclosure and reporting respecting hazardous, toxic or dangerous substances, materials, and wastes. The term “Environmental Laws” includes (i) the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, (ii) applicable state counterparts to such laws and (iii) any common law or equitable doctrine that imposes liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any hazardous, toxic or dangerous substances, materials, and wastes.

 

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Environmental Liability” means any liability, obligation, loss, claim, action, order or cost, contingent or otherwise (including any liability for damages, costs of medical monitoring, costs of environmental remediation or restoration, administrative oversight costs, consultants’ fees, fines, penalties and indemnities) directly or indirectly resulting from or based upon (a) any actual or alleged violation of any Environmental Law or permit, license or approval issued thereunder, (b) the generation, use, handling, transportation, storage, or treatment of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

Equipment” shall have the meaning set forth in Article 9 of the UCC and includes, without limitation, as to each Borrower and Guarantor, all of such Borrower’s and Guarantor’s now owned and hereafter acquired equipment, wherever located, including machinery, data processing and computer equipment (whether owned or licensed and including embedded software), vehicles, tools, furniture, fixtures, all attachments, accessions and property now or hereafter affixed thereto or used in connection therewith, and substitutions and replacements thereof, wherever located.

 

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

 

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

 

ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a Plan, except for any such event with respect to which notice has been waived pursuant to applicable regulations; (b) the adoption of any amendment to a Plan that would require the provision of security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (d) the filing pursuant to Section 412 of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (e) the occurrence of a non-exempt “prohibited transaction” with respect to which Borrower, or any of their respective Subsidiaries is a “disqualified Person” (within the meaning of Section 4975 of the Code); (f) a complete or partial withdrawal by Borrower, or any ERISA Affiliate from a Multiemployer Plan or a cessation of operations which is treated as such a withdrawal or notification that a Multiemployer Plan is in reorganization; (g) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the Pension Benefit Guaranty Corporation to terminate a Plan; (h) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan; (i) the imposition of any liability under Title IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due but not delinquent under Section 4007 of ERISA, upon Borrower, or any ERISA Affiliate in an amount that could reasonably be expected to have a Material Adverse Effect.

 

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“Eurodollar Borrowing” shall mean a Borrowing of Eurodollar Rate Loans.

 

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

 

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

 

Event of Loss” means, with respect to any property, any of the following: (a) any loss, destruction or damage of such property; or (b) any actual condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, of such property, or confiscation of such property or the requisition of the use of such property; which for the avoidance of doubt, shall not include store closings or liquidations.

 

Excess Availability” shall mean, the amount, as determined by Agent, calculated at any date, equal to: (a) the Borrowing Cap minus (b) the Aggregate Revolving Exposure.

 

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

 

Excluded Accounts” means (a) Zero Balance Accounts (provided that, upon any such account ceasing to be a Zero Balance Account, such account shall cease to be an Excluded Account), (b) Store Accounts, (c) accounts into which government receivables and government reimbursement payments are deposited, (d) payroll accounts (including accounts used for the disbursement of payroll, payroll taxes and other employee wage and benefit payments, including 401(k) and other retirement plans, rabbi trusts for deferred compensation and health care benefits), (e) withholding and trust accounts, escrow and other fiduciary accounts, (f) Manual Sweeping Accounts, (g) Deposit Accounts, Securities Accounts and commodity accounts 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 (g), have a daily balance of not more than $2,500,000 in the aggregate for all such Deposit Accounts, Securities Accounts or commodity accounts and (h) consisting solely of cash or Cash Equivalents securing Indebtedness permitted by Section 9.9(ff) to the extent such security constitutes liens permitted by Section 9.8(ii).

 

Excluded Assets” means, (a) any fee-owned real property that is not Material Real Property, all leasehold (including ground lease) interests in real property and any real property that contains improvements and is located in an area determined (as of the First Amendment Effective Date with respect to real property owned on the First Amendment Effective Date and as of the date of acquisition of any real property acquired after the First Amendment Effective Date) by the Federal Emergency Management Agency (or any successor agency) to be a special flood hazard area, (b) motor vehicles, railcars, trailers, aircraft, aircraft engines, construction and earth moving equipment and other assets subject to certificates of title or ownership (except to the extent perfection of a security interest therein can be accomplished by filing of a UCC-1 financing

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statement or equivalent financing statement with a central registry), (c) letter of credit rights (except to the extent constituting supporting obligations (as defined under the UCC) in which a security interest can be perfected with the filing of a UCC-1 financing statement or equivalent financing statement with a central registry), (d) commercial tort claims with an individual value, as determined by the Administrative Borrower in good faith, of less than $7,500,000 and commercial tort claims for which no complaint or counterclaim has been filed in a court of competent jurisdiction, (e) Capital Stock in any Person (other than any Wholly Owned Subsidiaries) to the extent the pledge thereof to Agent is not permitted by the terms of such Person’s organizational, incorporation or joint venture documents, (f) [reserved], (g) Capital Stock of any Immaterial Subsidiary (except to the extent perfection of a security interest therein can be accomplished by filing of a UCC-1 financing statement or equivalent financing statement with a central registry), not-for profit Subsidiaries, captive insurance companies or other special purpose subsidiaries (including real estate special purpose entities), (h) [reserved], (i) any lease, license or other agreement, government approval or franchise with any Person if, to the extent and for so long as, the grant of a Lien thereon to secure the Obligations constitutes a breach of or a default under, or creates a right of termination in favor of any party (other than any Loan Party) to, such lease, license or other agreement, government approval or franchise (but only to the extent any of the foregoing is not rendered ineffective by, or is otherwise unenforceable under, the UCC or any applicable Requirements of Law), other than proceeds and receivables thereof, the assignment of which is expressly deemed effective under the UCC, (j) any asset subject to a Lien of the type permitted by Section 9.8(e) (whether or not incurred pursuant to such Section) or a Lien permitted by Section 9.9(m), in each case if, to the extent and for so long as the grant of a Lien thereon to secure the Obligations constitutes a breach of or a default under, or creates a right of termination in favor of any party (other than any Loan Party) to, any agreement pursuant to which such Lien has been created (but only to the extent any of the foregoing is not rendered ineffective by, or is otherwise unenforceable under, the UCC Code or any applicable Requirements of Law), (k) any intent-to-use trademark applications filed in the United States Patent and Trademark Office, pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. Section 1051, prior to the accepted filing of a “Statement of Use” and issuance of a “Certificate of Registration” pursuant to Section 1(d) of the Lanham Act or an accepted filing of an “Amendment to Allege Use” whereby such intent-to-use trademark application is converted to a “use in commerce” application pursuant to Section 1(c) of the Lanham Act, (l) any asset if, to the extent and for so long as the grant of a Lien thereon to secure the Obligations is prohibited by any applicable Requirements of Law, rule or regulation, or agreements with any Governmental Authority (other than to the extent that any such prohibition would be rendered ineffective pursuant to the UCC or any other applicable Requirements of Law) or which would require consent, approval, license or authorization from any Governmental Authority or regulatory authority, unless such consent, approval, license or authorization has been received in consultation with Agent, (m) margin stock (within the meaning of Regulation U of the Board of Governors, as in effect from time to time) and, to the extent prohibited by, or creating an enforceable right of termination in favor of any other party thereto (other than the Administrative Borrower or any Material Subsidiary of the Administrative Borrower), under the terms of any applicable organizational or incorporation documents, joint venture agreement or shareholders’ agreement, equity interests in any person other than Material Subsidiaries that are Wholly Owned Subsidiaries after giving effect to the anti-assignment provisions of the UCC or any other applicable Requirements of Law, (n) Excluded Accounts, (o) assets to the extent a security interest in such assets would result in material adverse tax consequences to any Borrower (or any direct or

 

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indirect parent or beneficial owner thereof) or one of its subsidiaries (as determined in good faith by the Administrative Borrower), (p) assets sold to any Person who is not a Loan Party in compliance with the Financing Agreements, (q) assets owned by a Subsidiary Loan Party after the release of the guarantee of such Subsidiary Loan Party pursuant to the Financing Agreements, and (r) any assets with respect to which, in the reasonable judgment of Agent and the Administrative Borrower (as agreed to in writing), the cost or other consequences (including adverse tax consequences as determined by the Administrative Borrower and Agent in good faith) of pledging such assets shall be excessive in view of the benefits to be obtained by the Lenders therefrom.

 

Excluded Hedge Obligation” shall mean, with respect to any Borrower or Guarantor, any Hedge Obligation if, and to the extent that, all or a portion of the guarantee of such Borrower or Guarantor of, or the grant by such Borrower or Guarantor of a security interest to secure, such Hedge 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) (a) by virtue of such Borrower’s or Guarantor’s failure for any reason to constitute an ECP at the time the guarantee of such Borrower or Guarantor or the grant of such security interest becomes effective with respect to such Hedge Obligation or (b) in the case of a Hedge Obligation subject to a clearing requirement pursuant to Section 2(h) of the Commodity Exchange Act (or any successor provision thereto), because such Borrower or Guarantor is a “financial entity,” as defined in Section 2(h)(7)(C)(i) of the Commodity Exchange Act (or any successor provision thereto), at the time the guarantee of such Borrower or Guarantor becomes effective with respect to such related Hedge Obligation. If a Hedge Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Hedge Obligation that is attributable to swaps for which such guarantee or security interest is or becomes illegal.

 

Excluded Subsidiary” means (a) any Subsidiary that is not a Wholly Owned Subsidiary of the Administrative Borrower, (b) any Subsidiary that is prohibited by applicable law, rule or regulation or contractual obligation (so long as any such contractual prohibition is not incurred in contemplation of the acquisition of such Subsidiary, and only for so long as such contractual prohibition shall be continuing) existing on the Closing Date or, if later, the date such Subsidiary first becomes a Subsidiary, from guaranteeing the Obligations or which would require any governmental or regulatory consent, approval, license or authorization to do so, unless such consent, approval, license or authorization has been obtained (c) any Subsidiary acquired pursuant to a Permitted Acquisition or similar Investment financed with secured Indebtedness permitted to be incurred pursuant to Section 9.9(h) or Section 9.9(z) (and not incurred in contemplation of such Permitted Acquisition or similar Investment) and any subsidiary thereof that guarantees such Indebtedness, in each case to the extent, and so long as, such secured Indebtedness prohibits such Subsidiary from becoming a Loan Party, providing a guarantee of the Obligations or granting Liens on its assets as security for the Obligations, (d) any direct or indirect U.S. subsidiary of a Subsidiary that is a “controlled foreign corporation” within the meaning of Section 957 of the Code, and any direct or indirect U.S. Subsidiary that has no material assets other than the equity of (or equity of and obligations owed to or treated as owed by) one or more direct or indirect non-U.S. subsidiaries that are “controlled foreign corporations” within the meaning of Section 957 of the Code, (e) any Immaterial Subsidiary, (f) any other Subsidiary with respect to which, in the reasonable judgment of Agent and the Administrative Borrower (as agreed in writing), the cost or other consequences (including any adverse tax consequences as determined in good faith by the Administrative Borrower and Agent) of providing the guaranty shall be excessive in view of the benefits to be obtained by the Lenders therefrom, (g) any Subsidiary if the provision of a guaranty by such Subsidiary would result in material adverse tax consequences to the Administrative Borrower (or any direct or indirect parent or beneficial owner thereof) or one of its subsidiaries (as determined in good faith by the Administrative Borrower), (h) any other Subsidiary excused from becoming a Loan Party pursuant to the last paragraph of Section 9.23, (i) any Subsidiary that is (or, if it were a Loan Party, would be) an “investment company” under the Investment Company Act of 1940, as amended, (j) any not-for profit Subsidiaries, captive insurance companies or other special purpose subsidiaries and (k) any Foreign Subsidiary; provided that any Immaterial Subsidiary that is a signatory to the Guaranty Agreement shall be deemed not to be an Excluded Subsidiary for purposes of this Agreement and the other Financing Agreements unless the Administrative Borrower has otherwise notified Agent; provided further that the Administrative Borrower may at any time and in its sole discretion, with the consent of Agent (such consent not to be unreasonably withheld, conditioned or delayed), cause any Subsidiary to not be an Excluded Subsidiary for purposes of this Agreement and the other Financing Agreements; provided, further, that notwithstanding the foregoing, no Subsidiary that Guarantees the obligations under the First Lien Credit Agreement, the Second Lien Credit Agreement, the Badcock First Lien Credit Agreement and the Badcock Second Lien Credit Agreement shall be an Excluded Subsidiary hereunder.

 

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Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes; (b) in the case of a Lender, U.S. Federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan, Letter of Credit or Revolving Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan, Letter of Credit or Revolving Commitment (other than pursuant to an assignment request by the Borrowers under Section 3.6(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 3.5, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender acquired the applicable interest in a Loan, Letter of Credit or Revolving Commitment or to such Lender immediately before it changed its lending office; (c) Taxes attributable to such Lender’s failure to comply with Section 3.5(f); and (d) any withholding Taxes imposed under FATCA.

 

Existing Credit Agreement” shall have the meaning assigned to such term in the recitals to this Agreement.

 

Existing Debt Agreements” means (a) that certain ABL Credit Agreement, dated as of September 23, 2020, by and among the Loan Parties party thereto as borrowers or guarantors, the lenders from time to time party thereto and Citizens Bank, N.A., as administrative agent and collateral agent, as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof, (b) that certain Credit Agreement, dated as of December 12, 2018, by and among the Loan Parties party thereto as borrowers or guarantors, the lenders from time to time party thereto and Golub Capital Markets LLC, as administrative agent and collateral agent, as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof, (c) that certain Note Purchase Agreement, dated as of December 12, 2018, by and among the Loan Parties party thereto as borrowers or guarantors, Norwest Mezzanine Partners IV-Debt, LP and Sentinel Junior Capital I, L.P., as the initial purchasers, and the other noteholders party thereto from time to time, as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof, and (d) that certain Credit Agreement, dated as of February 14, 2020, by and among the Loan Parties party thereto as borrowers or guarantors, the lenders from time to time party thereto, GACP Finance Co., LLC, as administrative agent, and Kayne Solutions Fund, L.P., as collateral agent, as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof.

 

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Existing Letter of Credit” means each letter of credit issued prior to the Closing Date by a Person that shall be an Issuing Bank and listed on Schedule 2.3.

 

Existing Term Loan Credit Agreement” means that certain Credit Agreement, dated as of February 14, 2020, by and among the Loan Parties party thereto as borrowers or guarantors, the lenders from time to time party thereto, GACP Finance Co., LLC, as administrative agent, and Kayne Solutions Fund, L.P., as collateral agent, as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof.

 

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

 

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

 

Federal Reserve Board” means the Board of Governors of the Federal Reserve System of the United States of America.

 

Fee Letter” shall mean the amended and restated arranger fee letter, dated as of January 29, 2021, by and among FRG, PSP Newco, Agent, Citizens Bank, N.A. and Credit Suisse Loan Funding LLC, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

 

Financing Agreements” shall mean, collectively, this Agreement, the Intercreditor Agreement, the Collateral Documents and all notes, guarantees, security agreements, intercreditor agreements, the Agent Fee Letter, the Fee Letter and all other agreements, documents and instruments now or at any time hereafter executed and/or delivered by any Borrower or Guarantor in connection with this Agreement.

 

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FIRREA” means the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended.

 

First Amendment” means that certain First Amendment to Third Amended and Restated Loan and Security Agreement, dated as of the First Amendment Effective Date, among the Borrowers, the other Loan Parties party thereto, the Lenders party thereto and the Agent.

 

First Amendment Effective Date” means November 22, 2021.

 

First Lien Agent” means JPMorgan Chase Bank, N.A., in its capacity as “Administrative Agent and Collateral Agent” under the First Lien Credit Agreement, together with its successor and permitted assigns.

 

First Lien Credit Agreement” means that certain Credit Agreement, dated as of the Closing Date, among the Administrative Borrower and PSP Newco, as borrowers, JPMorgan Chase Bank, N.A., a national banking association, as administrative agent and collateral agent, and the lenders from time to time party thereto, as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance with the Intercreditor Agreement.

 

First Lien Lender” means a “Lender” under and as defined in the First Lien Credit Agreement.

 

First Lien Obligations” means all Indebtedness of the Borrower and the Guarantors incurred or owing under the First Lien Term Loan Documents, including all obligations in respect of the payment of principal, interest, fees, prepayment premiums and indemnification obligations, and any refinancing of such Indebtedness permitted under this Agreement and under the Intercreditor Agreement; provided that such Indebtedness is subject to the Intercreditor Agreement.

 

First Lien Term Loan Documents” means the “Loan Documents” as defined in the First Lien Credit Agreement or the agreements and other documents governing other Indebtedness incurred under Section 9.9(s).

 

Fixed Charge Coverage Ratio” means, for any period of four fiscal quarters of the Administrative Borrower, the ratio of (a) EBITDA for such period minus (i) all Unfinanced Capital Expenditures for such period and (ii) cash taxes paid (including in the form of tax distributions) for such period (net of cash refunds received during such period) to (b) Fixed Charges.

 

Fixed Charges” shall mean, for any period, the sum of (i) Consolidated Cash Interest Charges paid or payable currently for such period plus (ii) scheduled amortization of Funded Debt (including Capital Leases) paid or payable currently in cash for such period plus (iii) dividends or distributions made in reliance on Section 9.11(d) which are paid in cash (net of tax distributions) for such period.

 

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

 

Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreementthe Second Amendment, the modification, amendment or renewal of this Agreement or otherwise) with respect to LIBO Rate.the Adjusted Term SOFR Rate or the Adjusted Daily Simple SOFR, as applicable. For the avoidance of doubt, as of the Second Amendment Effective Date, the Floor for each of the Adjusted Term SOFR Rate and the Adjusted Daily Simple SOFR shall be 0%.

 

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

 

Foreign Subsidiary” shall mean a Subsidiary of FRG that is organized or incorporated under the laws of any jurisdiction outside of the United States of America; sometimes being referred to herein collectively as “Foreign Subsidiaries”.

 

Franchise Agreement” means a franchising agreement between any Loan Party or any Subsidiary 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 AFG Intermediate and its Subsidiaries, including, without limitation, any AFG Franchise Agreement.

 

Franchise Disclosure Documents” means any uniform franchise offering circulars and franchise disclosure documents used by (and, to the extent required, filed by) any AFG Borrower to comply with any applicable law, rule, regulation or order of any Governmental Authority.

 

Franchise Fees” shall mean each Borrower’s right to payment under any franchising agreement (including any Franchise Agreement) between any Borrower, as franchisor, and any other Person, as franchisee, pertaining to the establishment and operation of a business with operations comparable to the operations of such Borrower and its Subsidiaries, 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 Loan 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.

 

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 Agent, as in effect on the date hereof.

 

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Franchisee Receivable” shall mean an Account or credit card receivable of a Loan Party owed by an Account Debtor that is a franchisee arising from the sale of Inventory by a Loan Party to such Account Debtor (including any Account or credit card receivable to the extent arising from the sale of Inventory under a Franchise Agreement other than any such Account or credit card receivable (or portion thereof) that consists of fees, royalties, penalties and interest payable under any Franchise Agreement).

 

Frequent Buyer Program” shall mean the Borrowers’ “Healthy Awards” customer loyalty program, which as in effect on the Closing Date is described at https://www.vitaminshoppe.com/lp/Newhealthyaward.

 

FRG” means Franchise Group, Inc., a Delaware corporation.

 

Funded Debt” means all Indebtedness of the Administrative Borrower and its Subsidiaries for borrowed money that matures more than one year from the date of its creation or matures within one year from such date that is renewable or extendable, at the option of such Person, to a date more than one year from such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date, including Indebtedness in respect of the Loans.

 

GAAP” shall mean generally accepted accounting principles in the United States of America as in effect from time to time as set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States (including any principles required by the Securities and Exchange Commission), that are applicable to the circumstances as of the date of determination, consistently applied. If there occurs after the date of this Agreement any change in GAAP that affects the calculation of any requirements, terms or covenants set forth in this Agreement or any other Financing Agreement (whether contained in Section 9.24 or otherwise), Agent and Borrowers shall negotiate in good faith to amend the provisions of this Agreement and the other Financing Agreements that relate to the calculation of such requirements, terms and covenants with the intent of having the respective positions of the Lenders and Borrowers after such change in GAAP conform as nearly as possible to their respective positions as of the date of this Agreement and, until any such amendments have been agreed upon, the implicated requirements and covenants shall be calculated as if no such change in GAAP has occurred; provided, that, for the avoidance of doubt, the parties agree that all financial statements required to be delivered hereunder shall and will be delivered giving effect to any such change in GAAP.

 

General Intangibles” shall have the meaning set forth in Article 9 of the UCC.

 

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

 

Governmental Authority” shall mean any nation or government, any state, province, or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of government.

 

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Guarantors” shall mean, collectively and together with their respective successors and assigns), each party to the Guaranty on the Closing Date and any Subsidiary of FRG that at any time after the date hereof becomes party to a Guaranty in favor of Agent for the benefit of the Secured Parties or otherwise liable on or with respect to the Obligations (other than Borrowers) (each a “Subsidiary Guarantor”); each sometimes being referred to herein individually as a “Guarantor”; provided that, if at any time after the date hereof, a Guarantor which is directly or indirectly wholly owned by FRG shall own any assets that would constitute Eligible Inventory if owned by a Borrower, upon Administrative Borrower’s request, such Guarantor shall cease to be a Guarantor hereunder and shall be deemed a Borrower effective on the date of the confirmation by Agent to Administrative Borrower that (i) Agent has received such request and that Agent has received an appraisal with respect to such Inventory and conducted a field examination with respect thereto, the results of which are satisfactory to Agent in good faith, or alternatively, at Agent’s option, Agent shall have received such information with respect thereto as Agent may in its good faith require and (ii) Agent and each Lender have received all information and documentation reasonably requested by the Agent and the Lenders for purposes of compliance with applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act and the Beneficial Ownership Regulation with respect to such Guarantor; provided that, notwithstanding anything to the contrary herein or in any Financing Agreement, prior to the Badcock Joinder Date, Badcock shall not be a Guarantor for any purpose in any Financing Agreement.

 

Guaranty” shall mean (a) that certain Second Amended and Restated Guaranty Agreement dated as of the Closing Date, by each of Loan Parties from time to time party thereto in favor of Agent, Lenders and the other Secured Parties, and (b) any other guaranty agreement executed by a Subsidiary of FRG that at any time after the date hereof becomes a Guarantor under this Agreement in favor of Agent, Lenders and the other Secured Parties, in each case, as the same may be amended, restated or otherwise modified from time to time.

 

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

 

Hedge 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; sometimes being collectively referred to herein as “Hedge Agreements”.

 

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Hedge Obligations” of any Borrower or Guarantor means any and all obligations of such Borrower or Guarantor, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Hedge Agreements, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any Hedge Agreement transaction, in each case, solely under Hedge Agreements entered into with a Bank Product Provider and which are deemed to be Obligations under clause (b) (other than clause (b)(ii)) of the definition of Obligations.

 

IBA” has the meaning assigned to such term in Section 13.2(o).

 

Immaterial Subsidiary” means any Subsidiary other than a Material Subsidiary.

 

Impacted Interest Period” has the meaning assigned to such term in the definition of “LIBO Rate”.

 

Increased Amount” of any Indebtedness shall mean any increase in the amount of such Indebtedness in connection with any accrual of interest, the accretion of accreted value, the amortization of original issue discount, the payment of interest in the form of additional Indebtedness or in the form of Qualified Equity Interests of a Borrower or any of its direct or indirect parent entities, the accretion of original issue discount or liquidation preference and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies.

 

Increased Reporting Period” shall mean any period commencing on the first date on which Excess Availability is less than the greater of (a) 20% of the Borrowing Cap or (b) $30,000,000, in each case for three consecutive days, and continuing until the date that both (x) Excess Availability exceeds the greater of (i) 20% of the Borrowing Cap or (ii) $30,000,000 for 60 consecutive days and (y) no Default or Event of Default then exists and is continuing.

 

Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments to the extent the same would appear as a liability on a balance sheet of such Person prepared in accordance with GAAP, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding (w) trade accounts payable in the ordinary course of business, (x) any Earn-Out obligation, purchase price adjustment or similar obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and if not paid within thirty (30) days after being due and payable, (y) liabilities associated with customer prepayments and deposits and (z) expenses accrued in the ordinary course of business), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g) all obligations with respect to Capital Leases of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances; provided that the term “Indebtedness” shall not include (i) deferred or prepaid revenue, (ii) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty, indemnity or other unperformed obligations of the seller, (iii) contingent indemnity and similar obligations incurred in the ordinary course of business (iv) any obligations attributable to the exercise of appraisal rights and the settlement of any claims or actions (whether actual, contingent or potential) with respect thereto, (v) Indebtedness of any Person that is a direct or indirect parent of a Borrower appearing on the balance sheet of a Borrower, or solely by reason of push down accounting under GAAP, (vi) any non-compete or consulting obligations incurred in connection with a Permitted Acquisition, (vii) any reimbursement obligations under pre-paid contracts entered into with clients in the ordinary course of business, (viii) for the avoidance of doubt, any Qualified Equity Interests issued by the Borrower. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. The amount of Indebtedness of any Person for purposes of clause (e) above shall (unless such Indebtedness has been assumed by such Person) be deemed to be equal to the lesser of (A) the aggregate unpaid amount of such Indebtedness and (B) the fair market value of the property encumbered thereby as determined by such Person in good faith. For all purposes hereof, the Indebtedness of any Borrower and its Subsidiaries shall exclude intercompany liabilities arising from their cash management, tax, and accounting operations and intercompany loans, advances or Indebtedness having a term not exceeding 364 days (inclusive of any rollover or extensions of terms).

 

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Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by, or on account of any obligation of any Loan Party under any Financing Agreement and (b) to the extent not otherwise described in the foregoing clause (a) hereof, Other Taxes.

 

Indemnitee” shall have the meaning set forth in Section 11.6(a) hereof.

 

Information Certificate” shall mean that certain Information Certificate in the form of Exhibit B hereto (or such other form reasonably acceptable to the Agent) delivered by the Borrowers and Guarantors on the Closing Date.

 

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

 

Intellectual Property” means all intellectual property rights of every kind and nature, including rights in inventions, Patents, Copyrights, Licenses, Trademarks, rights in Trade Secrets, and rights in Software all rights to sue or otherwise recover for any past, present and future infringement, dilution, misappropriation, or other violation or impairment thereof, a Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages and proceeds of suit now or hereafter due and/or payable with respect thereto, and all other rights of any kind accruing thereunder or pertaining thereto throughout the world, in each case of the Borrowers and the Guarantors.

 

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Intercreditor Agreement” means (a) that certain Amended and Restated Intercreditor Agreement, dated as of the First Amendment Effective Date, by and among the Agent, the First Lien Agent, the Second Lien Agent, the Badcock First Lien Agent and the Badcock Second Lien Agent, and acknowledged by the Borrowers, the Guarantors and Badcock, 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 or (b) such other intercreditor agreement or arrangement among the Agent (or other applicable representative on behalf of the holders of the Indebtedness incurred under this Agreement and the other Financing Agreements) and the First Lien Agent and the Second Lien Agent (or any of them) (and any other Persons party thereto), that is reasonably acceptable to the Agent and the Administrative Borrower, as may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof, as applicable.

 

Interest Election Request” means a request by the Administrative Borrower to convert or continue a Borrowing in accordance with Section 2.12.

 

Interest Expense” shall mean, for any period, as to any Person, as determined on a consolidated basis in accordance with GAAP, the total interest expense of such Person, whether paid or accrued during such period (including the interest component of Capital Leases for such period), including, discounts in connection with the sale of any Accounts and bank fees, commissions, discounts and other fees and charges owed with respect to letters of credit, banker’s acceptances or similar instruments, losses, fees, net costs and early termination costs under Hedge Agreements, amortization or write-off of debt discounts and debt issuance costs and commissions, and other discounts and other fees and charges associated with Indebtedness.

 

Interest Payment Date” means (a) with respect to any ABR Loan (other than a Swingline Loan), the first Business Day of each calendar quarter and the Maturity Date, (b) with respect to any Eurodollar RateRFR Loan, each date that is on the numerically corresponding day in each calendar month that is one month after the Borrowing of such RFR Loan (or, if there is no numerically corresponding day in such month, then the last day of such month) and the Maturity Date, (c) with respect to any Term Benchmark Loan, the last day of each Interest Period applicable to the Borrowing of which such Loan is a part (and, in the case of a EurodollarTerm Benchmark Borrowing 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) and the Maturity Date and (cd) with respect to any Swingline Loan, the day that such Swingline Loan is required to be repaid and the Maturity Date.

 

Interest Period” means, with respect to any EurodollarTerm Benchmark Borrowing, the period commencing on the date of such Eurodollar Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six thereafter (in each case, subject to the availability for the Benchmark applicable to the relevant Loan or Revolving Commitment), as the Administrative 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 and, (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 tenor that has been removed from this definition pursuant to Section 3.4(f) shall be available for specification in such Borrowing Request or Interest Election Request. 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.

 

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Internally Generated Cash” shall mean any cash or Cash Equivalents of any Loan Party (or, prior to the Badcock Joinder Date, Badcock) that is not generated from an Asset Sale, an Event of Loss, an incurrence of Indebtedness, an issuance of Capital Stock or a capital contribution.

 

Interpolated Rate” means, at any time, for any Interest Period, the rate per annum (rounded to the same number of decimal places as the LIBO Screen Rate) determined by the 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 LIBO Screen Rate for the longest period (for which the LIBO Screen Rate is available) that is shorter than the Impacted Interest Period and (b) the LIBO Screen Rate for the shortest period (for which the LIBO Screen Rate is available) that exceeds the Impacted Interest Period, in each case, at such time; provided, that if any Interpolated Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

 

Inventory” shall have the meaning set forth in Article 9 of the UCC and includes, without limitation, as to each Borrower and Guarantor, all of such Borrower’s and Guarantor’s now owned and hereafter existing or acquired goods, wherever located, which (a) are leased by such Borrower or Guarantor as lessor; (b) are held by such Borrower or Guarantor for sale or lease or to be furnished under a contract of service; (c) are furnished by such Borrower or Guarantor under a contract of service; or (d) consist of raw materials, work in process, finished goods or materials used or consumed in its business.

 

Inventory Reserves” shall mean the reserves described in clauses (i), (ii), (viii), (x), (xi) and (xii) of the definition of “Reserves”.

 

Investment” shall have the meaning set forth in Section 9.10.

 

Investment Property” shall have the meaning set forth in Article 9 of the UCC.

 

Investment Property Control Agreement” shall mean an agreement in writing, in form and substance reasonably satisfactory to Agent, by and among Agent (and the First Lien Agent, if a party), any Borrower or Guarantor (as the case may be) and any securities intermediary, commodity intermediary or other Person who has custody, control or possession of any Investment Property of such Borrower or Guarantor acknowledging that such securities intermediary, commodity intermediary or other Person has custody, control or possession of such Investment Property on behalf of Agent (and the First Lien Agent, if a party) that it will comply with entitlement orders originated by Agent (or the First Lien Agent, as applicable) after the occurrence and during the continuance of an Event of Default with respect to such Investment Property, or other instructions of Agent (or the First Lien Agent, as applicable), and has such other terms and conditions as Agent may reasonably require.

 

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Investors” means the one or more co-investors and other investors (which may include existing shareholders, board members, management or other rollover investors of the Acquired Company) who are holders of Capital Stock in the Borrower (or any direct or indirect parent thereof) on the Closing Date after giving effect to the Transactions, together with their Affiliates.

 

ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.

 

Issuing Bank” shall mean Chase.

 

Landlord Lien States” shall mean the States of Washington and Virginia and the Commonwealth of Pennsylvania and such other states, provinces or jurisdictions in which a landlord’s claim for rent (including a portion of rent) has or may have priority by operation of applicable law over the lien of the Agent on behalf of the Secured Parties in any of the Collateral.

 

LC Disbursement” means any payment made by an Issuing Bank pursuant to a Letter of Credit.

 

LCA Election” has the meaning assigned to such term in Section 1.2.

 

LCA Test Date” has the meaning assigned to such term in Section 1.2.

 

Lender-Related Person” shall have the meaning set forth in Section 11.6(b) hereof.

 

Lenders” shall mean the financial institutions who are signatories hereto as Lenders and other Persons made a party to this Agreement as a Lender in accordance with Section 13.7 hereof, and their respective successors and assigns, including the Revolving Lenders; each sometimes being referred to herein individually as a “Lender”. Unless the context otherwise requires, the term “Lenders” includes the Swingline Lender and the Issuing Bank.

 

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

 

Letter of Credit Limit” shall mean $25,000,000.

 

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Letter of Credit Obligations” shall mean, at any time and without duplication, the sum of (a) the aggregate undrawn amount of all Letters of Credit outstanding at such time, plus (b) the aggregate amount of all drawings under Letters of Credit for which Issuing Bank has not at such time been reimbursed, plus (c) the aggregate amount of all payments made by each Revolving Lender to Issuing Bank with respect to such Revolving Lender’s participation in Letters of Credit as provided in Section 2.3 for which Borrowers have not at such time reimbursed the Revolving Lenders, whether by way of a Revolving Loan or otherwise.

 

Letter-of-Credit Rights” shall have the meaning set forth in Article 9 of the UCC.

 

Letters of Credit” shall mean all letters of credit (whether documentary or stand-by and whether for the purchase of Inventory, Equipment or otherwise) issued by an Issuing Bank for the account of any Borrower pursuant to this Agreement and shall include each Existing Letter of Credit, and all amendments, extensions or replacements thereof, and the term “Letter of Credit” means any one of them or each of them singularly, as the context may require.

 

Leverage Ratio” shall mean, for any date of determination, the ratio of: (a) Total Indebtedness as of such date to (b) EBITDA for the most recently completed Test Period, all calculated for any Person on a consolidated basis in accordance with GAAP.

 

Liabilities” means any losses, claims (including intraparty claims), demands, damages or liabilities of any kind.

 

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any applicable Interest Period or for any ABR Borrowing, LIBO Screen Rate at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period; provided that, if the LIBO Screen Rate shall not be available at such time for such Interest Period (an “Impacted Interest Period”), then the LIBO Rate shall be the Interpolated Rate, subject to Section 3.4 in the event that the Agent shall conclude that it shall not be possible to determine such Interpolated Rate (which conclusion shall be conclusive and binding absent manifest error). Notwithstanding the above, to the extent that “LIBO Rate” or “Adjusted LIBO Rate” is used in connection with an ABR Borrowing, such rate shall be determined as modified by the definition of Alternate Base Rate.

 

“LIBO Screen Rate” means, for any day and time, with respect to any Eurodollar Borrowing for any Interest Period or for any ABR Borrowing, the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate for dollars) for a period equal in length to such Interest Period as displayed on such day and time on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Agent in its reasonable discretion); provided that if the LIBO Screen Rate as so determined would be less than zero, such rate shall be deemed to zero for the purposes of this Agreement.

 

License” means any Patent License, Trademark License or Copyright License.

 

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License Agreements” means (a) all agreements or other arrangements of Borrowers and Guarantors pursuant to which such Borrower or Guarantor has a license, option, or other right to use any trademarks, logos, designs or other intellectual property that is material to such Borrower’s or Guarantor’s business and owned by another Person as in effect on the Closing Date and (b) all such agreements or other arrangements as may be entered into by any Borrower or Guarantor after the Closing Date.

 

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

 

Limited Condition Transaction” means any Permitted Acquisition or other investment, incurrence of Indebtedness, dividend, distribution or repayment, repurchase or redemption of Indebtedness permitted hereunder by a Borrower or one or more of its Subsidiaries.

 

Liquidity” means, at any time, (a) with respect to the AFG Borrowers, the sum of (i) the aggregate amount of cash of the AFG Borrowers contained in any deposit account for which such AFG Borrower has delivered to the Agent a Deposit Account Control Agreement pursuant to which (x) the Agent has been granted a lien on and first-priority security interest in such account and all cash held from time to time therein and (y) the Agent has been granted control over the amounts held from time to time therein and (ii) any AFG Excess Availability, (b) with respect to the PSP Borrowers, the sum of (i) the aggregate amount of cash of the PSP Borrowers contained in any deposit account for which such PSP Borrower has delivered to the Agent a Deposit Account Control Agreement pursuant to which (x) the Agent has been granted a lien on and first-priority security interest in such account and all cash held from time to time therein and (y) the Agent has been granted control over the amounts held from time to time therein and (ii) any PSP Excess Availability or (c) with respect to the TVS Borrowers, the sum of (i) the aggregate amount of cash of the TVS Borrowers contained in any deposit account for which such TVS Borrower has delivered to the Agent a Deposit Account Control Agreement pursuant to which (x) the Agent has been granted a lien on and first-priority security interest in such account and all cash held from time to time therein and (y) the Agent has been granted control over the amounts held from time to time therein and (ii) any TVS Excess Availability.

 

Loan Parties” means, collectively, the Borrowers and the Guarantors and their respective successors and assigns, and the term “Loan Party” shall mean any one of them or all of them individually, as the context may require; provided that, notwithstanding anything to the contrary herein or in any Financing Agreement, prior to the Badcock Joinder Date, Badcock shall not be a Loan Party for any purpose in any Financing Agreement.

 

Loans” shall mean, collectively, all of the Revolving Loans (including Swingline Loans and Overadvances) and “Loan” shall mean any one of the Revolving Loans (including Swingline Loans and Overadvances).

 

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Manual Sweeping Accounts” shall mean the Deposit Accounts maintained by the Borrowers as of the Closing Date that are identified as “Manual Sweeping Accounts” on Schedule 8.10 hereto, and any replacement or additional accounts of the Borrowers.

 

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

 

Material Adverse Effect” shall mean a material adverse effect on (a) the financial condition, business, performance or operations of Borrowers taken as a whole or of Borrowers and the Guarantors taken as a whole; (b) the legality, validity or enforceability of this Agreement, any Collateral Document, the Intercreditor Agreement or any of the other material Financing Agreements; (c) the legality, validity, enforceability, perfection or priority of the security interests and liens of Agent upon the Collateral; (d) the Collateral (taken as a whole) or its value; (e) the ability of Borrowers (taken as a whole) to repay the Obligations or of Borrowers (taken as a whole) to perform their obligations under this Agreement or any of the other Financing Agreements as and when to be performed; or (f) the ability of Agent or any Lender to enforce the Obligations or realize upon the Collateral or otherwise with respect to the material rights and remedies of Agent and Lenders under this Agreement or any of the other Financing Agreements.

 

Material Contract” shall mean the First Lien Credit Agreement, the Second Lien Credit Agreement, the Badcock First Lien Credit Agreement, the Badcock Second Lien Credit Agreement and any other contract or other agreement (other than the Financing Agreements and the Credit Card Agreements), whether written or oral, to which any Borrower or Guarantor is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto (unless a replacement Material Contract has been entered into either prior to or contemporaneously with the date of such termination or cancellation) would reasonably be expected have a Material Adverse Effect.

 

Material Real Property” means real property (including fixtures) (i) located in the United States, (ii) first acquired by any Loan Party after the Effective Date and (iii) owned (but not leased or ground-leased) by any Loan Party with a book value, as reasonably determined by the Administrative Borrower in good faith on the date of acquisition thereof, greater than or equal to $7,500,000.

 

Material Subsidiary” means each Wholly Owned Subsidiary that, as of the last day of the fiscal quarter of the Administrative Borrower most recently ended, had net revenues or total assets for such quarter in excess of 2.5% of the consolidated net revenues or total assets, as applicable, of the Administrative Borrower and its Subsidiaries for such fiscal quarter; provided that in the event that the Immaterial Subsidiaries, taken together, had as of the last day of the fiscal quarter of the Administrative Borrower most recently ended net revenues or total assets in excess of 7.5% of the consolidated net revenues or total assets, as applicable, of the Borrower and its Subsidiaries for such fiscal quarter, the Administrative Borrower shall designate at its sole discretion one or more Immaterial Subsidiaries to be a Material Subsidiary as may be necessary such that the foregoing 7.5% limit shall not be exceeded, and any such Subsidiary shall thereafter be deemed to be a Material Subsidiary hereunder; provided, further, that the Borrower may re-designate Material Subsidiaries as Immaterial Subsidiaries so long as Borrower is in compliance with the foregoing.

 

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Maturity Date” shall mean the earliest of (a) the fifth anniversary of the Closing Date, (b) the date that is 91 days prior to the maturity date of any Indebtedness of any Borrower or Guarantor with an aggregate outstanding principal amount in excess of $25,000,000 (including the First Lien Obligations and the Second Lien Obligations (but excluding, for the avoidance of doubt, the Badcock Term Obligations)) and in each case any Refinancing Indebtedness in respect thereof and (c) any date on which the Revolving Commitments are reduced to zero or otherwise terminated pursuant to the terms hereof.

 

Model” means the model delivered by the Administrative Borrower to Agent on or prior to the Closing Date.

 

Moneys” shall have the meaning set forth in the UCC.

 

Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency business

 

Mortgage” means a mortgage, deed of trust, deed to secure debt or other security document granting a Lien on any Mortgaged Property in favor of Agent for the benefit of the Secured Parties to secure the Obligations, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time. Each Mortgage shall be in form and substance reasonably satisfactory to Agent and the Administrative Borrower.

 

Mortgaged Property” means each parcel of Material Real Property with respect to which a Mortgage is granted pursuant to Section 9.21.

 

Multiemployer Plan” shall mean a “multi-employer plan” as defined in Section 4001(a)(3) of ERISA which is contributed to by any Borrower, Guarantor or any ERISA Affiliate or with respect to which any Borrower, Guarantor or any ERISA Affiliate may reasonably be expected to incur any liability.

 

Net Recovery Percentage” shall mean with respect to finished goods Inventory or raw materials Inventory, as applicable, the fraction, expressed as a percentage, (a) the numerator of which is the amount equal to the amount of the recovery in respect of the applicable Inventory at such time on a “net orderly liquidation value” basis as set forth in the most recent acceptable appraisal of such Inventory received by Agent in accordance with Section 7.3, net of operating expenses, liquidation expenses and commissions, and (b) the denominator of which is the applicable original cost of the aggregate amount of such Inventory subject to such appraisal.

 

Non-Cash Charges” means (a) any impairment charge or asset write-off or write-down, including impairment charges or asset write-offs or write-downs related to intangible assets (including goodwill), long-lived assets, and Investments in debt and equity securities or as a result of a change in law or regulation, in each case pursuant to GAAP, and the amortization of intangibles pursuant to GAAP (which, without limiting the foregoing, shall include any impairment charges resulting from the application of FASB Statements No. 142 and 144 and the amortization of intangibles arising pursuant to No. 141), (b) all losses from Investments recorded using the equity method, (c) all Non-Cash Compensation Expenses, (d) the non-cash impact of acquisition method accounting, (e) depreciation and amortization (including amortization of deferred financing fees or costs, Capitalized Software Expenditures and amortization of unrecognized prior service costs and actuarial gains and losses related to pension and other post-employment benefits) and (f) other non-cash charges (including non-cash charges related to deferred rent) (provided, in each case, that if any non-cash charges represent an accrual or reserve for potential cash items in any future period, the cash payment in respect thereof in such future period shall be subtracted from EBITDA to such extent, and excluding amortization of a prepaid cash item that was paid in a prior period).

 

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Non-Cash Compensation Expense” means any non-cash expenses and costs that result from the issuance of stock-based awards, partnership interest-based awards and similar incentive based compensation awards or arrangements.

 

Non-Wholly Owned Subsidiary” means any Subsidiary other than a Wholly Owned Subsidiary.

 

Not Otherwise Applied” means, with reference to the Available Equity Amount, that such amount was not previously applied pursuant to 9.10(hh), 9.11(m) and 9.24(l).

 

NYFRB” means the Federal Reserve Bank of New York.

 

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

 

NYFRB’s Website” means the website of the NYFRB at http://www.newyorkfed.org, or any successor source.

 

Obligations” shall mean:

 

(a)               any and all Loans, Letter of Credit Obligations and all other obligations, liabilities and indebtedness of every kind, nature and description owing by any or all of Borrowers and Guarantors to Agent or any Lender, including principal, interest, charges, fees, costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under this Agreement or any of the other Financing Agreements, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of this Agreement or after the commencement of any case with respect to such Borrower or Guarantor under the United States Bankruptcy Code or any similar statute (including the payment of interest and other amounts which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, or secured or unsecured; and

 

(b)               for purposes only of Section 5.1 hereof and subject to the priority in right of payment set forth in Section 6.4 hereof, all obligations, liabilities and indebtedness of every kind, nature and description owing by any or all of Borrowers or Guarantors and each of their respective Subsidiaries to Agent or any Bank Product Provider arising under or pursuant to any Bank Products or to Bank of America, N.A. arising under the E-Payables Agreement, in each case whether now existing or hereafter arising to the extent such obligations, liabilities and indebtedness would not cause the total amount of the Obligations to exceed the value of the Collateral; provided that:

 

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(i)                 solely with respect to any Borrower or Guarantor that is not an ECP, Excluded Hedge Obligations of any such Borrower or Guarantor shall in any event be excluded from “Obligations” owing by such Borrower or Guarantor,

 

(ii)              as to any such obligations, liabilities and indebtedness arising under or pursuant to the E-Payables Agreement, such obligations, liabilities and indebtedness owing to Bank of America, N.A. thereunder shall constitute Obligations entitled to the benefits of the security interest of Agent granted hereunder, provided that (A) such obligations, liabilities and indebtedness considered Obligations hereunder shall not exceed $20,000,000 in the aggregate at any time outstanding, (B) Administrative Borrower shall instruct and cause Bank of America, N.A. to deliver to Agent, monthly, a summary of the amount of the obligations, liabilities and indebtedness owing to Bank of America, N.A. under and pursuant to the E-Payables Agreement as Agent may reasonably request, (C) Agent may, at its option, establish a Reserve with respect to the amount of the reported obligations, liabilities and indebtedness owing to Bank of America, N.A. under and pursuant to the E-Payables Agreement and (D) Bank of America, N.A. shall not have any voting rights under this Agreement or any other Financing Agreement as a result of the existence of Obligations owing to it under and pursuant to the E-Payables Agreement,

 

(iii)            any Bank Product Provider (other than Chase and its Affiliates), shall have delivered written notice to Agent that (A) such Bank Product Provider has entered into a transaction to provide Bank Products to a Borrower and Guarantor and (B) the obligations arising pursuant to such Bank Products provided to Borrowers and Guarantors constitute Obligations entitled to the benefits of the security interest of Agent granted hereunder, and Agent shall have accepted such notice in writing, and

 

(iv)             in no event shall any Bank Product Provider to whom such obligations, liabilities or indebtedness are owing, or Bank of America, N.A. with respect to obligations, liabilities and indebtedness owing to it under and pursuant to the E-Payables Agreement, be deemed a Lender for purposes hereof to the extent of and as to such obligations, liabilities or indebtedness other than for purposes of Section 5.1 hereof and other than for purposes of Sections 12.1, 12.2, 12.3(b), 12.6, 12.7, 12.9, 12.12 and 13.6 hereof, as applicable, and in no event shall such obligations be included in the Obligations to the extent that the effect is that the value of the Collateral (as determined by Agent) is less than the amount of the Obligations and in no event shall the approval of any such Person be required in connection with the release or termination of any security interest or lien of Agent.

 

Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Taxes (other than a connection arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to, or enforced, any Financing Agreement, or sold or assigned an interest in any Loan, Letter of Credit or any Financing Agreement).

 

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Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Financing Agreement, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.6(b)).

 

Overadvances” has the meaning assigned to such term in Section 2.2(b).

 

Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnight Eurodollar borrowingseurodollar transactions denominated in dollars by U.S.-managed banking offices of depository institutions (as such composite rate shall be determined by the NYFRB as set forth on the NYFRB’s Website from time to time) and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate.

 

Paid in Full” or “Payment in Full” means, (a) the payment in full in cash of all outstanding Loans and LC Disbursements, together with accrued and unpaid interest thereon, (b) the termination, expiration, or cancellation and return of all outstanding Letters of Credit (or alternatively, with respect to each such Letter of Credit, the furnishing to the Agent of a cash deposit, or at the discretion of the Agent a backup standby letter of credit satisfactory to the Agent and the Issuing Bank, in an amount equal to 105% of the Letter of Credit Obligations as of the date of such payment), (c) the payment in full in cash of the accrued and unpaid fees, (d) the payment in full in cash of all reimbursable expenses and other Obligations (other than Unliquidated Obligations for which no claim has been made and other obligations expressly stated to survive such payment and termination of this Agreement), together with accrued and unpaid interest thereon, (e) the termination of all Revolving Commitments, and (f) the termination of the Hedge Obligations and the Bank Products or entering into other arrangements satisfactory to the Secured Parties counterparties thereto.

 

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

 

Participant Register” has the meaning assigned to such term in Section 13.7(e).

 

Patent License” means any written agreement or license now or hereafter in effect, granting to or from any Person any right to manufacture, use or sell any invention claimed in a Patent, now or hereafter owned by any other Person or that any other Person now or hereafter otherwise has the right to license, and all rights of any such Person under any such agreement or license.

 

Patents” means (a) all patents and patent applications, for letters patent of the United States or any other jurisdiction, including issued patents and pending patent applications in the United States Patent and Trademark Office, and (b) all reissues, substitutes, divisionals, continuations, continuations-in-part, extensions, renewals, and reexaminations thereof.

 

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Payment” has the meaning assigned to such term in Section 12.6(b)(i).

 

Payment in Full of Badcock Term Obligations” means, collectively, (i) the termination of all Commitments (under and as defined in the Badcock First Lien Credit Agreement) and the payment in full of all Secured Obligations (as defined in the Badcock First Lien Credit Agreement) (other than contingent indemnification obligations) and (ii) the termination of all Commitments (under and as defined in the Badcock Second Lien Credit Agreement) and the payment in full of all Secured Obligations (as defined in the Badcock Second Lien Credit Agreement) (other than contingent indemnification obligations).

 

Payment Notice” has the meaning assigned to such term in Section 12.6(b)(ii).

 

Permitted Acquisitions” shall mean the purchase or other acquisition, by merger, consolidation or otherwise, by any Borrower or any Subsidiary of any Capital 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 (the “Acquired Business”); 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) the business of such Person, or such assets, as the case may be, constitute a Permitted Business (or assets with respect thereto), (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 9.23 (other than with respect to any Subsidiary of such newly created or acquired Subsidiary that is an Excluded Subsidiary), (d) subject to Section 1.2, after giving effect to any such purchase or other acquisition no Event of Default shall have occurred and be continuing, (e) the total consideration paid in connection with all such purchases and acquisitions of the Capital Stock in any Person which will not become a Loan Party (within the time periods set forth in this Agreement), 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 if substantially all of such assets will not become owned by a Loan Party (or a Person that will become a Loan Party within the time periods set forth in this Agreement), shall not exceed $20,000,000 in the aggregate, unless financed with the proceeds of Qualified Equity Interests, excluding any Qualified Equity Interests used for, or otherwise having the effect of increasing, any other basket under this Agreement, (f) Accounts, Credit Card Receivables and Inventory of the Acquired Business shall only be Eligible Accounts, Eligible Credit Card Receivables, and Eligible Inventory to the extent that (i) such Accounts, Credit Card Receivables and Inventory are owned by a Borrower, (ii) Agent has conducted and completed a field examination and inventory appraisal with respect thereto and (iii) the criteria for Eligible Accounts, Eligible Credit Card Receivables, and Eligible Inventory set forth herein are satisfied with respect thereto in accordance with this Agreement (or such other or additional criteria as Agent may, at its option, establish with respect thereto in accordance with this Agreement and subject to such Reserves as Agent may establish in connection with the Acquired Business) and (g) (i) Excess Availability shall have been not less than the greater of (x) 15% of the Borrowing Cap and (y) $22,500,000 for the 30-day period ending on the date of consummation of such acquisition, and (ii) the Borrowers shall have projected Excess Availability of not less than the greater of (x) 15% of the Borrowing Cap and (y) $22,500,000 immediately after giving effect to such acquisition and any payments made in respect of such acquisition and for the succeeding 30-day period thereafter on a pro forma basis using the most recent calculation of the Aggregate Borrowing Base immediately prior to such acquisition or payment.

 

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Permitted Business” shall mean any business engaged in by any of the Borrowers on the date hereof, and any business or other activities that are reasonably similar, ancillary, complementary or related to, or a reasonable extension, development or expansion of, the businesses in which the Borrowers are engaged as of the Closing Date.

 

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

 

Permitted Encumbrances” means:

 

(i)                 liens for Taxes, assessments or governmental charges that are not overdue for a period of more than 30 days or that are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;

 

(ii)              liens with respect to outstanding motor vehicle fines and liens imposed by law, such as carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or construction contractors’ liens and other similar liens arising in the ordinary course of business that secure amounts not overdue for a period of more than 30 days or, if more than 30 days overdue, are unfiled and no other action has been taken to enforce such lien or that are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP, in each case so long as such liens do not individually or in the aggregate have a Material Adverse Effect;

 

(iii)            liens incurred, pledges or deposits made in the ordinary course of business (i) in connection with payroll taxes, workers’ compensation, unemployment insurance and other social security legislation, public liability laws or similar legislation or (ii) securing liability for reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees or similar instrument for the benefit of) insurance carriers providing property, casualty or liability insurance to a Borrower or any Subsidiary or otherwise supporting the payment of items of the type set forth in the foregoing clause (i);

 

(iv)             liens incurred or deposits made to secure the performance of tenders, bids, trade contracts, customer claims, governmental contracts and leases, statutory obligations, surety, stay, customs and appeal bonds, performance bonds, bankers’ acceptance facilities and other obligations of a like nature (including those to secure health, safety and environmental obligations) and obligations in respect of letters of credit, bank guarantees or similar instruments that have been posted to support the same, in each case incurred in the ordinary course of business or consistent with past practices;

 

(v)               easements, licenses, servitudes, restrictive covenants, rights-of-way, restrictions, encroachments, protrusions, zoning restrictions and other similar encumbrances and title defects affecting real property that, in the aggregate, do not materially interfere with the ordinary conduct of the business of the Borrowers and their Subsidiaries taken as a whole;

 

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(vi)             leases or subleases of real or personal property granted to other Persons (as lessee thereof) that do not materially interfere with the ordinary conduct of the business of the Borrowers and their Subsidiaries taken as a whole;

 

(vii)          rights of future tenants pursuant to written leases entered into in accordance with the terms hereof;

 

(viii)        liens securing, or otherwise arising from, judgments not constituting an Event of Default under Section 10.1(d) and any pledge and/or deposit securing any settlement of threatened litigation;

 

(ix)             liens on (i) goods the purchase price of which is financed by a documentary letter of credit issued for the account of a Borrower or any of its Subsidiaries or liens on bills of lading, drafts or other documents of title arising by operation of law or pursuant to the standard terms of agreements relating to letters of credit, bank guarantees and other similar instruments; provided that such lien secures only the obligations of a Borrower or such Subsidiaries in respect of such letter of credit to the extent such obligations are permitted by Section 9.9 and (ii) specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

 

(x)               liens arising from precautionary UCC financing statements or similar filings made in respect of operating leases entered into by a Borrower or any of its Subsidiaries;

 

(xi)             rights of recapture of unused real property (other than any Mortgaged Property) in favor of the seller of such property set forth in customary purchase agreements and related arrangements with any Governmental Authority;

 

(xii)          liens in favor of deposit banks or securities intermediaries securing customary fees, expenses or charges in connection with the establishment, operation or maintenance of deposit accounts or securities accounts;

 

(xiii)        liens in favor of obligations in respect of performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by a Borrower or any of the Subsidiaries or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case in the ordinary course of business or consistent with past practice;

 

(xiv)         liens arising from grants of non-exclusive licenses or sublicenses of Intellectual Property, or covenants not to sue with respect to Intellectual Property, made in the ordinary course of business;

 

(xv)           rights of setoff, banker’s lien, netting agreements and other liens arising by operation of law or by the terms of documents of banks or other financial institutions in relation to the maintenance of administration of deposit accounts, securities accounts, cash management arrangements or in connection with the issuance of letters of credit, bank guarantees or other similar instruments;

 

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(xvi)         liens arising from the right of distress enjoyed by landlords or liens otherwise granted to landlords, in either case, to secure the payment of arrears of rent or performance of other obligations in respect of leased properties, so long as such liens are not exercised or except where the exercise of such liens would not reasonably be expected to have a Material Adverse Effect;

 

(xvii)      liens or security given to public utilities or to any municipality or Governmental Authority when required by the utility, municipality or Governmental Authority in connection with the supply of services or utilities to the Borrower or any of its Subsidiaries;

 

(xviii)    servicing agreements, development agreements, site plan agreements, subdivision agreements, facilities sharing agreements, cost sharing agreements and other agreements pertaining to the use or development of any of the assets of the Person, provided the same do not result in (i) a substantial and prolonged interruption or disruption of the business activities of the Borrower and its Subsidiaries, taken as a whole, or (ii) a Material Adverse Effect; and

 

(xix)         liens securing Priority Obligations;

 

provided that the term “Permitted Encumbrances” shall not include any lien securing Indebtedness for borrowed money other than liens referred to in clauses (iv) and (xiii) above securing obligations under letters of credit or bank guarantees or similar instruments related thereto and in clause (viii) above, in each case to the extent any such lien would constitute a lien securing Indebtedness for borrowed money.

 

Permitted Holders” shall mean (a) Vintage (and its controlled investment funds) and (b) Vintage’s controlling persons who are Brian Kahn and Andrew Laurence (together with their controlled family trusts and personal investment vehicles).

 

Permitted Sale and Leaseback Transaction” has the meaning assigned to it in Section 9.7(b)(T).

 

Permitted Subordinated Indebtedness” means (a) any Indebtedness (other than any permitted intercompany Indebtedness owing to the Borrower or any Subsidiary) for borrowed money in a principal amount in excess of $10,000,000 that is secured on a junior basis to the Obligations, unsecured or contractually subordinated in right of payment or right of lien to the Obligations and (b) any Refinancing Indebtedness in respect of the foregoing. For avoidance of doubt, Indebtedness under the First Lien Credit Agreement and the other First Lien Term Loan Documents, the Second Lien Credit Agreement and the other Second Lien Term Loan Documents, the Badcock First Lien Credit Agreement and the other Badcock First Lien Term Loan Documents and the Badcock Second Lien Credit Agreement and the other Badcock Second Lien Term Loan Documents shall not constitute Permitted Subordinated Indebtedness.

 

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

 

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Plan” shall mean an employee pension benefit plan (as defined in Section 3(2) of ERISA) which Borrower or any Guarantor or, solely with respect to an employee benefit plan subject to Title IV of ERISA, an ERISA Affiliate sponsors or to which it contributes, or a Multiemployer Plan.

 

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

 

Pledge Agreement” shall mean that certain Third Amended and Restated Stock Pledge Agreement dated as of the Closing Date, by and among the Loan Parties and Agent, as the same may be amended, restated or otherwise modified from time to time.

 

Post-Transaction Period” means, with respect to any Specified Transaction, the period beginning on the date such Specified Transaction is consummated and ending on the last day of the eighth full consecutive fiscal quarter of the Administrative Borrower immediately following the date on which such Specified Transaction is consummated.

 

Prime Rate” shall mean the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Agent) or any similar release by the Federal Reserve Board (as determined by the Agent). Each change in the Prime Rate shall be effective from and including the date such change is publicly announced or quoted as being effective.

 

Priority Obligation” means any obligation that is secured by a Lien on any Collateral (and/or, prior to the Badcock Joinder Date, any Badcock Collateral) in favor of a Governmental Authority, which Lien ranks or is capable of ranking prior to or pari passu with the Liens created thereon by the applicable Collateral Documents (and/or, prior to the Badcock Joinder Date, the applicable Badcock Security Documents), including any such Lien securing amounts owing for wages, vacation pay, severance pay, employee deductions, sales tax, excise tax, other Taxes, workers compensation, governmental royalties and stumpage or pension fund obligations.

 

pro forma basis” means, with respect to compliance with any test hereunder for an applicable period of measurement, that all Specified Transactions and the following transactions in connection therewith that have been made during the applicable period of measurement or subsequent to such period and prior to or simultaneously with the event for which the calculation is made shall be deemed to have occurred as of the first day of the applicable measurement period with respect to such covenant or condition: (a) income statement items (whether positive or negative) attributable to the property or Person subject to such Specified Transaction, (i) in the case of a sale, transfer or other disposition of all or substantially all Capital Stock in FRG or any of its Subsidiaries or any division or product line of FRG or any of its Subsidiaries, shall be excluded, and (ii) in the case of an Investment described in the definition of the term “Specified Transaction”, shall be included, (b) any retirement of Indebtedness and (c) any Indebtedness incurred or assumed by FRG or any of its Subsidiaries in connection with such Specified Transaction, and assuming all Indebtedness so incurred or assumed to be outstanding shall be deemed to have borne interest (i) in the case of fixed rate Indebtedness, at the rate applicable thereto or (ii) in the case of floating rate Indebtedness, at the rates which were or would have been applicable thereto during the period when such Indebtedness was or was deemed to be outstanding.

 

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Pro Forma Disposal Adjustment” means, for any Test Period that includes all or a portion of a fiscal quarter of the Administrative Borrower included in any Post-Transaction Period with respect to any Sold Entity or Business, the pro forma increase or decrease in EBITDA projected by the Administrative Borrower in good faith as a result of contractual arrangements between the Borrowers or any Subsidiary entered into with such Sold Entity or Business at the time of its disposal or within the Post-Transaction Period and which represent an increase or decrease in EBITDA which is incremental to the Disposed EBITDA of such Sold Entity or Business for the most recent Test Period prior to its disposal.

 

Pro Forma Entity” means any Acquired Entity or Business.

 

Pro Rata Share” shall mean as to any Lender, the fraction (expressed as a percentage) the numerator of which is such Revolving Lender’s Revolving Commitment and the denominator of which is the aggregate amount of the Revolving Commitments of all Revolving Lenders, as adjusted from time to time in accordance with the provisions of Section 13.7 hereof; provided, that, if the Revolving Commitments have terminated, the numerator shall be the unpaid amount of such Revolving Lender’s Revolving Exposure and the denominator shall be the aggregate amount of Revolving Exposure of all Revolving Lenders.

 

Proceeding” means any claim, litigation, investigation, action, suit, arbitration or administrative, judicial or regulatory action or proceeding in any jurisdiction.

 

Proceeds” means all “proceeds” as such term is defined in Section 9-102(a)(64) of the UCC and, in any event, shall include, without limitation, all dividends or other income from the Pledged Securities, collections thereon and distributions or payments with respect thereto.

 

Promissory note” shall have the meaning set forth in Article 9 of the UCC.

 

PSP” means Pet Supplies “Plus”, LLC, a Delaware limited liability company.

 

PSP Acquisition” means the acquisition of PSP and its Subsidiaries by FRG and its Subsidiaries pursuant to the PSP Acquisition Agreement.

 

PSP Acquisition Agreement” means the Equity Purchase Agreement, dated as of January 23, 2021, by and among PSP Newco, PSP Holdings, LLC, a Delaware limited liability company, PSP, Sentinel Capital Partners VI-A, L.P., a Delaware limited partnership, solely for purposes of agreeing to the covenants set forth in Sections 6.8 and 6.9 thereof, Sentinel Capital Partners, L.L.C., a Delaware limited liability company, PSP Midco Holdings, LLC, a Delaware limited liability company, and, solely for purposes of agreeing to the covenants in Section 10.19 thereof, FRG, and including the schedules, exhibits and disclosure letters thereto.

 

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PSP Borrowers” means (a) PSP and (b) PSP Newco.

 

PSP Borrowing Base” shall mean, at any time, the amount equal to:

 

(a)               the amount equal to:

 

(i)                 90% of the amount of Eligible Credit Card Receivables of the PSP Borrowers at such time, plus

 

(ii)              85% of the amount of Eligible Accounts of the PSP Borrowers at such time, plus

 

(iii)            90% of the Net Recovery Percentage multiplied by the Value of the Eligible Inventory of the PSP Borrowers, net of any Inventory Reserves, in each case, at such time, minus

 

(b)               the Availability Reserves;

 

provided that the aggregate amount of Eligible Accounts of the PSP Borrowers in respect of Franchisee Receivables shall not exceed the amount equal to 10% of the PSP Borrowing Base at any time.

 

The amounts of Eligible Inventory of the PSP Borrowers shall be determined based on the amount of applicable Inventory set forth in the inventory record maintained by the Borrowers.

 

Agent shall have the right to establish Reserves against or sublimits in the PSP Borrowing Base in such amounts and with respect to such matters as Agent shall deem reasonably necessary or appropriate in its Permitted Discretion, based on new information received by Agent and after Agent has completed its updated field audits, examinations and appraisals of the Collateral; provided, however, that, so long as no Event of Default has occurred and is continuing, Agent shall give to Administrative Borrower five Business Days’ telephonic or electronic notice if (A) Agent establishes new categories of Reserves, (B) Agent changes the methodology of calculating Reserves or (C) Agent establishes new categories of sublimits in the PSP Borrowing Base; provided further that, during such five Business Day-period, no Borrowing may be drawn or Letter of Credit issued to the extent any Revolving Exposure Limitations would be exceeded after giving effect to any such Reserves or sublimit modifications. The foregoing notwithstanding, in the event Agent establishes Reserves to preserve or protect or maximize the value of the Collateral during the continuance of an Event of Default, Agent shall only provide Administrative Borrower with notice at the time such Reserves are established.

 

Accounts, Credit Card Receivables and Inventory of the PSP Borrowers shall only be Eligible Accounts, Eligible Credit Card Receivables and Eligible Inventory, as applicable, to the extent that (x) Agent has conducted and completed a field examination, appraisal and other due diligence with respect thereto and (y) the criteria for Eligible Accounts, Eligible Credit Card Receivables and Eligible Inventory set forth herein, as applicable, are satisfied with respect thereto in accordance with this Agreement (or such other or additional criteria as Agent may, at its option, establish with respect thereto in accordance with this Agreement and subject to such Reserves as Agent may establish in its Permitted Discretion).

 

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The PSP Borrowing Base shall be determined at any time by Agent, on the basis of the most recently delivered Borrowing Base Certificate, as adjusted by Agent for any changes in Reserves or otherwise in accordance with the terms hereof.

 

Notwithstanding anything to the contrary herein, in connection with the PSP Acquisition, the PSP Borrowers may submit a Borrowing Base Certificate reflecting a calculation of the PSP Borrowing Base that includes Eligible Credit Card Receivables (collectively, the “Deemed Eligible Credit Card Receivables”) and Eligible Inventory (collectively, the “Deemed Eligible Inventory”) acquired in connection with the PSP Acquisition and, from and after the date of the PSP Acquisition until the date that is 90 days after the Closing Date (or such later date not to exceed 30 days thereafter as Agent may agree to in its sole discretion), the PSP Borrowing Base hereunder shall be calculated giving effect thereto; provided that, prior to the completion and delivery to Agent of the applicable field examination or inventory appraisal with respect to such Deemed Eligible Credit Card Receivables or Deemed Eligible Inventory, the PSP Borrowing Base shall be limited to the sum of (x) (i) 50% of the Deemed Eligible Credit Card Receivables plus (ii) 40% of the Value (without giving effect to the proviso in the definition thereof) of the Deemed Eligible Inventory, net of any Inventory Reserves, minus (y) Availability Reserves. On and after the date that is 90 days after the Closing Date (or such later date not to exceed 30 days thereafter as Agent may agree to in its sole discretion), the PSP Borrowing Base shall be deemed to equal $0 unless Agent shall have received a field examination, an inventory appraisal and an updated Borrowing Base Certificate reflecting the PSP Borrowing Base on a pro forma basis after giving effect to the Eligible Credit Card Receivables and Eligible Inventory of the PSP Borrowers, in each case in form and substance reasonably satisfactory to Agent, and after the delivery of all such items, the PSP Borrowing Base shall be calculated without giving effect to this paragraph.

 

PSP Borrowing Cap” shall mean, the amount, calculated at any date, equal to the lesser of (i) $75,000,000 and (ii) the PSP Borrowing Base in effect at such time.

 

PSP Excess Availability” shall mean, the amount, as determined by Agent, calculated at any date, equal to: (a) the PSP Borrowing Cap minus (b) the Aggregate Revolving Exposure owing by the PSP Borrowers.

 

PSP Loan Party” means (a) each PSP Borrower and (b) without duplication of clause (a), each Loan Party that is a Subsidiary of a PSP Borrower.

 

PSP Newco” means Franchise Group Newco PSP, LLC, a Delaware limited liability company and an indirect subsidiary of FRG.

 

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.

 

QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

 

QFC Credit Support” has the meaning assigned to it in Section 13.12.

 

Qualified ECP Guarantor” shall mean, in respect of any Hedge Obligation, each Borrower or Guarantor that has total assets exceeding $10,000,000 at the time the relevant guarantee or grant of the relevant security interest becomes effective with respect to such Hedge Obligation or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

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Qualified Equity Interests” means Capital Stock of a Borrower other than Disqualified Equity Interests.

 

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

 

Receivables” shall mean all of the following now owned or hereafter arising or acquired property of each Borrower and Guarantor: (a) all Accounts; (b) all interest, fees, late charges, penalties, collection fees and other amounts due or to become due or otherwise payable in connection with any Account; (c) all payment intangibles of such Borrower or Guarantor; (d) letters of credit, indemnities, guarantees, security or other deposits and proceeds thereof issued payable to any Borrower or Guarantor or otherwise in favor of or delivered to any Borrower or Guarantor in connection with any Account; or (e) all other Accounts, contract rights, Chattel Paper, Documents, Instruments, notes, General Intangibles and other forms of obligations owing to any Borrower or Guarantor, whether from the sale and lease of goods or other property, licensing of any property (including Intellectual Property or other General Intangibles), franchising, rendition of services or from loans or advances by any Borrower or Guarantor or to or for the benefit of any third Person (including loans or advances to any Affiliates or Subsidiaries of any Borrower or Guarantor) or otherwise associated with any Accounts, Inventory or General Intangibles of any Borrower or Guarantor (including choices in action, causes of action, tax refunds, tax refund claims, any funds which may become payable to any Borrower or Guarantor in connection with the termination of any Plan or other employee benefit plan and any other amounts payable to any Borrower or Guarantor from any Plan or other employee benefit plan, rights and claims against carriers and shippers, rights to indemnification, business interruption insurance and proceeds thereof, casualty or any similar types of insurance and any proceeds thereof and proceeds of insurance covering the lives of employees on which any Borrower or Guarantor is a beneficiary).

 

Recipient” means, as applicable, (a) the Agent, (b) any Lender, (c) the Swingline Lender and (d) the Issuing Bank, or any combination thereof (as the context requires).

 

Records” shall mean, as to each Borrower and Guarantor, all of such Borrower’s and Guarantor’s present and future books of account of every kind or nature, purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping evidence, statements, correspondence, memoranda, credit files and other data relating to the Collateral or any Account Debtor, together with the tapes, disks, diskettes and other data and software storage media and devices, file cabinets or containers in or on which the foregoing are stored (including any rights of any Borrower or Guarantor with respect to the foregoing maintained with or by any other Person).

 

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Reference Time” with respect to any setting of the then-current Benchmark means (1i) if such Benchmark is LIBOthe Term SOFR Rate, 11:005:00 a.m. (London time), Chicago time, on the day that is two London banking days(2) Business Days preceding the date of such setting, and (2ii) if such Benchmark is not LIBO Ratethe Daily Simple SOFR, then four (4) Business Days prior to such setting, and (iii) if such Benchmark is none of the Term SOFR Rate or Daily Simple SOFR, the time determined by the Agent in its reasonable discretion.

 

Refinanced Indebtedness” shall have the meaning set forth in Section 9.9(p) hereof.

 

Refinancing Indebtedness” shall have the meaning set forth in Section 9.9(p) hereof.

 

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

 

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

 

Release” means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, emptying, escaping, pumping, discharge, dispersal, leaching or migration into or through the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) and including the environment within any building, or any occupied structure, facility or fixture.

 

Relevant Governmental Body” means the Federal Reserve Board or, the NYFRB and/or the CME Term SOFR Administrator, as applicable, or a committee officially endorsed or convened by the Federal Reserve Board and/or the NYFRB or, in each case, any successor thereto.

 

“Relevant Rate” means (i) with respect to any Term Benchmark Borrowing, the Adjusted Term SOFR Rate or (ii) with respect to any RFR Borrowing, the Adjusted Daily Simple SOFR, as applicable.

 

Rental Agreements” means each rental agreement entered into by FRG or any of its Subsidiaries.

 

Required Conditions” shall mean, with respect to any Specified Transaction, either (a) Excess Availability exceeds the greater of (x) 20% of the Borrowing Cap and (y) $30,000,000 and the Fixed Charge Coverage Ratio is equal to or greater than 1.0 to 1.0, in each case, calculated as of the date of such Specified Transaction both prior to and after giving effect to such Specified Transaction, on a pro forma basis using the most recent calculation of the Aggregate Borrowing Base immediately prior to such Specified Transaction; provided that the pro forma Fixed Charge Coverage Ratio shall be calculated as of the last Test Period prior to the date of such Specified Transaction for which financial statements for the fiscal month, fiscal quarter or fiscal year then ended have been (or have been required to be) delivered pursuant to Section 9.6(a)(i) and Section 9.6(a)(ii), as applicable, or (b) Excess Availability exceeds the greater of (x) 25% of the Borrowing Cap and (y) $37,500,000 calculated as of the date of such Specified Transaction both prior to and after giving effect to such Specified Transaction, on a pro forma basis using the most recent calculation of the Aggregate Borrowing Base immediately prior to such Specified Transaction.

 

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Required Lenders” shall mean, at any time, those Lenders whose Pro Rata Shares aggregate 50.1% or more of the aggregate of the Revolving Commitments of all Lenders, or if the Revolving Commitments shall have been terminated, Lenders to whom at least 50.1% of the then outstanding Obligations are owing; provided that (x) if there are only two non-affiliated Lenders at such time, then Required Lenders shall mean all Lenders and (y) if there are only three non-affiliated Lenders at such time, then Required Lenders must include at least two non-affiliated Lenders.

 

Requirement of Law” means, with respect to any Person, (a) the charter, articles or certificate of organization or incorporation and bylaws or operating, management or partnership agreement, or other organizational or governing documents of such Person and (b) any statute, law (including common law), treaty, rule, regulation, code, ordinance, order, decree, writ, judgment, injunction or determination of any arbitrator or court or other Governmental Authority (including Environmental Laws), in each case 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” shall mean as of any date of determination, such amounts as Agent may from time to time in its Permitted Discretion establish and revise reasonably and in good faith reducing the amount of Revolving Loans and Letters of Credit which would otherwise be available to any Borrower under the lending formula(s) provided for herein:

 

(a)               to reflect events, conditions, contingencies or risks which, as determined by Agent reasonably and in good faith, materially and adversely affect, either (i) the Collateral, its value or the amount that might be received by Agent from the sale or other disposition or realization upon such Collateral, or (ii) the assets or business of any Borrower or Guarantor or (iii) the security interests and other rights of Agent or any Lender in the Collateral (including the enforceability, perfection and priority thereof); or

 

(b)               to reflect Agent’s reasonable and good faith belief that any collateral report or financial information furnished by or on behalf of any Borrower or Guarantor to Agent is or may have been incomplete, inaccurate or misleading in any material respect; or

 

(c)               in respect of any state of facts which Agent believes reasonably and in good faith determines constitutes a Default or an Event of Default (which reasonable and good faith belief shall be relevant for purposes of this definition regardless of whether the Agent has explicitly asserted any other rights to which it may be entitled).

 

Without limiting the generality of the foregoing, Reserves may, at Agent’s option (or shall, to the extent so required under this Agreement), be established to reflect any of the following:

 

(i)                 Inventory shrinkage,

 

(ii)              reserves in respect of markdowns and cost variances (pursuant to discrepancies between the purchase order price of Inventory and the actual cost thereof),

 

(iii)            outstanding Taxes and other governmental charges, including, without limitation, ad valorem, real estate, personal property, sales, claims of the Pension Benefit Guaranty Corporation (or any successor thereto) and other Taxes which may have priority over the interests of Agent in the Collateral,

 

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(iv)             any amounts which are past due in respect of rental payments, service charges or other amounts which are past due to (i) lessors of real property other than retail store locations (“Non-Retail Store Locations”) or (ii) consignees, warehousemen or bailees of Inventory or personal property (“Warehouse Locations”), to the extent Inventory or Records are located in or on such property (but not in respect of Non-Retail Store Locations or Warehouse Locations (A) where Agent has received a Collateral Access Agreement executed and delivered by the owner and lessor of such real property that Agent has acknowledged in writing is in form and substance satisfactory to Agent or (B) which do not (1) contain Records relating to Receivables or Inventory or (2) in which either no Inventory or Inventory having a Value of less than $5,000,000 is located, provided that, notwithstanding the foregoing, Agent may, at its option, establish Reserves in respect of amounts at any time due or to become due to the owner and operator of such Non-Retail Store Location and Warehouse Location as Agent shall reasonably determine in the event that any of the following shall occurred: (A) an Event of Default shall have occurred and be continuing, (B) any Borrower, Guarantor or Agent shall have received notice of any event of default under (i) the lease with respect to such Non-Retail Store Location or (ii) the bailee or warehouse agreement with respect to such Warehouse Location or (C) any Borrower or Guarantor has granted to the lessor, consignee, warehousemen or bailee a consensual security interest or lien upon any assets of such Borrower or Guarantor (unless such security interest is waived or subordinated to the security interest of Agent on terms and conditions reasonably satisfactory to Agent)),

 

(v)               any rental payments, service charges or other amounts owing to lessors of retail store locations,

 

(A)             which are past due and owing to lessors of retail store locations in states other than Landlord Lien States (but not in respect of retail store locations where Agent has received a Collateral Access Agreement executed and delivered by the owner and lessor of such real property that Agent has acknowledged in writing is in form and substance satisfactory to Agent), provided, that, Agent may, at its option, establish Reserves in respect of amounts at any time due or to become due to the owner and lessor of such a retail store location as Agent shall reasonably determine in the event that any of the following shall occurred: (1) an Event of Default shall have occurred and be continuing, (2) any Borrower, Guarantor or Agent shall have received notice of any event of default under the lease with respect to such location, or (3) any Borrower or Guarantor has granted to the lessor a security interest or lien upon any assets of such Borrower or Guarantor (unless such security interest is waived or subordinated to the security interest of Agent on terms and conditions reasonably satisfactory to Agent), and

 

(B)              which are due or to become due to lessors of retail store locations located in Landlord Lien States (but not in respect of retail store locations where Agent has received a Collateral Access Agreement executed and delivered by the owner and lessor of such real property that Agent has acknowledged in writing is in form and substance satisfactory to Agent), provided, that, the Reserves established pursuant to this clause (v)(B) as to any particular retail store location shall not exceed at any time the aggregate of such amounts payable for the next two months to the lessors of such retail store locations, provided, that, such limitation on the amount of the Reserves which may be established by Agent pursuant to this clause (v)(B) shall only apply so long as: (1) no Event of Default shall have occurred and be continuing, (2) neither a Borrower, Guarantor nor Agent shall have received notice of any event of default under the lease with respect to such location or (3) any Borrower or Guarantor has granted a consensual lien or security interest upon any assets of such Borrower or Guarantor (unless such security interest is waived or subordinated to the security interest of Agent on terms and conditions reasonably satisfactory to Agent),

 

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(vi)             any rental payments, service charges or other amounts which are past due to lessors of personal property,

 

(vii)          up to 50% of the aggregate amount of (A) merchandise gift certificates and (B) the dollar value of Frequent Buyer Program points as accrued by Borrowers in accordance with GAAP,

 

(viii)        an adverse change in the number of days of the turnover of Inventory or a material change in the mix of the Inventory that results in an overall decrease in the value thereof or a material deterioration in its nature or quality that results in an overall decrease in the value thereof (but only to the extent not addressed by the lending formulas in a manner satisfactory to Agent),

 

(ix)             variances between the perpetual inventory records of Borrowers and the results of test counts of Inventory conducted by Agent or at the request of Agent pursuant to the terms of this Agreement, with respect thereto in excess of the percentage reasonably acceptable to Agent but only to the extent that such variances are not accounted for as Inventory shrinkage,

 

(x)               Inventory that may become obsolete, based on prior twelve months expired product expenses or Inventory currently in retail store locations that was subject to previous store “giveaways” within the prior twelve months,

 

(xi)             the aggregate amount of deposits, if any, received by any Borrower from its retail customers in respect of unfilled orders for merchandise,

 

(xii)          [reserved],

 

(xiii)        commissions and other amounts due to franchisees (including AFG Franchisees),

 

(xiv)         customs duties, and other costs to release Inventory which is being imported into the United States,

 

(xv)           the aggregate remaining value at such time of outstanding merchandise credits of the Loan Parties,

 

(xvi)         rebates, discounts, deposits, warranty claims and returns,

 

(xvii)      Bank Product Reserve, and

 

(xviii)    E-Payables Reserve.

 

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Agent will not establish new Reserves after the date hereof on account of any circumstances, conditions, events or contingencies of which Agent has actual knowledge as of the Closing Date. To the extent Agent may establish new criteria or revise existing criteria (including percentages applied to determine the amount of) for Eligible Credit Card Receivables, Eligible Accounts, or Eligible Inventory so as to address any circumstances, condition, event or contingency in a manner reasonably satisfactory to Agent, Agent shall not establish or increase a Reserve for the same purpose. The amount of any Reserve established or increased by Agent shall have a reasonable relationship to the event, condition or other matter which is the basis for such Reserve as reasonably determined by Agent in good faith and to the extent that such Reserve is in respect of amounts that may be payable to third parties or is in respect of Bank Product Reserves, Agent may, at its option, deduct such Reserve from the Aggregate Revolving Commitments Amount at any time that such limit is less than the amount of the Aggregate Borrowing Base. Agent shall provide prior written notice to Administrative Borrower of any material change in the categories of Reserves established after the date hereof or in the manner such Reserves are calculated or any other change to any item for the calculation thereof.

 

Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.

 

Reuters” means, as applicable, Thomson Reuters Corp, Refinitiv, or any successor thereto.

 

Revolving Commitment” means, with respect to each Revolving Lender, the commitment, if any, of such Revolving Lender to make Revolving Loans and to acquire participations in Letters of Credit, expressed as an amount representing the maximum possible aggregate amount of such Revolving Lender’s Revolving Exposure hereunder, as such commitment may be reduced or increased from time to time pursuant to (a) Section 2.4 and (b) assignments by or to such Revolving Lender pursuant to Section 13.7. Each Revolving Lender’s Revolving Commitment as of the Closing Date is the amount set forth opposite such Revolving Lender’s name on Schedule 1A under the caption “Revolving Commitment”.

 

Revolving Exposure” means, with respect to any Revolving Lender at any time, the sum of the outstanding principal amount of such Revolving Lender’s unpaid Revolving Loans, its Swingline Exposure and its outstanding Letter of Credit Obligations.

 

Revolving Exposure Limitations” has the meaning assigned to it in Section 2.1(a).

 

Revolving Lender” means, as of any date of determination, a Lender with a Revolving Commitment or, if the Revolving Commitments have terminated or expired, a Lender with Revolving Exposure. Unless the context otherwise requires, the term “Revolving Lenders” includes the Swingline Lender and the Issuing Bank.

 

Revolving Loans” shall mean the loans now or hereafter made by or on behalf of any Revolving Lender or by Agent for the account of any Revolving Lender on a revolving basis pursuant to the Credit Facility (involving advances, repayments, readvances, Swingline Loans and Overadvances) as set forth in Section 2.1, Section 2.2, Section 12.8 and Section 12.11 hereof.

 

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

 

“RFR Loan” means a Loan that bears interest at a rate based on the Adjusted Daily Simple SOFR.

 

S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, and any successor to its rating agency business.

 

Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (as of the Closing Date, Crimea, Cuba, Iran, North Korea, and Syria).

 

Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State or other relevant sanctions authority, (b) any Person operating, organized or resident in a Sanctioned Country, (c) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b) or (d) any Person otherwise the subject of any Sanctions.

 

Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) any other relevant sanctions authority.

 

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

 

“Second Amendment” means that certain Second Amendment to Third Amended and Restated Loan and Security Agreement, dated as of the Second Amendment Effective Date, among the Borrowers, the other Loan Parties party thereto, the Lenders party thereto and the Agent.

 

“Second Amendment Effective Date” means June [__], 2022.

 

Second Lien Agent” means Alter Domus (US) LLC, in its capacity as “Administrative Agent and Collateral Agent” under the Second Lien Credit Agreement, together with its successor and permitted assigns.

 

Second Lien Credit Agreement” means that certain Credit Agreement, dated as of the Closing Date, among the Administrative Borrower, PSP Newco, Valor Acquisition, LLC and AFG Intermediate, as borrowers, Alter Domus (US) LLC, as administrative agent and collateral agent, and the lenders from time to time party thereto, as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance with the Intercreditor Agreement.

 

Second Lien Lender” means a “Lender” under and as defined in the Second Lien Credit Agreement.

 

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Second Lien Obligations” means all Indebtedness of the Borrower and the Guarantors incurred or owing under the Second Lien Term Loan Documents, including all obligations in respect of the payment of principal, interest, fees, prepayment premiums and indemnification obligations, and any refinancing of such Indebtedness permitted under this Agreement and under the Intercreditor Agreement; provided that such Indebtedness (to the extent secured) is subject to the Intercreditor Agreement.

 

Second Lien Term Loan Documents” means the “Loan Documents” as defined in the Second Lien Credit Agreement or the agreements and other documents governing other Indebtedness incurred under Section 9.9(t).

 

Secured Parties” shall mean, collectively, (a) Agent, (b) Lenders, (c) the Swingline Lender, (d) the Issuing Bank and (e) any Bank Product Provider and Bank of America, N.A. (in its capacity as a party to the E-Payables Agreement); provided, that, (i) as to any Bank Product Provider and as to Bank of America, N.A., only to the extent of the Obligations owing to such Bank Product Provider and Bank of America, N.A., as provided, in subsection (b) of the definition of Obligations set forth herein and (ii) such parties are sometimes referred to herein individually as a “Secured Party”.

 

Secured Term Debt Cap” means the sum of (i) $1,430,000,000 plus (ii) an additional amount not to exceed 110% of the Incremental Cap (as defined in the First Lien Credit Agreement as in effect on the Closing Date and assuming, for purposes of this definition, that any Indebtedness incurred pursuant to Section 9.9(s) or (t) constitutes Consolidated First Lien Indebtedness (as defined in the First Lien Credit Agreement)).

 

Securities Accounts” shall have the meaning set forth in Article 9 of the UCC.

 

Securities and Exchange Commission” means the Securities and Exchange Commission of the United States.

 

Security” shall have the meaning set forth in Article 8 of the UCC.

 

Settlement” has the meaning assigned to such term in Section 2.2(d).

 

Settlement Date” has the meaning assigned to such term in Section 2.2(d).

 

Settlement Period” has the meaning assigned to such term in Section 6.1(b).

 

SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day publishedas administered by the SOFR Administrator on the SOFR Administrator’s Website at approximately 8:00 a.m. (New York City time) on the immediately succeeding Business Day..

 

SOFR Administrator” means the NYFRB (or a successor administrator of the secured overnight financing rate).

 

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SOFR Administrator’s Website” means the NYFRB’s Website, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.

 

“SOFR Rate Day” has the meaning specified in the definition of “Daily Simple SOFR”.

 

Sold Entity or Business” has the meaning assigned to such term in the definition of the term “EBITDA.”

 

Solvent” shall mean, at any time with respect to any Person, that at such time such Person (a) is able to pay its debts as they mature and has (and has a reasonable basis to believe it will continue to have) sufficient capital (and not unreasonably small capital) to carry on its business consistent with its practices as of the Closing Date, and (b) the assets and properties of such Person at a fair valuation on a going concern basis (and including as assets for this purpose at a fair valuation all rights of subrogation, contribution or indemnification arising pursuant to any guarantees given by such Person) are greater than the Indebtedness of such Person, and including subordinated and contingent liabilities computed at the amount which, such Person has a reasonable basis to believe, represents an amount which can reasonably be expected to become an actual or matured liability (and including as to contingent liabilities arising pursuant to any guarantee the face amount of such liability as reduced to reflect the probability of it becoming a matured liability).

 

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

 

Specified Transaction” means any (a) disposition of all or substantially all the assets of or all the Capital Stock of any Subsidiary of FRG or of any business unit, line of business or division of FRG or any of its Subsidiaries for which historical financial statements are available, (b) Permitted Acquisitions, (c) Investment that results in a Person becoming a Borrower or Subsidiary, (d) the proposed incurrence of Permitted Subordinated Indebtedness or (e) the making of an Investment, dividend or distribution or repurchase of Capital Stock in respect of which compliance with the Required Conditions or any other financial ratio is by the terms of this Agreement is required to be calculated on a pro forma basis.

 

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 percentage (including any marginal, special, emergency or supplemental reserves) established by the Federal Reserve Board to which the Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency liabilities” in Regulation D). Such reserve percentages shall include those imposed pursuant to Regulation D of the Federal Reserve Board. Eurodollar Rate 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 of the Federal Reserve Board 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.

 

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Store Accounts” shall have the meaning set forth in Section 6.3; provided that the Store Accounts maintained by the Borrowers as of the Closing Date are identified as “Store Accounts” on Schedule 8.10 hereto, and any replacement or additional accounts of the Borrowers.

 

Subsidiary” or “subsidiary” shall mean, with respect to any Person, any corporation, limited liability company, limited liability partnership or other limited or general partnership, trust, association or other business entity of which an aggregate of at least a majority of the outstanding Capital Stock or other interests entitled to vote in the election of the board of directors of such corporation (irrespective of whether, at the time, Capital Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency), managers, trustees or other controlling Persons, or an equivalent controlling interest therein, of such Person is, at the time, directly or indirectly, owned by such Person and/or one or more subsidiaries of such Person.

 

Subsidiary Guarantors” shall have the meaning assigned to such term in the definition of “Guarantors”.

 

Successor Borrower” shall have the meaning set forth in Section 9.7(a)(iv) hereof.

 

Supermajority Revolving Lenders” means, at any time, Lenders (other than Defaulting Lenders) having Revolving Exposures and unused Revolving Commitments representing at least 66 2/3% of the sum of the Aggregate Revolving Exposure and unused Revolving Commitments at such time; provided that (x) if there are only two non-affiliated Lenders at such time, then Supermajority Revolving Lenders shall mean all Lenders and (y) if there are only three non-affiliated Lenders at such time, then Supermajority Revolving Lenders must include at least two non-affiliated Lenders.

 

Supported QFC” has the meaning assigned to it in Section 13.12.

 

Supporting Obligations” shall have the meaning set forth in Article 9 of the UCC.

 

Swingline Exposure” means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time. The Swingline Exposure of any Revolving Lender at any time shall be its Pro Rata Share of the total Swingline Exposure at such time.

 

Swingline Lender” means Chase, in its capacity as lender of Swingline Loans hereunder. Any consent required of Agent or the Issuing Bank shall be deemed to be required of the Swingline Lender and any consent given by Chase in its capacity as Agent or Issuing Bank shall be deemed given by Chase in its capacity as Swingline Lender.

 

Swingline Loan” has the meaning assigned to such term in Section 2.2(a).

 

Tax Restructuring” means any reorganizations and other activities related to tax planning and tax reorganization (as determined by Administrative Borrower in good faith) entered into after the Closing Date so long as such Tax Restructuring does not materially impair the Guaranty or the security interests of the Agent and the Lenders under the Collateral Documents in the Collateral, taken as a whole, and Borrower and its Subsidiaries otherwise comply with Sections 9.23.

 

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

 

“Term Benchmark Borrowing” shall mean a Borrowing of Term Benchmark Loans.

 

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

 

Term Loan Priority Collateral” has the meaning assigned to such term in the Intercreditor Agreement.

 

Term SOFR” means, for the applicable Corresponding Tenor as of the applicable Reference Time, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body. Determination Day” has the meaning assigned to it under the definition of Term SOFR Reference Rate.

 

Term SOFR Notice” means a notification by the Agent to the Lenders and the Administrative Borrower of the occurrence of a Term SOFR Transition Event.

 

Term SOFR Transition Event” means the determination by the Agent that (a) Term SOFR has been recommended for use by the Relevant Governmental Body, (b) the administration of Term SOFR is administratively feasible for the Agent and (c) a Benchmark Transition Event or an Early Opt-in Election, as applicable, has previously occurred resulting in a Benchmark Replacement in accordance with Section 3.4 that is not Term SOFR.Rate” means, with respect to any Term Benchmark Borrowing and for any tenor comparable to the applicable Interest Period, the Term SOFR Reference Rate at approximately 5:00 a.m., Chicago time, two U.S. Government Securities Business Days prior to the commencement of such tenor comparable to the applicable Interest Period, as such rate is published by the CME Term SOFR Administrator.

 

“Term SOFR Reference Rate” means, for any day and time (such day, the “Term SOFR Determination Day”), with respect to any Term Benchmark Borrowing and for any tenor comparable to the applicable Interest Period, the rate per annum determined by the Agent as the forward-looking term rate based on SOFR. If by 5:00 pm (New York City time) on such Term SOFR Determination Day, the “Term SOFR Reference Rate” for the applicable tenor has not been published by the CME Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Rate has not occurred, then the Term SOFR Reference Rate for such Term SOFR Determination Day will be the Term SOFR Reference Rate as published in respect of the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate was published by the CME Term SOFR Administrator, so long as such first preceding Business Day is not more than five (5) Business Days prior to such Term SOFR Determination Day.

 

Test Period” means the most recent period of twelve consecutive months of FRG ended on or prior to such time (taken as one accounting period) in respect of which financial statements for each month or fiscal year period have been (or have been required to be) delivered pursuant to Section 9.6.

 

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Total Indebtedness” means, as of any date of determination, (i) the aggregate amount of Indebtedness of the Administrative Borrower and its Subsidiaries outstanding on such date, determined on a consolidated basis in accordance with GAAP (but excluding the effects of any discounting of Indebtedness resulting from the application of the acquisition method accounting in connection with the Transactions or any Permitted Acquisition (or other Investment not prohibited hereunder)) consisting only of third-party Indebtedness for borrowed money, drawn but unreimbursed obligations under letters of credit, letters of guaranty and bankers’ acceptances and third-party debt obligations evidenced by bonds, debentures, loan agreements, promissory notes or similar instruments, and, in each case, without duplication, guarantees by the Administrative Borrower and its Subsidiaries outstanding on such date, determined on a consolidated basis in accordance with GAAP, in respect of any of the foregoing Indebtedness of any other Person minus (ii) the sum of (x) unrestricted cash and cash equivalents of the Administrative Borrower and its Subsidiaries in an aggregate amount not to exceed $150,000,000 and (y) cash and cash equivalents restricted in favor of Agent or any Lender (which may also include cash and cash equivalents securing other indebtedness (including Indebtedness under the First Lien Term Loan Documents and the Badcock First Lien Term Loan Documents) secured by a Lien on the Collateral).

 

Trade Secrets” means any trade secrets or other proprietary and confidential information, including unpatented inventions, invention disclosures, engineering or other technical data, financial data, procedures, know-how, designs, supplier lists, customer lists, business, production or marketing plans, formulae, methods (whether or not patentable), processes, compositions, schematics, algorithms, techniques, analyses, source code, object code and data collections.

 

Trademark License” means any written agreement or license now or hereafter in effect, granting to or from any Person any right to use any Trademark now or hereafter owned by any other Person or that any other Person otherwise has the right to license and all rights of any such Person under any such agreement or license.

 

Trademarks” means (a) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade dress, logos, domain names and other source identifiers, in each case whether arising under the trademark laws of the United States or any other jurisdiction, (b) all registrations and applications for the registration thereof, including all registrations and applications for registration filed in the United States Patent and Trademark Office, and (c) all of the goodwill of the applicable business connected with the use of and symbolized by any of the foregoing.

 

Transaction Costs” means all fees, premiums, costs and expenses incurred or payable by the Administrative Borrower or any of its subsidiaries in connection with the Transactions.

 

Transactions” means (a) the PSP Acquisition, (b) the execution and delivery of the First Lien Term Loan Documents, the creation of the Liens pursuant to the Security Documents (as defined in the First Lien Credit Agreement) and the incurrence of the Term Facility (as defined in the First Lien Credit Agreement) and the funding of the Initial Term Loans (as defined in the First Lien Credit Agreement) on the Closing Date, (c) the execution and delivery of the Second Lien Term Loan Documents, the creation of the Liens pursuant to the Security Documents (as defined in the Second Lien Credit Agreement) and the incurrence of the Term Facility (as defined in the Second Lien Credit Agreement) and the funding of the Initial Term Loans (as defined in the Second Lien Credit Agreement) on the Closing Date, (d) the consummation of the other transactions contemplated by this Agreement on the Closing Date, (e) the consummation of any other transactions in connection with the foregoing, (f) the repayment of the existing Indebtedness under the Existing Term Loan Credit Agreement and the termination of such Existing Term Loan Credit Agreement and the documents related thereto, (g) the repayment of the existing Indebtedness under, and the termination of, the Existing Debt Agreements and the documents related thereto, (h) the execution and delivery of this Agreement, the creation of the Liens pursuant to the Collateral Documents and the incurrence of any borrowings hereunder to be incurred on the Closing Date and (i) the payment of the Transaction Costs related thereto.

 

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TVS” means Vitamin Shoppe Industries LLC, a New York limited liability company.

 

TVS Borrowers” means (a) TVS and (b) Valor Acquisition, LLC, a Delaware limited liability company.

 

TVS Borrowing Base” shall mean, at any time, the amount equal to:

 

(a)               the amount equal to:

 

(i)                 90% of the amount of Eligible Credit Card Receivables of the TVS Borrowers at such time, plus

 

(ii)              85% of the amount of Eligible Accounts of the TVS Borrowers at such time, plus

 

(iii)            90% of the Net Recovery Percentage multiplied by the Value of the Eligible Inventory of the TVS Borrowers, net of any Inventory Reserves, in each case, at such time, minus

 

(b)               the Availability Reserves;

 

provided that the aggregate amount of Eligible Accounts of the TVS Borrowers in respect of Franchisee Receivables shall not exceed the amount equal to 10% of the TVS Borrowing Base at any time.

 

The amounts of Eligible Inventory of the TVS Borrowers shall be determined based on the amount of applicable Inventory set forth in the inventory record maintained by the Borrowers.

 

Agent shall have the right to establish Reserves against or sublimits in the TVS Borrowing Base in such amounts and with respect to such matters as Agent shall deem reasonably necessary or appropriate in its Permitted Discretion, based on new information received by Agent and after Agent has completed its updated field audits, examinations and appraisals of the Collateral; provided, however, that, so long as no Event of Default has occurred and is continuing, Agent shall give to Administrative Borrower five Business Days’ telephonic or electronic notice if (A) Agent establishes new categories of Reserves, (B) Agent changes the methodology of calculating Reserves or (C) Agent establishes new categories of sublimits in the TVS Borrowing Base; provided further that, during such five Business Day-period, no Borrowing may be drawn or Letter of Credit issued to the extent any Revolving Exposure Limitations would be exceeded after giving effect to any such Reserves or sublimit modifications. The foregoing notwithstanding, in the event Agent establishes Reserves to preserve or protect or maximize the value of the Collateral during the continuance of an Event of Default, Agent shall only provide Administrative Borrower with notice at the time such Reserves are established.

 

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Accounts, Credit Card Receivables and Inventory of the TVS Borrowers shall only be Eligible Accounts, Eligible Credit Card Receivables and Eligible Inventory, as applicable, to the extent that (x) Agent has conducted and completed a field examination, appraisal and other due diligence with respect thereto and (y) the criteria for Eligible Accounts, Eligible Credit Card Receivables and Eligible Inventory set forth herein, as applicable, are satisfied with respect thereto in accordance with this Agreement (or such other or additional criteria as Agent may, at its option, establish with respect thereto in accordance with this Agreement and subject to such Reserves as Agent may establish in its Permitted Discretion).

 

The TVS Borrowing Base shall be determined at any time by Agent, on the basis of the most recently delivered Borrowing Base Certificate, as adjusted by Agent for any changes in Reserves or otherwise in accordance with the terms hereof.

 

TVS Borrowing Cap” shall mean, the amount, calculated at any date, equal to the lesser of (i) $125,000,000 and (ii) the TVS Borrowing Base in effect at such time.

 

TVS Excess Availability” shall mean, the amount, as determined by Agent, calculated at any date, equal to: (a) the TVS Borrowing Cap minus (b) the Aggregate Revolving Exposure owing by the TVS Borrowers.

 

TVS Loan Party” means (a) each TVS Borrower and (b) without duplication of clause (a), each Loan Party that is a Subsidiary of a TVS Borrower and/or TVS Newco.

 

TVS Newco” means Franchise Group Newco V, LLC, a Delaware limited liability company.

 

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

 

UCC” shall mean the Uniform Commercial Code as in effect in the State of New York, and any successor statute, as in effect from time to time (except that terms used herein which are defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as Agent may otherwise determine); provided that, if, with respect to any financing statement or by reason of any provisions of law, the perfection or the effect of perfection or non-perfection of the security interests granted to the Agent pursuant to applicable Financing Agreement is governed by the Uniform Commercial Code as in effect in a jurisdiction of the United States other than the State of New York, then “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions of each Financing Agreement and any financing statement relating to such perfection or effect of perfection or non-perfection.

 

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UK Financial Institutions” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.

 

UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.

 

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

 

Unfinanced Capital Expenditures” means, for any period, capital expenditures paid in cash (other than cash constituting proceeds of long-term Indebtedness (other than revolving Indebtedness)) during such period, other than (a) the purchase price paid in connection with a Permitted Acquisition or other similar Investment not prohibited by this Agreement and expenditures made in connection with the Transactions, (b) the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment to the extent that the gross amount of such purchase price is reduced by the credit granted by the seller of such equipment for such existing equipment being traded in at such time, (c) expenditures made with the proceeds of dispositions, Casualty Events or similar dispositions or events that are not required to be applied to repay Indebtedness pursuant to the terms of this Agreement, the First Lien Credit Agreement, the Second Lien Credit Agreement, the Badcock First Lien Credit Agreement or the Badcock Second Lien Credit Agreement, (d) expenditures made in leasehold improvements, to the extent reimbursed by the landlord, (e) expenditures to the extent actually paid for by any Person other than any Borrower or Subsidiary and for which no Borrower or Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation in respect of the relevant expenditures to such Person, (f) property, plant and equipment taken in settlement of accounts and (g) that portion of interest on Indebtedness incurred for capital expenditures which is capitalized in accordance with GAAP.

 

Unliquidated Obligations” means, at any time, any Obligations (or portion thereof) that are contingent in nature or unliquidated at such time, including any Obligation that is: (a) an obligation to reimburse a bank for drawings not yet made under a letter of credit issued by it; (b) any other obligation (including any guarantee) that is contingent in nature at such time; or (c) an obligation to provide collateral to secure any of the foregoing types of obligations.

 

“U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.

 

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

 

U.S. Special Resolution Regime” has the meaning assigned to it in Section 13.12.

 

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Value” shall mean, as reasonably determined by Agent in good faith, with respect to Inventory, the lower of (a) cost determined on the weighted average cost basis in accordance with GAAP or (b) market value, provided that, for purposes of the calculation of the AFG Borrowing Base, the PSP Borrowing Base and the TVS Borrowing Base, (i) the Value of the Inventory shall not include: (A) the portion of the value of Inventory equal to the profit earned by any Affiliate on the sale thereof to any Borrower unless the sale by such Affiliate is a bona fide arm’s length transaction consistent with the most recent appraisal received and accepted by Agent for the Inventory and consistent with the prices previously paid by such Borrower in comparable dealings with non-Affiliates, or (B) write-ups or write-downs in value with respect to currency exchange rates and (ii) notwithstanding anything to the contrary contained herein, the cost of the Inventory shall be computed in the same manner and consistent with the most recent appraisal of the Inventory received and accepted by Agent prior to the date hereof, if any.

 

Vintage” shall mean Vintage Capital Management LLC, a Delaware limited liability company.

 

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

 

Wholly Owned Subsidiary” means any Subsidiary that is a wholly owned subsidiary.

 

Write-Down and Conversion Powers” means, (a) 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, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.

 

Zero Balance Accounts” shall mean Deposit Accounts in which a balance of zero is maintained by the depository institution at all times by automatically transferring funds from a master Deposit Account to such Zero Balance Account in an amount only large enough to cover checks presented and other debits to such account, such that any such Zero Balance Account maintains an overnight balance of zero dollars at all times.

 

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1.2              Limited Conditionality Acquisition.

 

Notwithstanding anything in this Agreement or any Financing Agreements to the contrary, when calculating any applicable ratio, the amount or availability of any other basket based on EBITDA or total assets or whether a Default or Event of Default has occurred and is continuing or any representations and warranties have been complied with, in each case in connection with a Limited Condition Transaction, the date of determination of such ratio or other provisions, determination of whether any Default or Event of Default has occurred and is continuing shall, at the option of the Administrative Borrower (the Administrative Borrower’s election to exercise such option in connection with any Limited Condition Transaction, an “LCA Election”), be deemed to be the date the definitive agreements for such Limited Condition Transaction are entered into or the date of the declaration or making of such dividend or distribution constituting a Limited Condition Transaction or of the giving of irrevocable (which may be conditional) notice with respect to a repayment, repurchase or redemption of Indebtedness constituting a Limited Condition Transaction, or, as an alternative option with respect to Permitted Acquisitions or investments constituting Limited Condition Transactions, the date of a public announcement of an intention to make an offer in respect of the target of such Permitted Acquisition or investment (the “LCA Test Date”) after giving pro forma effect to such Limited Condition Transaction and the other transactions to be entered into in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) as if such transactions occurred at the beginning of the applicable Test Period, and for the avoidance of doubt, if any of such ratios or other provisions are exceeded as a result of fluctuations in such ratio or amount (including due to fluctuations in EBITDA of the Borrower or such person subject to such Limited Condition Transaction) or other provisions at or prior to the consummation of the relevant Limited Condition Transaction, such ratios and other provisions will not be deemed to have been exceeded as a result of such fluctuations solely for purposes of determining whether the Limited Condition Transaction is permitted hereunder. If the Administrative Borrower has made an LCA Election for any Limited Condition Transaction, then in connection with any subsequent calculation of any ratio on or following the relevant LCA Test Date and prior to the earlier of the date on which such Limited Condition Transaction is consummated or the date that the definitive agreement for such Limited Condition Transaction is terminated or expires without consummation of such Limited Condition Transaction, any such ratio shall be calculated (and tested) on a pro forma basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) had been consummated on the LCA Test Date.

 

Section 2.CREDIT FACILITIES

 

2.1              Revolving Loans.

 

(a)               Subject to and upon the terms and conditions contained herein, each Revolving Lender severally (and not jointly) agrees to make its Pro Rata Share of Revolving Loans to each Borrower from time to time in amounts requested by such Borrower (or Administrative Borrower on behalf of such Borrower) in an aggregate principal amount outstanding at any one time that will not result, immediately after giving effect to such proposed Revolving Loan, in (i) such Revolving Lender’s Pro Rata Share of the aggregate amount of Revolving Loans and Letter of Credit Obligations then outstanding exceeding such Revolving Lender’s Revolving Commitment, (ii) the Aggregate Revolving Exposure exceeding the Borrowing Cap at such time, (iii) if such Borrower is an AFG Borrower, the Aggregate Revolving Exposure owing by the AFG Borrowers (including FRG solely to the extent in its capacity as an AFG Borrower) exceeding the AFG Borrowing Cap at such time, (iv) if such Borrower is a PSP Borrower, the Aggregate Revolving Exposure owing by the PSP Borrowers (including FRG solely to the extent in its capacity as a PSP Borrower) exceeding the PSP Borrowing Cap at such time and (v) if such Borrower is a TVS Borrower, the Aggregate Revolving Exposure owing by the TVS Borrowers (including FRG solely to the extent in its capacity as a TVS Borrower) exceeding the TVS Borrowing Cap at such time (such limitations in clauses (i) through (v), the “Revolving Exposure Limitations”). Subject to and upon the terms and conditions contained herein, each Revolving Loan (other than a Swingline Loan) shall be comprised entirely of ABR Loans or Eurodollar RateTerm Benchmark Loans as each Borrower (or Administrative Borrower on behalf of such Borrower) may from time to time request in accordance herewith; provided that all Revolving Loans made on the date hereof must be made as ABR Loans but may be converted into Eurodollar Rate Loans in accordance with Section 3.1(b) hereof. Each Swingline Loan shall be an ABR Loan.

 

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(b)               To the extent that any facts or circumstances (i) have led to Agent establishing a Reserve pursuant to one provision of this Agreement, Agent shall not establish any Reserves based on the same such facts or circumstances pursuant to any other provision of this Agreement and (ii) were taken into account in calculating any component of the AFG Borrowing Base, the PSP Borrowing Base or the TVS Borrowing Base, Agent shall not establish any Reserves based on the same such facts or circumstances.

 

(c)               Except in Agent’s discretion, with the consent of all Revolving Lenders, or as otherwise provided in Section 2.2, Section 12.8 or Section 12.11 herein, the Borrowers shall be in compliance with the Revolving Exposure Limitations at all times.

 

(d)               In the event that the Aggregate Revolving Exposure at any time exceeds the Borrowing Cap at such time or the Borrowers are otherwise not in compliance with the Revolving Exposure Limitations at any time, (i) such event shall not limit, waive or otherwise affect any rights of Agent or Lenders in such circumstances or on any future occasions and (ii) Borrowers shall immediately repay to Agent the entire amount of any such excess.

 

2.2              Swingline Loans and Overadvances.

 

(a)               Agent, the Swingline Lender and the Revolving Lenders agree that, in order to facilitate the administration of this Agreement and the other Financing Agreements, promptly after any Borrower requests an ABR Borrowing, the Swingline Lender may elect to have the terms of this Section 2.2(a) apply to such Borrowing Request by advancing, on behalf of the Revolving Lenders and in the amount requested, same day funds to the Borrowers, on the date of the applicable Borrowing (each such Loan made solely by the Swingline Lender pursuant to this Section 2.2(a) is referred to in this Agreement as a “Swingline Loan”), with settlement among them as to the Swingline Loans to take place on a periodic basis as set forth in Section 2.2(d). Each Swingline Loan shall be subject to all the terms and conditions applicable to other ABR Loans funded by the Revolving Lenders, except that all payments thereon shall be payable to the Swingline Lender solely for its own account. The aggregate amount of Swingline Loans outstanding at any time shall not exceed $10,000,000. The Swingline Lender shall not make any Swingline Loan if the requested Swingline Loan exceeds the Borrowing Cap or would otherwise cause the Borrowers to not be in compliance with the Revolving Exposure Limitations (before or after giving effect to such Swingline Loan). All Swingline Loans shall be ABR Borrowings.

 

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(b)               Any provision of this Agreement to the contrary notwithstanding, at the request of the Administrative Borrower, Agent may in its sole discretion (but with absolutely no obligation), on behalf of the Revolving Lenders, (x) make Revolving Loans to the Borrowers in amounts that exceed the Borrowing Cap or that would otherwise cause the Borrowers to not be in compliance with the Revolving Exposure Limitations (any such excess Revolving Loans are herein referred to collectively as “Overadvances”) or (y) deem the amount of Revolving Loans outstanding to the Borrowers that are in excess of the Borrowing Cap or that otherwise cause the Borrowers to not be in compliance with the Revolving Exposure Limitations to be Overadvances; provided that no Overadvance shall result in a Default due to Borrowers’ failure to comply with Section 2.1 for so long as such Overadvance remains outstanding in accordance with the terms of this paragraph, but solely with respect to the amount of such Overadvance. In addition, Overadvances may be made even if the condition precedent set forth in Section 4.2(d) has not been satisfied. All Overadvances shall constitute ABR Borrowings. The making of an Overadvance on any one occasion shall not obligate Agent to make any Overadvance on any other occasion. The authority of Agent to make Overadvances is limited to an aggregate amount not to exceed $10,000,000 at any time, no Overadvance may remain outstanding for more than thirty days and no Overadvance shall cause any Revolving Lender’s Revolving Exposure to exceed its Revolving Commitment; provided that the Required Lenders may at any time revoke Agent’s authorization to make Overadvances. Any such revocation must be in writing and shall become effective prospectively upon Agent’s receipt thereof. The Borrowers hereby unconditionally promise to pay to Agent the then unpaid principal amount of each Overadvance on the earlier of the Maturity Date and demand by Agent.

 

(c)               Upon the making of a Swingline Loan or an Overadvance (whether before or after the occurrence of a Default and regardless of whether a Settlement has been requested with respect to such Swingline Loan or Overadvance), each Revolving Lender shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably purchased from the Swingline Lender or Agent, as the case may be, without recourse or warranty, an undivided interest and participation in such Swingline Loan or Overadvance in proportion to its Pro Rata Share of the Revolving Commitment. The Swingline Lender or Agent may, at any time, require the Revolving Lenders to fund their participations. From and after the date, if any, on which any Revolving Lender is required to fund its participation in any Swingline Loan or Overadvance purchased hereunder, Agent shall promptly distribute to such Lender, such Lender’s Pro Rata Share of all payments of principal and interest and all proceeds of Collateral received by Agent in respect of such Swingline Loan or Overadvance.

 

(d)               Agent, on behalf of the Swingline Lender, shall request settlement (a “Settlement”) with the Revolving Lenders on at least a weekly basis or on any date that Agent elects, by notifying the Revolving Lenders of such requested Settlement by facsimile, telephone, or e-mail no later than 12:00 noon Chicago time on the date of such requested Settlement (the “Settlement Date”). Each Revolving Lender (other than the Swingline Lender, in the case of the Swingline Loans) shall transfer the amount of such Revolving Lender’s Pro Rata Share of the outstanding principal amount of the applicable Loan with respect to which Settlement is requested to Agent, to such account of Agent as Agent may designate, not later than 2:00 p.m., Chicago time, on such Settlement Date. Settlements may occur during the existence of a Default and whether or not the applicable conditions precedent set forth in Section 4.2 have then been satisfied. Such amounts transferred to Agent shall be applied against the amounts of the Swingline Lender’s Swingline Loans and, together with Swingline Lender’s Pro Rata Share of such Swingline Loan, shall constitute Revolving Loans of such Revolving Lenders, respectively. If any such amount is not transferred to Agent by any Revolving Lender on such Settlement Date, the Swingline Lender shall be entitled to recover from such Lender on demand such amount, together with interest thereon, as specified in Section 6.11.

 

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2.3              Letters of Credit.

 

(a)               Subject to and upon the terms and conditions contained herein and in the Letter of Credit Documents, at the request of a Borrower (or Administrative Borrower on behalf of such Borrower), Agent agrees to cause Issuing Bank to issue, and Issuing Bank agrees to issue, for the account of such Borrower or a Subsidiary or Affiliate of such Borrower one or more Letters of Credit, for the ratable risk of each Revolving Lender according to its Pro Rata Share of Revolving Loans, containing terms and conditions acceptable to Agent and Issuing Bank. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrowers to, or entered into by the Borrowers with, Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. Notwithstanding anything herein to the contrary, the Issuing Bank shall have no obligation hereunder to issue, and shall not issue, any Letter of Credit 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 or territory that, at the time of such funding, is the subject of any Sanctions except to the extent permissible for a Person required to comply with Sanctions or (ii) in any manner that would result in a violation of any Sanctions by any party to this Agreement.

 

(b)               The Borrower requesting such Letter of Credit (or Administrative Borrower on behalf of such Borrower) shall hand deliver or facsimile (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to Issuing Bank and Agent (prior to 10:00 a.m., New York time, at least three Business Days prior to the requested date of issuance, amendment or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended or extended, and specifying the date of issuance, amendment or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be reasonably necessary to prepare, amend or extend such Letter of Credit. The form and terms of the proposed Letter of Credit shall be reasonably satisfactory to Agent and Issuing Bank, and as of the date of issuance, no order of any court, arbitrator or other Governmental Authority shall purport by its terms to enjoin or restrain money center banks relevant to the proposed issuance generally from issuing letters of credit of the type and in the amount of the proposed Letter of Credit, and no law, rule or regulation applicable to money center banks generally and no request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over money center banks relevant to the proposed issuance generally shall prohibit, or request that Issuing Bank refrain from, the issuance of letters of credit generally or the issuance of such Letter of Credit. If requested by Issuing Bank, the applicable Borrower also shall submit a letter of credit application on Issuing Bank’s standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended or extended only if (and upon issuance, amendment or extension of each Letter of Credit the Borrowers shall be deemed to represent and warrant that), after giving effect to such issuance, amendment or extension (i) the Letter of Credit Obligations with respect to stand-by Letters of Credit shall not exceed the Letter of Credit Limit, (ii) the terms and conditions of Section 2.1 hereof shall be satisfied, (iii) Excess Availability, prior to giving effect to any Reserves with respect to such Letter of Credit, on the date of the proposed issuance of any Letter of Credit shall be equal to or greater than: (A) if the proposed Letter of Credit is for the purpose of purchasing Eligible Inventory and the documents of title with respect thereto are consigned to Issuing Bank, the sum of (1) the percentage equal to 100% minus the then applicable percentage with respect to Eligible Inventory set forth in the definition of the term AFG Borrowing Base, PSP Borrowing Base or TVS Borrowing Base, as applicable, multiplied by the Value of such Eligible Inventory, plus (2) freight, taxes, duty and other amounts which Agent estimates must be paid in connection with such Inventory upon arrival and for delivery to one of such Borrower’s locations for Eligible Inventory within the United States of America and (B) if the proposed Letter of Credit is for any other purpose or the documents of title are not consigned to Issuing Bank in connection with a Letter of Credit for the purpose of purchasing Inventory, an amount equal to 100% of the Letter of Credit Obligations with respect thereto and (iv) the Borrowers shall be in compliance with the Revolving Exposure Limitations (provided that, in the event that such Letter of Credit is issued at the request of Administrative Borrower for the benefit of a Subsidiary that is not a Cross-Silo Loan Party, Administrative Borrower shall designate which of the AFG Borrowing Cap, the PSP Borrowing Cap or the TVS Borrowing Cap such Letter of Credit shall be incurred under for purposes of testing compliance with the Revolving Exposure Limitations (and, if Administrative Borrower fails to so designate, such Letter of Credit shall be deemed to have been incurred under the greatest of the AFG Borrowing Cap, the PSP Borrowing Cap or the TVS Borrowing Cap at the time such Letter of Credit is issued). Effective on the issuance of each Letter of Credit, Reserves shall be established in the applicable amount set forth in Section 2.3(b)(iii)(A) or Section 2.3(b)(iii)(B).

 

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(c)               Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any extension thereof, one year after such extension) unless otherwise agreed by the Issuing Bank (including automatic or “evergreen” extension) and (ii) the date that is five Business Days prior to the Maturity Date.

 

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

 

(e)               If Issuing Bank shall make any payment in respect of a Letter of Credit, Borrowers shall reimburse such payment by paying to Agent an amount equal to such payment not later than 2:00 p.m., New York time, on the date that such payment is made, if Administrative Borrower shall have received notice of such payment prior to 10:00 a.m., New York time, on such date, or, if such notice has not been received by Administrative Borrower prior to such time on such date, then not later than 2:00 p.m., New York time, on (i) the Business Day that Administrative Borrower receives such notice, if such notice is received prior to 10:00 a.m., New York time, on the day of receipt, or (ii) the Business Day immediately following the day that Administrative Borrower receives such notice, if such notice is not received prior to such time on the day of receipt. Each drawing under any Letter of Credit or other amount payable in connection therewith when due shall constitute a request by the Borrower for whose account such Letter of Credit was issued to Agent for an ABR Loan (or a Swingline Loan) in the amount of such drawing or other amount then due, and shall be made by Agent on behalf of Revolving Lenders as a Revolving Loan (or Special Agent Advance, as the case may be) (which Revolving Loan shall be deemed to reimburse the Issuing Bank for such amount due). The date of such Revolving Loan shall be the date of the drawing or as to other amounts, the due date therefor. Any payments made by or on behalf of Agent or any Revolving Lender to Issuing Bank and/or related parties in connection with any Letter of Credit shall constitute additional Revolving Loans to such Borrower pursuant to this Section 2 (or Special Agent Advances as the case may be).

 

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(f)                Borrowers’ joint and several obligation to reimburse Issuing Bank for any payment under any Letter of Credit as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, Borrowers’ obligations hereunder. Neither Agent, Revolving Lenders nor Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms, any error in translation or any consequence arising from causes beyond the control of Issuing Bank; provided that the foregoing shall not be construed to excuse Issuing Bank from liability to Borrowers to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by Borrowers to the extent permitted by applicable law) suffered by any Borrower that are caused by Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence, bad faith or willful misconduct on the part of Issuing Bank (as finally determined by a court of competent jurisdiction), Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

 

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(g)               Borrowers and Guarantors shall indemnify and hold Agent and Lenders harmless from and against any and all losses, claims, damages, liabilities, costs and expenses which Agent or any Lender may suffer or incur in connection with any Letter of Credit and any documents, drafts or acceptances relating thereto, including any losses, claims, damages, liabilities, costs and expenses due to any action taken by Issuing Bank or correspondent with respect to any Letter of Credit, except for such losses, claims, damages, liabilities, costs or expenses that are a direct result of the gross negligence, bad faith or willful misconduct of Agent or any Lender. Each Borrower and Guarantor assumes all risks with respect to the acts or omissions of the drawer under or beneficiary of any Letter of Credit and for such purposes the drawer or beneficiary shall be deemed such Borrower’s agent. Each Borrower and Guarantor assumes all risks for, and agrees to pay, all foreign, Federal, State and local taxes, duties and levies relating to any goods subject to any Letter of Credit or any documents, drafts or acceptances thereunder. Each Borrower and Guarantor hereby releases and holds Agent and Lenders harmless from and against any acts, waivers, errors, delays or omissions with respect to or relating to any Letter of Credit, except for the gross negligence, bad faith or willful misconduct of Agent or any Lender. The provisions of this Section 2.3(g) shall survive the payment of Obligations and the termination of this Agreement.

 

(h)               At any time after the occurrence and during the continuance of an Event of Default,

 

(i)                 in connection with Inventory purchased pursuant to any Letter of Credit, Borrowers and Guarantors shall, at Agent’s reasonable request, instruct all suppliers, carriers, forwarders, customs brokers, warehouses or others receiving or holding cash, checks, Inventory, documents or instruments in which Agent holds a security interest that upon Agent’s request, such items are to be delivered to Agent and/or subject to Agent’s order, and if they shall come into such Borrower’s or Guarantor’s possession, to deliver them, upon Agent’s reasonable request, to Agent in their original form; and

 

(ii)              within three Business Days that Administrative Borrower receives notice from Agent or Required Lenders demanding the deposit of cash collateral pursuant to this paragraph, Borrowers shall deposit in an account with Agent, in the name of Agent and for the benefit of the Revolving Lenders (the “LC Collateral Account”), an amount in cash equal to 105% of the Letter of Credit Obligations as of such date plus accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to any Borrower described in clause (g) or (h) of Section 10.1. Such deposit shall be held by Agent as collateral for the payment and performance of the Letter of Credit Obligations. In addition, and without limiting the foregoing or paragraph (c) of this Section, if any Letter of Credit Obligations remain outstanding after the expiration date specified in said paragraph (c), the Borrowers shall immediately deposit in the LC Collateral Account an amount in cash equal to 105% of such Letter of Credit Obligations as of such date plus any accrued and unpaid interest thereon. Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account for so long as the Event of Default which triggered the requirement for such funds to be deposited is continuing and Borrowers hereby grant Agent a security interest in the LC Collateral Account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole but reasonable discretion of Agent and at Borrowers’ risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by Agent to reimburse Issuing Bank for any draws under any Letter of Credit for which it has not been reimbursed, together with related fees, costs and customary processing charges and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of Borrowers for the Letter of Credit Obligations at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Lenders with Letter of Credit Obligations representing greater than 50% of the total Letter of Credit Obligations), be applied to satisfy other Obligations. If Borrowers are required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to Borrowers within three Business Days after all such Events of Default have been cured or waived.

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Except as otherwise provided herein, Agent shall not exercise any such rights pursuant to this clause so long as no Event of Default shall have occurred and be continuing. Borrowers and Guarantors shall, at Agent’s reasonable request, designate Issuing Bank with respect to a Letter of Credit as the consignee on all bills of lading and other negotiable and non-negotiable documents under such Letter of Credit.

 

(i)                 Each Borrower and Guarantor hereby irrevocably authorizes and directs Issuing Bank to name such Borrower or Guarantor as the account party therein and to deliver to Agent all instruments, documents and other writings and property received by Issuing Bank pursuant to the Letter of Credit and to accept and rely upon Agent’s instructions and agreements with respect to all matters arising in connection with the Letter of Credit or the Letter of Credit Documents with respect thereto. Nothing contained herein shall be deemed or construed to grant any Borrower or Guarantor any right or authority to pledge the credit of Agent or any Revolving Lender in any manner. Borrowers and Guarantors shall be bound by any reasonable interpretation made in good faith by Agent or Issuing Bank under or in connection with any Letter of Credit or any documents, drafts or acceptances thereunder, notwithstanding that such interpretation may be inconsistent with any instructions of any Borrower or Guarantor.

 

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

 

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

 

(l)                 If Issuing Bank shall make any payment under any Letter of Credit, then, unless Borrowers shall reimburse such payment in full on the date such payment is made, the unpaid amount thereof shall bear interest, for each day from and including the date such payment is made to but excluding the date that the Borrowers reimburse such payment including a reimbursement pursuant to any ABR Loan made by Agent in accordance with paragraph (e) of this Section, at the rate per annum then applicable to ABR Loans; provided that, if Borrowers fail to reimburse such payment when due pursuant to paragraph (e) of this Section, then Agent may, at its option, and Agent shall, at the direction of the Required Lenders, increase the Applicable Margin otherwise used to calculate the interest rate for ABR Loans by 2% per annum; provided that such increased Applicable Margins shall only apply to such unpaid amount and not to any other Obligations, outstanding hereunder. Interest accrued pursuant to this paragraph shall be for the account of Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to paragraph (e) of this Section to reimburse Issuing Bank shall be for the account of such Revolving Lender to the extent of such payment.

 

(m)             Issuing Bank may be replaced at any time by written agreement among the Administrative Borrower, Agent, the replaced Issuing Bank and the successor Issuing Bank. Agent shall notify Lenders of any such replacement of Issuing Bank. At the time any such replacement shall become effective, Borrowers shall pay all unpaid fees accrued for the account of the replaced Issuing Bank as described in Section 3.2(b) hereof. From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of Issuing Bank under this Agreement with respect to Letter of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit or extend or otherwise amend any existing Letter of Credit.

 

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2.4              Termination, Reductions or Increases of Aggregate Revolving Commitment Amounts.

 

(a)               The Borrowers may at any time terminate the Revolving Commitments upon the Payment in Full of the Obligations.

 

(b)               The Borrowers may from time to time reduce the Revolving Commitments; provided that (i) each reduction of the Revolving Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (ii) the Borrowers shall not terminate or reduce the Revolving Commitments if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with Section 2.4(e) and Section 2.9, (x) the Aggregate Revolving Exposure would exceed the Borrowing Cap then in effect or (y) the Borrowers would not be in compliance with the Revolving Exposure Limitations.

 

(c)               The Borrowers shall notify Agent of any election to terminate or reduce the Aggregate Revolving Commitment Amounts pursuant to Section 2.4(a) or (b), as applicable, at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof; provided that the Borrowers shall not reduce the Aggregate Revolving Commitment Amounts if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.4(e) and/or 2.9, the Aggregate Revolving Exposure then outstanding would exceed the Borrowing Cap. Promptly following receipt of any such notice, Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrowers pursuant to this Section 2.4(c) shall be irrevocable; provided that a notice of termination of the Aggregate Revolving Commitment Amounts may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by Administrative Borrower (by notice to Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Aggregate Revolving Commitment Amounts shall be permanent and may not be reinstated. Each reduction of the Aggregate Revolving Commitment Amounts shall be made ratably among the Lenders in accordance with each Lender’s Pro Rata Share.

 

(d)               Increase of Aggregate Revolving Commitment Amounts.

 

(i)                 The Borrowers shall have the right from and after the Payment in Full of Badcock Term Obligations to increase the Revolving Commitments by obtaining additional Revolving Commitments, either from one or more of the Lenders or another lending institution; provided that (A) any such request for an increase shall be in a minimum amount of $5,000,000, (B) the Administrative Borrower, on behalf of the Borrowers, may make a maximum of four such requests, (C) after giving effect thereto, the sum of the total of the additional Revolving Commitments added pursuant to this Section 2.4(d) does not exceed $50,000,000, (D) the Agent, the Swingline Lender and the Issuing Bank have approved any such new Lender, such approvals not to be unreasonably withheld, (E) any such new Lender assumes all of the rights and obligations of a “Lender” hereunder, (F) the procedures described in Section 2.4(d)(ii) below have been satisfied and (G) the Agent shall be satisfied that such increase in the Revolving Commitments and all Loans or Letters of Credit that could be incurred or issued thereunder is permitted under the Intercreditor Agreement, the First Lien Credit Agreement and the Second Lien Credit Agreement, each as in effect at such time. Nothing contained in this Section 2.4(d) shall constitute, or otherwise be deemed to be, a commitment on the part of any Lender to increase its Revolving Commitment hereunder at any time.

 

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(ii)              Any amendment hereto for such an increase or addition shall be in form and substance reasonably satisfactory to the Agent and shall only require the written signatures of the Agent, the Borrowers and each Lender being added or increasing its Revolving Commitment. As a condition precedent to such an increase or addition, the Borrowers shall deliver to the Agent (A) a certificate of each Loan Party signed by an authorized officer of such Loan Party (1) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such increase, and (2) in the case of the Borrowers, certifying that, before and after giving effect to such increase or addition, (x) the representations and warranties contained in Section 8 and the other Financing Agreements are true and correct in all material respects (without duplication of any materiality qualification applicable thereto), except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects as of such earlier date and (y) no Default or Event of Default exists, and (B) legal opinions and documents consistent with those delivered on the Closing Date, to the extent requested by the Agent. If the Borrowers elect to increase the Aggregate Revolving Commitment Amounts by increasing the Revolving Commitment of a Lender, the Borrowers and such Lender shall execute and deliver to the Agent an agreement substantially in the form of Exhibit F (a “Commitment Increase Agreement”) or in such other form, including an amendment to this Agreement, otherwise acceptable to the Agent. If the Borrowers elect to increase the Aggregate Revolving Commitment Amounts by causing an additional Lender to become a party to this Agreement and there is no increased Revolving Commitment by an existing Lender, then the Borrowers and such additional Lender shall execute and deliver to the Agent an agreement substantially in the form of Exhibit G (an “Additional Lender Agreement”) or in such other form, including an amendment to this Agreement, otherwise acceptable to the Agent. Each such additional Lender shall submit to the Agent an Administrative Questionnaire and a processing and recordation fee of $3,500. The Borrowers shall, if requested by the additional Lender, deliver a promissory note payable to such additional Lender in a principal amount equal to its Revolving Commitment, and otherwise duly completed.

 

(iii)            On the effective date of any such increase or addition, (A) any Lender increasing (or, in the case of any newly added Lender, extending) its Revolving Commitment shall make available to the Agent such amounts in immediately available funds as the Agent shall determine, for the benefit of the other Lenders, as being required in order to cause, after giving effect to such increase or addition and the use of such amounts to make payments to such other Lenders, each Lender’s portion of the outstanding Revolving Loans of all the Lenders to equal its revised Pro Rata Share of such outstanding Revolving Loans, and the Agent shall make such other adjustments among the Lenders with respect to the Revolving Loans then outstanding and amounts of principal, interest, commitment fees and other amounts paid or payable with respect thereto as shall be necessary, in the opinion of the Agent, in order to effect such reallocation and (B) the Borrowers shall be deemed to have repaid and reborrowed all outstanding Revolving Loans as of the date of any increase (or addition) in the Revolving Commitments (with such reborrowing to consist of the Types of Revolving Loans, with related Interest Periods if applicable, specified in a notice delivered by the Administrative Borrower, in accordance with the requirements of Section 3.7). The deemed payments made pursuant to clause (B) of the immediately preceding sentence shall be accompanied by payment of all accrued interest on the amount prepaid and, in respect of each Eurodollar Rate Loan,Term Benchmark Loan and each RFR Loan, as applicable, shall be subject to indemnification by the Borrowers pursuant to the provisions of Section 3.7 if the deemed payment occurs other than on the last day of the related Interest Periods or (in the case of RFR Loans) on the next Interest Payment Date applicable thereto. Within a reasonable time after the effective date of any increase or addition, the Agent shall, and is hereby authorized and directed to, revise Schedule 1A to reflect such increase or addition and such revised Schedule 1A shall replace the old Schedule 1A and become part of this Agreement.

 

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(iv)             Upon its receipt of a duly completed and executed Additional Lender Agreement or Commitment Increase Agreement, as applicable, and the satisfaction of each other condition to the applicable increase in the Aggregate Revolving Commitment Amounts in accordance with Section 2.4(d)(i) and (ii), Agent shall accept such Revolving Commitment Increase Certificate and record, within three Business Days, the information contained therein in the Register required to be maintained by Agent pursuant to Section 13.7(b). No increase in the Aggregate Revolving Commitment Amounts shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this Section 2.4(d)(iv).

 

(e)               Mandatory Prepayment Related to Reduction of Aggregate Revolving Commitment Amounts. If, after giving effect to any termination or reduction of the Aggregate Revolving Commitment Amounts pursuant to Section 2.4(a) or (b), the Aggregate Revolving Exposure exceeds the total Revolving Commitments, then the Borrowers shall (i) prepay the Loans as provided in Section 2.9 on the date of such termination or reduction in an aggregate principal amount equal to such excess, and (ii) if any excess remains after prepaying all of the Loans as a result of a Letter of Credit Obligation, pay to Agent on behalf of the Lenders an amount equal to such excess to be held as cash collateral as provided in Section 2.3(h).

 

2.5              Revolving Commitments. The aggregate amount of each Revolving Lender’s Pro Rata Share of the Revolving Loans and Letter of Credit Obligations shall not exceed the amount of such Revolving Lender’s Revolving Commitment, as the same may from time to time be amended in accordance with the provisions hereof.

 

2.6              Bank Products. The Loan Parties, or any of their Subsidiaries, may (but no such Person is required to) request that the Bank Product Providers provide or arrange for such Person to obtain Bank Products from Bank Product Providers, and each Bank Product Provider may, in its sole discretion, provide or arrange for such Person to obtain the requested Bank Products. The Loan Parties and any of their Subsidiaries that obtain Bank Products shall indemnify and hold Agent, each Lender and their respective Affiliates harmless from any and all obligations now or hereafter owing to any other Person by any Bank Product Provider in connection with any Bank Products other than for gross negligence or willful misconduct on the part of any such indemnified Person. This Section 2.6 shall survive the payment of the Obligations and the termination of this Agreement. Borrower and its Subsidiaries acknowledge and agree that the obtaining of Bank Products from Bank Product Providers (a) is in the sole discretion of such Bank Product Provider, and (b) is subject to all rules and regulations of such Bank Product Provider. Upon the request by the Loan Parties and the acceptance by such Bank Product Provider in the first sentence of this Section 2.6, such Bank Product Provider shall be deemed a party hereto for purposes of any reference in a Financing Agreement to the parties for whom Agent is acting, provided, that, the rights of such Bank Product Provider hereunder and under any of the other Financing Agreements shall consist exclusively of such Bank Product Provider’s right to share in payments and collections out of the Collateral as set forth herein. Each Lender or Affiliate thereof providing Bank Products for, or having Hedge Agreements with, any Loan Party or any Subsidiary of a Loan Party shall deliver to Agent, promptly after entering into such Hedge Agreement or Bank Product, written notice setting forth the aggregate amount of all Hedge Obligations or Obligations arising under or pursuant to any Bank Products of such Loan Party or Subsidiary to such Lender or Affiliate (whether matured or unmatured, absolute or contingent). In addition, each such Lender or Affiliate thereof shall deliver to Agent, from time to time after a significant change therein or upon a request therefor, a summary of the amounts due or to become due in respect of such Hedge Obligations and Obligations arising under or pursuant to any Bank Products. The most recent information provided to Agent shall be used in determining the amounts to be applied in respect of such Hedge Obligations and/or Obligations arising under or pursuant to any Bank Products pursuant to Section 6.4(a) and which tier of the waterfall, contained in Section 6.4(a), such Hedge Obligations and/or Obligations arising under or pursuant to any Bank Products will be placed. For the avoidance of doubt, so long as Chase or its Affiliate is the Agent, neither Chase nor any of its Affiliates providing Bank Products for, or having Hedge Agreements with, any Loan Party or any Subsidiary or Affiliate of a Loan Party shall be required to provide any notice described in this Section 2.6 in respect of such Bank Products or Hedge Agreements.

 

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2.7              Joint and Several Liability. Each Borrower hereby unconditionally and irrevocably agrees it is jointly and severally liable to the Agent, the Swingline Lender, the Issuing Bank and the Lenders for the Obligations. In furtherance thereof, each Borrower agrees that wherever in this Agreement it is provided that a Borrower is liable for a payment, such obligation is the joint and several obligation of each Borrower. Each Borrower acknowledges and agrees that its joint and several liability under this Agreement and the Financing Agreements is absolute and unconditional and shall not in any manner be affected or impaired by any acts or omissions whatsoever by the Agent, the Swingline Lender, the Issuing Bank, any Lender or any other Person. Each Borrower’s liability for the Obligations shall not in any manner be impaired or affected by who receives or uses the proceeds of the credit extended hereunder or for what purposes such proceeds are used, and each Borrower waives notice of borrowing requests issued by, and loans or other extensions of credit made to, other Borrowers. Each Borrower hereby agrees not to exercise or enforce any right of exoneration, contribution, reimbursement, recourse or subrogation available to such Borrower against any party liable for payment under this Agreement and the Financing Agreements unless and until the Agent, the Swingline Lender, the Issuing Bank and each Lender have been paid in full and all of the Obligations are satisfied and discharged following termination or expiration of all commitments of the Lenders to extend credit to the Borrowers. Each Borrower’s joint and several liability hereunder with respect to the Obligations shall, to the fullest extent permitted by applicable law, be the unconditional liability of such Borrower irrespective of (i) the validity, enforceability, avoidance or subordination of any of the Obligations or of any other document evidencing all or any part of the Obligations, (ii) the absence of any attempt to collect any of the Obligations from any other Loan Party or any Collateral or other security therefor, or the absence of any other action to enforce the same, (iii) the amendment, modification, waiver, consent, extension, forbearance or granting of any indulgence by the Agent or any Lender with respect to any provision of any instrument executed by any other Loan Party evidencing or securing the payment of any of the Obligations, or any other agreement now or hereafter executed by any other Loan Party and delivered to the Agent, (iv) the failure by the Agent or any Lender to take any steps to perfect or maintain the perfected status of its Lien upon, or to preserve its rights to, any of the Collateral or other security for the payment or performance of any of the Obligations or the Agent’s release of any Collateral or of its Liens upon any Collateral, (v) the release or compromise, in whole or in part, of the liability of any other Loan Party for the payment of any of the Obligations, (vi) any increase in the amount of the Obligations beyond any limits imposed herein or in the amount of any interest, fees or other charges payable in connection therewith, in each case, if consented to by any other Borrower, or any decrease in the same, or (vii) any other circumstance that might constitute a legal or equitable discharge or defense of any Loan Party, other than the payment in full of the Obligations. After the occurrence and during the continuance of any Event of Default, the Agent may proceed directly and at once, without notice to any Loan Party, against any or all of Loan Parties to collect and recover all or any part of the Obligations, without first proceeding against any other Loan Party or against any Collateral or other security for the payment or performance of any of the Obligations, and each Borrower waives any provision that might otherwise require the Agent or the Lenders under applicable law to pursue or exhaust remedies against any Collateral or other Loan Party before pursuing such Borrower or its property. Each Borrower and Guarantor consents and agrees that neither the Agent nor any Lender shall be under any obligation to marshal any assets in favor of any Loan Party or against or in payment of any or all of the Obligations.

 

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2.8              Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Revolving Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Revolving Lender is a Defaulting Lender:

 

(a)               fees shall cease to accrue on the unfunded portion of the Revolving Commitment of such Defaulting Lender pursuant to Section 3.2(a);

 

(b)               the Revolving Commitment and the Pro Rata Share of the then outstanding Obligations of such Defaulting Lender shall not be included in determining whether all Lenders, the Required Lenders or the Supermajority Revolving Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 11.4), provided that any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender which affects such Defaulting Lender disproportionately than other affected Lenders shall require the consent of such Defaulting Lender;

 

(c)               if any Swingline Exposure or Letter of Credit Obligation exists at the time a Revolving Lender becomes a Defaulting Lender then:

 

(i)                 all or any part of the Swingline Exposure and the Letter of Credit Obligations shall be reallocated among the Revolving Lenders (other than those that are also Defaulting Lenders) in accordance with their respective Pro Rata Share of Revolving Loans but only to the extent (x) the sum of all Revolving Lenders’ (other than those that are also Defaulting Lenders) Pro Rata Share of the then outstanding Obligations consisting of Revolving Loans plus such Defaulting Lender’s Letter of Credit Obligations does not exceed the total of all Revolving Lenders’ (other than those that are also Defaulting Lenders) Revolving Commitments and (y) the conditions set forth in Section 4.2 are satisfied at such time;

 

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(ii)              if the reallocation described in clause (i) above cannot, or can only partially, be effected, Borrowers shall within three Business Days following notice by Agent (x) first, prepay such Swingline Exposure and (y) second, cash collateralize such Defaulting Lender’s pro rata share of the Letter of Credit Obligations (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 2.3(h)(i) for so long as such Letter of Credit Obligation are outstanding;

 

(iii)            if Borrowers cash collateralize any portion of such Defaulting Lender’s pro rata share of the Letter of Credit Obligations pursuant to Section 2.8(c), Borrowers shall not be required to pay any fees to such Defaulting Lender pursuant to Section 3.2 with respect to such Defaulting Lender’s Letter of Credit Obligations during the period such Defaulting Lender’s pro rata share of the Letter of Credit Obligations is cash collateralized;

 

(iv)             if the Letter of Credit Obligations of the non-Defaulting Lenders is reallocated pursuant to Section 2.8(c), then the fees payable to the Revolving Lenders pursuant to Section 3.2 shall be adjusted in accordance with such non-Defaulting Lenders’ Pro Rata Share; and

 

(v)               if any Defaulting Lender’s Letter of Credit Obligations are neither cash collateralized nor reallocated pursuant to Section 2.8(c), then, without prejudice to any rights or remedies of the Issuing Bank or any Lender hereunder, all facility fees that otherwise would have been payable to such Defaulting Lender (solely with respect to the portion of such Defaulting Lender’s Revolving Commitment that was utilized by such Letter of Credit Obligations) and letter of credit fees payable under Section 3.2 with respect to such Defaulting Lender’s pro rata share of the Letter of Credit Obligations shall be payable to the Issuing Bank until such pro rata share of the Letter of Credit Obligations is cash collateralized and/or reallocated;

 

(d)               the Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure will be 100% covered by the Revolving Commitments of the Revolving Lenders (other than those that are also Defaulting Lenders) and/or cash collateral will be provided by Borrowers in accordance with Section 2.8(c), and participating interests in any such newly issued or increased Letters of Credit shall be allocated among Revolving Lenders (other than those that are also Defaulting Lenders) in a manner consistent with Section 2.8(c)(i) (and Defaulting Lenders shall not participate therein);

 

(e)               in the event and on the date that each of Agent, Borrowers, the Swingline Lender and the Issuing Bank agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Swingline Exposure and the Letter of Credit Obligations of the other Revolving Lenders shall be readjusted to reflect the inclusion of such Revolving Lender’s Revolving Commitment and on such date such Revolving Lender shall purchase at par such of the Revolving Loans (other than Swingline Loans) and Letter of Credit Obligations of the other Revolving Lenders as Agent shall determine may be necessary in order for such Revolving Lender to hold such Revolving Loans in accordance with its Pro Rata Share of Revolving Loans; and

 

(f)                Agent shall not be obligated to transfer to a Defaulting Lender any payments received by Agent for the Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder (including any principal, interest or fees). Amounts payable to a Defaulting Lender shall instead be paid to or retained by Agent. Agent may hold and, in its discretion, relend to a Borrower the amount of all such payments received or retained by it for the account of such Defaulting Lender. The operation of this Section shall not be construed to increase or otherwise affect the Revolving Commitment of any Revolving Lender, or relieve or excuse the performance by any Borrower or Guarantor of their duties and obligations hereunder.

 

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2.9              Prepayment of Loans.

 

(a)               Borrowers shall have the right at any time and from time to time to prepay any Loan in whole or in part, subject to prior notice in accordance with paragraph (b) of this Section.

 

(b)               Administrative Borrower shall notify Agent (and, in the case of a prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed by facsimile) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar RateTerm Benchmark Loan, not later than 11:00 a.m., New York time, three Business Days before the date of prepayment or (ii) in the case of prepayment of an ABR Loan, not later than 11:00 a.m., New York time, one Business Day before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Loan or portion thereof to be prepaid. Promptly following receipt of any such notice relating to a Loan, Agent shall advise the Lenders of the contents thereof. Each prepayment of the Revolving Loans shall be applied ratably to the Revolving Loans. Prepayments shall be accompanied by accrued interest to the extent required by Section 3.1.

 

(c)               In the event that (1) the Aggregate Revolving Exposure owing by the AFG Borrowers (including FRG solely to the extent in its capacity as an AFG Borrower) at any time exceeds the AFG Borrowing Cap then in effect, the AFG Borrowers shall, promptly after Agent’s written demand, apply an amount equal to such excess first, to the prepayment of outstanding Revolving Loans and Swingline Loans of the AFG Borrowers and second, to the cash collateralization of the Letter of Credit Obligations of the AFG Borrowers as set forth in Section 2.3(h), in an amount sufficient to eliminate such excess, (2) the Aggregate Revolving Exposure owing by the PSP Borrowers (including FRG solely to the extent in its capacity as a PSP Borrower) at any time exceeds the PSP Borrowing Cap then in effect, the PSP Borrowers shall, promptly after Agent’s written demand, apply an amount equal to such excess first, to the prepayment of outstanding Revolving Loans and Swingline Loans of the PSP Borrowers and second, to the cash collateralization of the Letter of Credit Obligations of the PSP Borrowers as set forth in Section 2.3(h), in an amount sufficient to eliminate such excess, (3) the Aggregate Revolving Exposure owing by the TVS Borrowers (including FRG solely to the extent in its capacity as a TVS Borrower) at any time exceeds the TVS Borrowing Cap then in effect, the TVS Borrowers shall, promptly after Agent’s written demand, apply an amount equal to such excess first, to the prepayment of outstanding Revolving Loans and Swingline Loans of the TVS Borrowers and second, to the cash collateralization of the Letter of Credit Obligations of the TVS Borrowers as set forth in Section 2.3(h), in an amount sufficient to eliminate such excess or (4) the Aggregate Revolving Exposures at any time exceed the Borrowing Cap then in effect, the Borrowers shall, promptly after Agent’s written demand, apply an amount equal to such excess to prepay the outstanding Revolving Loans and Swingline Loans and second, to the cash collateralization of the Letter of Credit Obligations as set forth in Section 2.3(h), in an amount sufficient to eliminate such excess.

 

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(d)               In the event that the aggregate balance of the Loan Parties’ disbursement and operating deposit accounts (other than Excluded Accounts) exceeds $75,000,000 on any Business Day, then the Borrowers shall immediately prepay the Obligations and cash collateralize the Letter of Credit Obligations as set forth in Section 2.3(h) in an aggregate amount equal to such excess.

 

2.10          Loans and Borrowings.

 

(a)               Each Loan (other than a Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the same Type made by the Lenders ratably in accordance with their respective Revolving Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Revolving Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required. Each Swingline Loan and Overadvance shall be made in accordance with the procedures set forth in Section 2.2.

 

(b)               Subject to Section 3.4, each Borrowing (other than a Swingline Loan) shall be comprised entirely of ABR Loans or Eurodollar RateTerm Benchmark Loans as the Administrative Borrower may request in accordance herewith. Each Lender at its option may make any Eurodollar RateTerm Benchmark Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan (and in the case of an Affiliate, the provisions of Sections 3.3, 3.4, 3.5 and 3.6 shall apply to such Affiliate to the same extent as to such Lender); provided that any exercise of such option shall not affect the obligation of the Borrowers to repay such Loan in accordance with the terms of this Agreement. Each Swingline Loan shall be an ABR Loan.

 

(c)               At the commencement of each Interest Period for any EurodollarTerm Benchmark Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than $3,000,000. ABR Borrowings may be in any amount. Borrowings of more than one Type may be outstanding at the same time; provided that there shall not at any time be more than a total of 12 EurodollarTerm Benchmark Borrowings outstanding.

 

(d)               Notwithstanding any other provision of this Agreement, the Administrative Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.

 

2.11          Requests for Borrowings.

 

(a)               To request a Borrowing, the Administrative Borrower shall notify the Agent of such request either in writing (delivered by hand or fax) by delivering a Borrowing Request signed by an Authorized Officer of the Administrative Borrower or through Electronic System if arrangements for doing so have been approved by the Agent not later than (a) in the case of a EurodollarTerm Benchmark Borrowing, 2:00 p.m11:00 am., New York time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, 1:00 p.m., New York time, on the date of the proposed Borrowing; provided that any such notice of an ABR Borrowing to finance the reimbursement of an LC Disbursement as contemplated by Section 2.3(e) may be given not later than 10:00 a.m., New York time, on the date of such proposed Borrowing. Each such Borrowing Request shall be irrevocable. Each such written (or if permitted, telephonic) Borrowing Request shall specify the following information:

 

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(i)                 the name of the applicable Borrower(s) (and, if any such Borrower is FRG, whether FRG is requesting a Borrowing under the AFG Borrowing Base, the PSP Borrowing Base and/or the TVS Borrowing Base);

 

(ii)              the aggregate principal amount of the requested Borrowing and a breakdown of the separate wires comprising such Borrowing;

 

(iii)            the date of such Borrowing, which shall be a Business Day;

 

(iv)             whether such Borrowing is to be an ABR Borrowing or a EurodollarTerm Benchmark Borrowing; and

 

(v)               in the case of a EurodollarTerm Benchmark Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period.”

 

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested EurodollarTerm Benchmark Borrowing, then the applicable Borrower(s) shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

 

2.12          Interest Elections.

 

(a)               Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a EurodollarTerm Benchmark Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Administrative Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a EurodollarTerm Benchmark Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Administrative Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. This Section 2.12 shall not apply to Swingline Borrowings or Overadvances, which may not be converted or continued.

 

(b)               To make an election pursuant to this Section, the Administrative Borrower shall notify the Agent of such election either in writing (delivered by hand or fax) by delivering an Interest Election Request signed by an Authorized Officer of the Administrative Borrower or through Electronic System if arrangements for doing so have been approved by the Agent by the time that a Borrowing Request would be required under Section 2.11 if the Borrowers were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such Interest Election Request shall be irrevocable.

 

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(c)               Each written Interest Election Request (including requests submitted through Electronic System) shall specify the following information:

 

(i)                 the name of the applicable Borrower and the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

 

(ii)              the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

 

(iii)            whether the resulting Borrowing is to be an ABR Borrowing or a EurodollarTerm Benchmark Borrowing; and

 

(iv)             if the resulting Borrowing is a EurodollarTerm Benchmark Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.

 

If any such Interest Election Request requests a EurodollarTerm Benchmark Borrowing but does not specify an Interest Period, then the Borrowers shall be deemed to have selected an Interest Period of one month’s duration.

 

(d)               Promptly following receipt of an Interest Election Request, the Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

 

(e)               If the Administrative Borrower fails to deliver a timely Interest Election Request with respect to a EurodollarTerm Benchmark Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Agent, at the request of the Required Lenders, so notifies the Administrative Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a EurodollarTerm Benchmark Borrowing and (ii) unless repaid, (A) each EurodollarTerm Benchmark Borrowing and (B) each RFR Borrowing shall be converted to an ABR Borrowing (in the case of a Term Benchmark Borrowing) at the end of the Interest Period applicable thereto or (in the case of an RFR Borrowing) on the next Interest Payment Date in respect thereof.

 

(f)                Notwithstanding anything in this Agreement or any other Financing Agreement to the contrary, interest on all “Eurodollar Rate Loans” (as defined in this Agreement immediately prior to the effectiveness of the Second Amendment) outstanding under this Agreement immediately prior to the effectiveness of the Second Amendment shall continue to accrue and be paid based upon the “Adjusted LIBO Rate”) (as defined in this Agreement immediately prior to the effectiveness of the Second Amendment) applicable pursuant to the terms of this Agreement immediately prior to the effectiveness of the Second Amendment solely until the expiration of the current “Interest Period” (as defined in this Agreement immediately prior to the effectiveness of the Second Amendment) applicable thereto (at which time such Eurodollar Rate Loans may be reborrowed as or converted to ABR Borrowings or Term Benchmark Borrowings in accordance with this Section 2.12). From and after the Second Amendment Effective Date, (i) Loans shall bear interest determined by reference to the Alternate Base Rate or the Adjusted Term SOFR Rate, as applicable, and (ii) except as otherwise provided in the immediately preceding sentence, such Eurodollar Rate Loans may not be continued as Eurodollar Rate Loans.

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Section 3.INTEREST AND FEES

 

3.1              Interest Payments.

 

(a)               The Loans comprising ABR Borrowings (including Swingline Loans) shall bear interest at the Alternate Base Rate plus the Applicable Margin.

 

(b)               The Loans comprising each EurodollarTerm Benchmark Borrowing shall bear interest at the Adjusted LIBOTerm SOFR Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin.

 

(c)               Each RFR Loan shall bear interest at a rate per annum equal to the Adjusted Daily Simple SOFR plus the Applicable Margin.

 

(d)              (c) Notwithstanding the foregoing, (i) during the occurrence and continuance of an Event of Default, the Agent or the Required Lenders may, at their option, by notice to the Administrative Borrower, declare that (A) all Loans shall bear interest at 2% plus the rate otherwise applicable to such Loans as provided in the preceding paragraphs of this Section and (B) in the case of any other amount outstanding hereunder, such amount shall accrue at 2% plus the rate applicable to such fee or other obligation as provided hereunder and (ii) during the occurrence and continuance of an Event of Default described in Section 10.1(a), Section 10.1(g) or Section 10.1(h), (A) all Loans shall bear interest at 2% plus the rate otherwise applicable to such Loans as provided in the preceding paragraphs of this Section and (B) in the case of any other amount outstanding hereunder, such amount shall accrue at 2% plus the rate applicable to such fee or other obligation as provided hereunder, in each case under this clause (c) without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Borrower and Guarantor for the period from and after the date of the occurrence of such Event of Default and for so long as such Event of Default is continuing.

 

(e)               (d) Accrued interest on each Loan (for ABR Loans, accrued through the last day of the prior calendar month) shall be payable in arrears on each Interest Payment Date for such Loan and upon termination of the Revolving Commitments; provided that (i) interest accrued pursuant to paragraph (cd) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Loan prior to the Maturity Date), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar RateTerm Benchmark Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

 

(f)                (e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in. In each case interest shall be payable for the actual number of days elapsed (including the first day but excluding the last day). All interest hereunder on any Loan shall be computed on a daily basis based upon the outstanding principal amount of such Loan as of the applicable date of determination. The applicable Alternate Base Rate, Adjusted LIBOTerm SOFR Rate or LIBO Rate, Term SOFR Rate, Adjusted Daily Simple SOFR or Daily Simple SOFR shall be determined by the Agent, and such determination shall be conclusive absent manifest error.

 

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3.2              Fees.

 

(a)               Borrowers shall pay to Agent, for the account of Revolving Lenders, monthly an unused line fee at a rate equal to, determined on the first day of each month, (i) if Average Excess Availability is less than 50% of the Borrowing Cap, 0.25% per annum and (ii) if Average Excess Availability is greater than or equal to 50% of the Borrowing Cap, 0.375% per annum, in each case calculated upon the amount by which the Aggregate Revolving Commitment Amounts exceeds the average daily principal balance of the outstanding Revolving Loans and Letters of Credit during the immediately preceding month (or part thereof, in which case it shall be calculated on the basis of days actually elapsed during such month) while this Agreement is in effect and for so long thereafter as any of the Obligations (other than indemnities and contingent Obligations which survive the termination of this Agreement and the other Financing Agreements) are outstanding, which fee shall be payable on the first day of each month in arrears. Such unused line fees shall be calculated on the basis of a 360-day year and actual days elapsed and the obligation of Borrowers to pay such fee shall survive the termination or non-renewal of this Agreement.

 

(b)               In the case of all Letters of Credit, Borrowers shall pay to Agent, for the account of Revolving Lenders, a fee at a rate equal to Applicable Margin for Eurodollar RateTerm Benchmark Loans (then in effect) per annum on the average daily maximum amount available to be drawn under all of such Letters of Credit for the immediately preceding month (or part thereof), in which case it shall be calculated on the basis of days actually elapsed during such month) payable in arrears as of the first day of each succeeding month, computed for each day from the date of issuance to the date of expiration; provided that Borrowers shall pay, at Agent’s option, with notice, such fee at a rate 2% greater than the otherwise applicable rate on such average daily maximum amount for: (i) the period from and after the date of termination or non-renewal of this Agreement until Revolving Lenders have received full and final payment of all Obligations (other than contingent Obligations not yet accrued) notwithstanding entry of a judgment against any Borrower or Guarantor and (ii) the period from and after the date of the occurrence of an Event of Default for so long as such Event of Default is continuing. Such letter of credit fees shall be calculated on the basis of a 360-day year and actual days elapsed and the obligation of Borrowers to pay such fee shall survive the termination or non-renewal of this Agreement. In addition to the letter of credit fees provided above, Borrowers shall pay to Issuing Bank for its own account (without sharing with Lenders), a letter of credit fronting fee equal to 0.25% (on a per annum basis) calculated upon the daily outstanding balance of the Letter of Credit Obligations for the immediately preceding month (or part thereof), payable in arrears as of the first day of each succeeding month and negotiation fees agreed to by Borrowers and Issuing Bank from time to time and the customary charges from time to time of Issuing Bank with respect to the issuance, amendment, transfer, administration, cancellation and conversion of, and drawings under, such Letters of Credit.

 

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

 

3.3              Increased Costs.

 

(a)               If any Change in Law shall:

 

(i)                 impose, modify or deem applicable any reserve, special deposit, liquidity or similar requirement (including any compulsory loan requirement, insurance charge or other assessment) against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBOTerm SOFR Rate) or the Issuing Bank;

 

(ii)              impose on any Lender or the Issuing Bank or the Londonapplicable offshore interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender or any Letter of Credit or Swingline Loan or participation therein; or

 

(iii)            subject any Recipient to any Taxes (other than (A) Indemnified Taxes covered by Section 3.5 or (B) Excluded Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto;

 

and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, continuing, converting into or maintaining any Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender, the Issuing Bank or such other Recipient of participating in, issuing or maintaining any Letter of Credit or Swingline Loan or to reduce the amount of any sum received or receivable by such Lender, the Issuing Bank or such other Recipient hereunder (whether of principal, interest or otherwise), then the Borrowers will pay to such Lender, the Issuing Bank or such other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, the Issuing Bank or such other Recipient, as the case may be, for such additional costs incurred or reduction suffered.

 

(b)               If any Lender or the Issuing Bank determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a consequence of this Agreement, the Revolving Commitments of, or the Loans made by, or participations in Letters of Credit or Swingline Loans held by, such Lender, the Swingline Loans made by the Swingline Lender or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing Bank’s holding company with respect to capital adequacy and liquidity), then from time to time the Borrowers will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such reduction suffered.

 

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(c)               A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Agent and shall be conclusive absent manifest error. The Borrowers shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within ten days after receipt thereof.

 

(d)               Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation; provided that the Borrowers shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 270 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Administrative Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof.

 

3.4              Alternate Rate of Interest; Illegality.

 

(a)               Subject to clauses (c), (d), (e), (f), and (g) and (h) of this Section 3.4, if prior to the commencement of any Interest Period for a Eurodollar Borrowing:

 

(i)                 the Agent determines (which determination shall be conclusive and binding absent manifest error) (A) prior to the commencement of any Interest Period for a Term Benchmark Borrowing, that adequate and reasonable means do not exist for ascertaining the Adjusted LIBOTerm SOFR Rate or the LIBOTerm SOFR Rate, as applicable (including, without limitation, by means of an Interpolated Rate or because the LIBO ScreenTerm SOFR Reference Rate is not available or published on a current basis) for such Interest Period; provided that no Benchmark Transition Event or Early Opt-in Election shall have occurred at such time; or or (B) at any time, that adequate and reasonable means do not exist for ascertaining the applicable Adjusted Daily Simple SOFR or Daily Simple SOFR; or

 

(ii)              the Agent is advised by the Required Lenders that (A) prior to the commencement of any Interest Period for a Term Benchmark Borrowing, the Adjusted LIBOTerm SOFR Rate or the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period or (B) at any time, the Adjusted Daily Simple SOFR will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing;

 

then the Agent shall give notice thereof to the Administrative Borrower and the Lenders through Electronic System as provided in Section 13.3 as promptly as practicable thereafter and, until (x) the Agent notifies the Administrative Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (A) with respect to the relevant Benchmark and (y) the Administrative Borrower delivers a new Interest Election Request in accordance with the terms of Section 2.12 or a new Borrowing Request in accordance with the terms of Section 2.11, any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and any such Eurodollar Borrowing shall be repaid or converted into an ABR BorrowingTerm Benchmark Borrowing, and any Borrowing Request that requests a Term Benchmark Borrowing shall instead be deemed to be an Interest Election Request or a Borrowing Request, as applicable, for (x) an RFR Borrowing so long as the Adjusted Daily Simple SOFR is not also the subject of Section 3.4(a)(i) or (ii) above or (y) an ABR Borrowing if the Adjusted Daily Simple SOFR also is the subject of Section 3.4(a)(i) or (ii) above; provided that if the circumstances giving rise to such notice affect only one Type of Borrowings, then all other Types of Borrowings shall be permitted. Furthermore, if any Term Benchmark Loan or RFR Loan is outstanding on the date of the Administrative Borrower’s receipt of the notice from the Agent referred to in this Section 3.4(a) with respect to a Relevant Rate applicable to such Term Benchmark Loan or RFR Loan, then until (x) the Agent notifies the Administrative Borrower and the Lenders that the circumstances giving rise to such notice no longer exist with respect to the relevant Benchmark and (y) the Administrative Borrower delivers a new Interest Election Request in accordance with the terms of Section 2.12 or a new Borrowing Request in accordance with the terms of Section 2.11, (1) any Term Benchmark Loan shall on the last day of the then current Interest Period applicable thereto, and (B) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made asto such Loan (or the next succeeding Business Day if such day is not a Business Day), be converted by the Agent to, and shall constitute, (x) an RFR Borrowing so long as the Adjusted Daily Simple SOFR is not also the subject of Section 3.4(a)(i) or (ii) above or (y) an ABR Loan if the Adjusted Daily Simple SOFR also is the subject of Section 3.4(a)(i) or (ii) above, on such day, and (2) any RFR Loan shall on and from such day be converted by the Agent to, and shall constitute, an ABR BorrowingLoan.

 

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(b)               If any Lender determines that any Requirement of Law has made it unlawful, or if any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable lending office to make, maintain, fund or continue any Eurodollar Borrowing, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, dollars in the London interbank marketLoans whose interest is determined by reference to SOFR, the Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR, Adjusted Daily Simple SOFR or Daily Simple SOFR, or to determine or charge interest based upon SOFR, the Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR, Adjusted Daily Simple SOFR or Daily Simple SOFR, then, onupon notice thereof by such Lender to the Administrative Borrower through the Agent, (i) any obligations of such Lender to make, maintain, fund or continue Eurodollar RateTerm Benchmark Loans or to convert ABR Borrowings to EurodollarTerm Benchmark Borrowings will be suspended and (ii) the interest rate on which ABR Loans shall, if necessary to avoid such illegality, be determined by the Agent without reference to clause (c) of the definition of “Alternate Base Rate”, in each case, until such Lender notifies the Agent and the Administrative Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrowers will upon demand from such Lender (with a copy to the Agent), either convert or prepay all EurodollarTerm Benchmark Borrowings of such Lender to ABR Borrowings (the interest rate on which ABR Loans shall, if necessary to avoid such illegality, be determined by the Agent without reference to clause (c) of the definition of “Alternate Base Rate”), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such EurodollarTerm Benchmark Borrowings to such day, or immediately, if such Lender may not lawfully continue to maintain such Loans. Upon any such conversion or prepayment, the Borrowers will also pay accrued interest on the amount so converted or prepaid, together with any additional amounts required pursuant to Section 3.7.

 

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(c)               Notwithstanding anything to the contrary herein or in any other Financing Agreement (and any Hedge Agreement shall be deemed not to be a “Financing Agreement” for purposes of this Section 3.4, if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) or (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Financing Agreement in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Financing Agreement and (y) if a Benchmark Replacement is determined in accordance with clause (32) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Financing Agreement in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Financing Agreement so long as the Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders.

 

(d) Notwithstanding anything to the contrary herein or in any other Financing Agreement and subject to the proviso below in this paragraph, if a Term SOFR Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then the applicable Benchmark Replacement will replace the then-current Benchmark for all purposes hereunder or under any Financing Agreement in respect of such Benchmark setting and subsequent Benchmark settings, without any amendment to, or further action or consent of any other party to, this Agreement or any other Financing Agreement; provided that this clause (d) shall not be effective unless the Agent has delivered to the Lenders and the Administrative Borrower a Term SOFR Notice. For the avoidance of doubt, the Agent shall not be required to deliver a Term SOFR Notice after a Term SOFR Transition Event and may do so in its sole discretion.

 

(d)              (e) In connection with the implementation of a Benchmark Replacement, Notwithstanding anything to the contrary herein or in any other Financing Agreement, the Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Financing Agreement, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Financing Agreement.

 

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(e)               (f) The Agent will promptly notify the Administrative Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event, a Term SOFR Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes, (iv) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (df) below and (v) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 3.4, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Financing Agreement, except, in each case, as expressly required pursuant to this Section 3.4.

 

(f)                (g) Notwithstanding anything to the contrary herein or in any other Financing Agreement, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including the Term SOFR or LIBO Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Agent may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Agent may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor.

 

(g)               (h) Upon the Administrative Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrowers may revoke any request for a EurodollarTerm Benchmark Borrowing of, conversion to or continuation of EurodollarTerm Benchmark Borrowings to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrowers will be deemed to have converted any such request for a Term Benchmark Borrowing into a request for a Borrowing of or conversion to ABR Loans(A) an RFR Borrowing so long as the Adjusted Daily Simple SOFR is not the subject of a Benchmark Transition Event or (B) an ABR Borrowing if the Adjusted Daily Simple SOFR is the subject of a Benchmark Transition Event. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of ABRthe Alternate Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of ABR.the Alternate Base Rate. Furthermore, if any Term Benchmark Loan or RFR Loan is outstanding on the date of the Administrative Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period with respect to a Relevant Rate applicable to such Term Benchmark Loan or RFR Loan, then until such time as a Benchmark Replacement is implemented pursuant to this Section 3.4, (1) any Term Benchmark Loan shall on the last day of the Interest Period applicable to such Loan (or the next succeeding Business Day if such day is not a Business Day), be converted by the Agent to, and shall constitute, (x) an RFR Borrowing so long as the Adjusted Daily Simple SOFR is not the subject of a Benchmark Transition Event or (y) an ABR Loan if the Adjusted Daily Simple SOFR is the subject of a Benchmark Transition Event, on such day and (2) any RFR Loan shall on and from such day be converted by the Agent to, and shall constitute, an ABR Loan.

 

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3.5              Withholding of Taxes; Gross-Up.

 

(a)               Payment Free of Taxes. Any and all payments by or on account of any obligation of any Loan Party under any Financing Agreement shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable withholding agent) requires the deduction or withholding of any Tax from any such payment by a withholding agent, then the applicable withholding agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 3.5) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

 

(b)               Payment of Other Taxes by the Loan Parties. The Loan Parties shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Agent timely reimburse it for, Other Taxes.

 

(c)               Evidence of Payment. As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authority pursuant to this Section 3.5, such Loan Party shall deliver to the Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Agent.

 

(d)               Indemnification by the Loan Parties. The Loan Parties shall jointly and severally indemnify each Recipient, within thirty days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any the Administrative Borrower by a Lender (with a copy to the Agent), or by the Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

 

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(e)               Indemnification by the Lenders. Each Lender shall severally indemnify the Agent, within ten days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so) and (ii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Agent in connection with any Financing Agreement, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Agent to setoff and apply any and all amounts at any time owing to such Lender under any Financing Agreement or otherwise payable by the Agent to such Lender from any other source against any amount due to the Agent under this paragraph (e).

 

(f)                Status of Lenders.

 

(i)                 Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Financing Agreement shall deliver to the Administrative Borrower and the Agent, at the time or times reasonably requested by the Administrative Borrower or the Agent, such properly completed and executed documentation reasonably requested by the Administrative Borrower or the Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Administrative Borrower or the Agent, shall deliver such other documentation prescribed by applicable law reasonably requested by the Administrative Borrower or the Agent as will enable the Borrowers or the Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 3.5(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

 

(ii)              Without limiting the generality of the foregoing,

 

(A)             any Lender that is a U.S. Person shall deliver to the Administrative Borrower and the Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Administrative Borrower or the Agent), an executed copy of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;

 

(B)              any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Administrative Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Administrative Borrower or the Agent), whichever of the following is applicable:

 

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

 

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(2)               in the case of a Foreign Lender claiming that its extension of credit will generate U.S. effectively connected income, an executed copy of IRS Form W-8ECI;

 

(3)               in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit E-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of a Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) an executed copy of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable; or

 

(4)               to the extent a Foreign Lender is not the beneficial owner, an executed copy of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, a U.S. Tax Compliance Certificate substantially in the form of Exhibit E-2 or Exhibit E-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit E-4 on behalf of each such direct and indirect partner;

 

(C)              any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Administrative Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Administrative Borrower or the Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrowers or the Agent to determine the withholding or deduction required to be made; and; and

 

(D)             if a payment made to a Lender under any Financing Agreement would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Administrative Borrower and the Agent at the time or times prescribed by law and at such time or times reasonably requested by the Administrative Borrower or the Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Administrative Borrower or the Agent as may be necessary for the Borrowers and the Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

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

 

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

 

(h)               Survival. Each party’s obligations under this Section shall survive the resignation or replacement of the Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Revolving Commitments and the repayment, satisfaction or discharge of all obligations under any Financing Agreement (including the Payment in Full of the Obligations).

 

(i)                 Defined Terms. For purposes of this Section 3.5, the term “Lender” includes the Swingline Lender and the Issuing Bank.

 

(j)                 FATCA Status. For purposes of determining withholding Taxes imposed under FATCA under this Agreement, each Borrower and Agent shall treat (and the Lenders hereby authorize the Agent to treat) each Loan and this Agreement as not qualifying as a “grandfathered obligation” within the meaning of Section 1.1471-2(b)(2)(i) of the United States Treasury Regulations.

 

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3.6              Mitigation of Obligations; Replacement of Lenders.

 

(a)               If any Lender requests compensation under Section 3.3, or if the Borrowers are required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.5, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.3 or 3.5, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

 

(b)               If any Lender requests compensation under Section 3.3, or if the Borrowers are required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.5, or if any Lender becomes a Defaulting Lender, then the Borrowers may, at their sole expense and effort, upon notice to such Lender and the Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 13.7), all its interests, rights (other than its existing rights to payments pursuant to Section 3.3 or 3.5) and obligations under this Agreement and other Financing Agreements to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrowers shall have received the prior written consent of the Agent (and in circumstances where its consent would be required under Section 13.7, the Issuing Bank and/or the Swingline Lender), which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 3.3 or payments required to be made pursuant to Section 3.5, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to require such assignment and delegation cease to apply. Each party hereto agrees that (x) an assignment required pursuant to this paragraph may be effected pursuant to an Assignment and Assumption executed by the Administrative Borrower, the Agent and the assignee, and (y) the Lender required to make such assignment need not be a party thereto in order for such assignment to be effective and shall be deemed to have consented to an be bound by the terms thereof; provided that, following the effectiveness of any such assignment, the other parties to such assignment agree to execute and deliver such documents necessary to evidence such assignment as reasonably requested by the applicable Lender, provided that any such documents shall be without recourse to or warranty by the parties thereto.

 

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3.7              Break Funding Payments.

 

(a)               3.7 Break Funding Payments. InWith respect to Loans that are not RFR Loans, in the event of (ai) the payment of any principal of any Eurodollar RateTerm Benchmark Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default or as a result of any prepayment pursuant to Section 2.1(d), 2.4(e) or 2.9), (bii) the conversion of any Eurodollar RateTerm Benchmark Loan other than on the last day of the Interest Period applicable thereto, (ciii) the failure to borrow, convert, continue or prepay any Eurodollar RateTerm Benchmark Loan on the date specified in any notice delivered pursuant hereto, or (div) the assignment of any Eurodollar RateTerm Benchmark Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Administrative Borrower pursuant to Section 3.6, then, in any such event, the Borrowers shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Rate Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Eurodollar Rate Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Eurodollar Rate Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Eurodollar Rate Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section 3.7(a) shall be delivered to the Administrative Borrower and shall be conclusive absent manifest error. The Borrowers shall pay such Lender the amount shown as due on any such certificate within ten days after receipt thereof.

 

(b)              With respect to RFR Loans, in the event of (i) the payment of any principal of any RFR Loan other than on the Interest Payment Date applicable thereto (including as a result of an Event of Default or as a result of any prepayment pursuant to Section 2.1(d), 2.4(e) or 2.9), (ii) the failure to borrow or prepay any RFR Loan on the date specified in any notice delivered pursuant hereto, or (iii) the assignment of any RFR Loan other than on the Interest Payment Date applicable thereto as a result of a request by the Administrative Borrower pursuant to Section 3.6, then, in any such event, the Borrowers shall compensate each Lender for the loss, cost and expense attributable to such event. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section 3.7(b) shall be delivered to the Administrative Borrower and shall be conclusive absent manifest error. The Borrowers shall pay such Lender the amount shown as due on any such certificate within ten days after receipt thereof.

 

Section 4.CONDITIONS PRECEDENT

 

4.1              Conditions Precedent to Effectiveness. The effectiveness of this Agreement and the obligation of Lenders to make and/or continue to make Loans under this Agreement and of the Issuing Bank to issue Letters of Credit hereunder is subject to the satisfaction of, or waiver (in accordance with Section 11.4) of, each of the following conditions precedent:

 

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(a)               Loan Agreement and other Financing Agreements. The Agent (or its counsel) shall have received (i) from each party hereto a counterpart of this Agreement signed on behalf of such party (which, subject to Section 13.10(b), may include any Electronic Signatures transmitted by facsimile, emailed .pdf or any other electronic means that reproduces an image of an actual executed signature page), (ii) either (A) a counterpart of each other Financing Agreement signed on behalf of each party thereto or (B) written evidence satisfactory to the Agent (which may include facsimile or other electronic transmission of a signed signature page thereof) that each such party has signed a counterpart of such Financing Agreement and (iii) such other certificates, documents, instruments and agreements as the Agent shall reasonably request in connection with the transactions contemplated by this Agreement and the other Financing Agreements, all in form and substance satisfactory to the Agent and its counsel.

 

(b)               Officer’s Certificates. Agent shall have received (i) a certificate of each Loan Party (including FRG), dated as of the Closing Date and executed by its secretary, assistant secretary or other appropriate officer, which shall (ii) certify the resolutions of its board of directors, members or other governing body authorizing the execution, delivery and performance of this Agreement and the other Financing Agreements to which it is a party, (iii) identify by name and title and bear the signatures of the Authorized Officers and any other officers of such Loan Party authorized to sign the Financing Agreements to which it is a party, and (iv) contain appropriate attachments, including the certificate or articles of incorporation or formation (or equivalent constitutional documents) of each Loan Party certified by the relevant authority of the jurisdiction of organization of such Loan Party and a true and correct copy of its bylaws or operating, limited liability company or partnership agreement (or equivalent governing documents), and (v) a good standing certificate or equivalent certification for each Loan Party from its jurisdiction of organization as of a recent date.

 

(c)               [Reserved].

 

(d)               [Reserved].

 

(e)               Information Certificate. Agent shall have received an executed copy of the Information Certificate.

 

(f)                Closing Certificate. Agent shall have received a duly executed certificate from an Authorized Officer of the Administrative Borrower certifying that the conditions precedent set forth in clauses (m) and (p) of this Section 4.1 have been satisfied as of the Closing Date.

 

(g)               Solvency Certificate. Agent shall have received a duly executed certificate from an Authorized Officer of the Administrative Borrower certifying that the Loan Parties, taken as a whole, are Solvent and will continue to be Solvent immediately after giving effect to this Agreement, the incurrence of the First Lien Obligations and the Second Lien Obligations, the payment of all fees and expenses to be paid by the Loan Parties in connection with any of the foregoing and the other transactions to be consummated in connection with the foregoing.

 

(h)               Opinions of Counsel. Agent shall have received customary written opinions of (i) Willkie Farr & Gallagher LLP, special counsel to the Loan Parties, (ii) Foley & Lardner LLP, special Florida counsel to the Loan Parties, and (iii) Taft Stettinius & Hollister LLP, special Ohio counsel to the Loan Parties, addressed, in each case, to Agent, the Swingline Lender, the Issuing Bank, the Lenders and the other holders of the Obligations.

 

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(i)                 Fees and Expenses. The Lenders and Agent shall have received all fees required to be paid, including fees payable pursuant to the Agent Fee Letter and the Fee Letter, and all costs and expenses required to be paid by the Loan Parties pursuant to Section 9.22 for which invoices have been presented to the Administrative Borrower at least three Business Days prior to the Closing Date (including, without limitation, the reasonable fees, disbursements and other charges of Latham & Watkins LLP, counsel to Agent), on or before the Closing Date.

 

(j)                 Lien Searches. Agent shall have received the results of a recent lien search in each jurisdiction where the Loan Parties are organized and where the assets of the Loan Parties are located, and such search shall reveal no liens on any of the assets of the Loan Parties except for liens permitted by Section 9.8, or discharged on or prior to the Closing Date pursuant to a pay-off letter or other documentation satisfactory to Agent.

 

(k)               Borrowing Base Certificate. Agent shall have received a Borrowing Base Certificate which calculates the AFG Borrowing Base, the PSP Borrowing Base, the TVS Borrowing Base and the Aggregate Borrowing Base as of the end of the month ending no more than 45 days prior to the Closing Date.

 

(l)                 Existing Debt Agreements. Agent shall have received evidence reasonably satisfactory to it that the facilities evidenced by the Existing Debt Agreements shall have been terminated and cancelled and all indebtedness thereunder shall have been fully repaid (except to the extent being so repaid with the initial Loans) and, if applicable, any and all liens thereunder shall have been terminated.

 

(m)             Closing Liquidity. Agent shall have received a duly completed written calculation in form and substance reasonably acceptable to the Agent, dated as of Closing Date, certified by an Authorized Officer of the Administrative Borrower, which shall evidence that, after giving effect to all of the transactions contemplated to be effective on the Closing Date, including all Borrowings to be made on the Closing Date, on a pro forma basis, Liquidity, in the aggregate for FRG, the AFG Borrowers, the PSP Borrowers and the TVS Borrowers, shall not be less than $100,000,000.

 

(n)               First Lien Credit Facility; Second Lien Credit Facility. Agent shall have received (a) evidence reasonably satisfactory to it that (x) substantially contemporaneously with the effectiveness of the First Lien Credit Agreement the First Lien Lenders will fund to the Borrowers loan proceeds in an aggregate gross principal amount equal to $1,000,000,000 pursuant to the terms of the First Lien Credit Agreement and (y) substantially contemporaneously with the effectiveness of the Second Lien Credit Agreement the Second Lien Lenders will fund to the Borrowers loan proceeds in an aggregate gross principal amount equal to $300,000,000 pursuant to the terms of the Second Lien Credit Agreement and (b) executed copies of the First Lien Credit Agreement, all material First Lien Term Loan Documents, the Second Lien Credit Agreement and all material Second Lien Term Loan Documents, each of which shall be in form and substance reasonably satisfactory to Agent.

 

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(o)               Pledged Capital Stock; Stock Powers; Pledged Notes. The First Lien Agent shall have received (i) if applicable, the certificates representing the Capital Stock pledged pursuant to the Pledge Agreement, together with an undated stock power for each such certificate executed in blank by an Authorized Officer of the pledgor thereof and (ii) each promissory note (if any) pledged to Agent pursuant to this Agreement, endorsed (without recourse) in blank (or accompanied by an executed transfer form in blank) by the pledgor thereof.

 

(p)               PSP Acquisition. The PSP Acquisition shall have been consummated, or substantially simultaneously with the effectiveness of this Agreement, shall be consummated, in all material respects in accordance with the terms of the PSP Acquisition Agreement, after giving effect to any modifications, amendments, supplements, consents, waivers or requests, other than those modifications, amendments, supplements, consents, waivers or requests (including the effects of any such requests) that are materially adverse to the interests of Agent or the Lenders which have not been consented to in writing by Agent and the Lenders.

 

(q)               Indebtedness. No Loan Party shall have any outstanding Indebtedness for borrowed money other than Indebtedness permitted under Section 9.9.

 

(r)                Know Your Customer”; USA PATRIOT ACT. (i) Agent and the Lenders shall have received, at least three Business Days prior to the Closing Date, all documentation and other information regarding the Loan Parties requested in connection with applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT ACT, to the extent reasonably requested in writing of the Loan Parties at least ten Business Days prior to the Closing Date and (ii) to the extent any Loan Party qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, at least three Business Days prior to the Closing Date, any Lender that has requested, a Beneficial Ownership Certification in relation to each Loan Party shall have received such Beneficial Ownership Certification.

 

(s)                Intercreditor Agreement. Agent shall have received a copy of the Intercreditor Agreement, in form and substance reasonably satisfactory to Agent, executed by the First Lien Agent and the Loan Parties.

 

(t)                 Amended and Restated Guaranty. Agent shall have received a Guaranty in form and substance reasonably satisfactory to Agent and executed by each of the Loan Parties.

 

(u)               Borrowing Notice. Agent shall have received a Borrowing Request executed by an Authorized Officer of the Administrative Borrower in accordance with Section 2.11 with respect to any Borrowings to be made on the Closing Date.

 

Notwithstanding anything in this Section 4.1 to the contrary, the Borrowers shall be deemed to have made all representations and warranties herein and the other Financing Agreements on the Closing Date.

 

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

 

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(a)               all representations and warranties contained herein and in the other Financing Agreements shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of the making of each such Loan or providing each such Letter of Credit and after giving effect thereto, except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date);

 

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

 

(c)               the Consolidated Cash Balance on and as of the date of such Loan Borrowing or the date of the issuance, increase, or extension of such Letter of Credit does not exceed $75,000,000, before and after giving effect to such Borrowing or to the issuance, increase, or extension of such Letter of Credit and to the application of the proceeds therefrom on or around such date, but in any event, not to exceed two Business Days after such date; and

 

(d)               after giving effect to any Revolving Loan or the issuance of any Letter of Credit, (i) Excess Availability is not less than zero, (ii) the Borrowers shall be in compliance with the Revolving Exposure Limitations and (iii) to the extent that FRG is the Borrower of such Borrowing, Liquidity of the Borrowers whose Borrowing Base is being utilized for such Borrowing is at least $25,000,000.

 

Each Loan made after the Closing Date and each issuance, increase or extension (other than automatic extensions of evergreen Letters of Credit) of a Letter of Credit shall be deemed to constitute a representation and warranty by Borrowers on the date thereof as to the matters specified in paragraphs (a), (b), (c) and (d) of this Section.

 

Section 5.GRANT AND PERFECTION OF SECURITY INTEREST

 

5.1              Grant of Security Interest. To secure payment and performance in full of the Obligations, each Borrower and Guarantor hereby grants to Agent, together with its permitted successors and assigns, for the benefit of the Secured Parties, a security interest in all of its right, title and interest in, to and under any and all of the following assets now owned or at any time hereafter acquired by such Borrower or Guarantor or in which such Borrower or Guarantor now has or at any time in the future may acquire any right, title or interest, regardless of where located (but in all cases excluding any Excluded Assets) (together with all other collateral security for the Obligations at any time granted to or held or acquired by Agent or any Secured Party, collectively, the “Collateral”), including:

 

(a)               all Accounts;

 

(b)               all Chattel Paper;

 

(c)               all Deposit Accounts;

 

(d)               all Documents;

 

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(e)               all Equipment;

 

(f)                all General Intangibles, including all Intellectual Property and all rights to sue or otherwise recover for any past, present and future infringement, dilution, misappropriation or other violation or impairment of any such Intellectual Property, and all Proceeds of such Intellectual Property, including, without limitation, license fees, royalties, income, payments, claims, damages and proceeds of suit now or hereafter due and/or payable with respect thereto;

 

(g)               all Instruments and Promissory notes;

 

(h)               all Inventory;

 

(i)                 all other Goods;

 

(j)                 all Investment Property;

 

(k)               all Letter-of-Credit Rights;

 

(l)                 all cash and Moneys;

 

(m)             all Securities Accounts;

 

(n)               all Commercial Tort Claims specifically described on Schedule 5.2(g) hereto, as such schedule may be supplemented from time to time;

 

(o)               all books and records pertaining to the Article 9 Collateral; and

 

(p)               to the extent not otherwise included, all Proceeds, substitutions, replacements and products of any and all of the foregoing and all Supporting Obligations, collateral security and guarantees given by any Person with respect to any of the foregoing.

 

It is understood that Collateral shall not include any Excluded Asset; provided, however, that Collateral shall include any Proceeds, substitutions or replacements of any of the foregoing (unless such Proceeds, substitutions or replacements would constitute an Excluded Asset).

 

5.2              Perfection of Security Interests.

 

(a)               Each Borrower and Guarantor irrevocably and unconditionally authorizes Agent (or its agent) to file at any time and from time to time such financing statements with respect to the Collateral naming Agent or its designee as the secured party and such Borrower or Guarantor as debtor, as Agent may reasonably require, and including any other information with respect to such Borrower or Guarantor or otherwise required by part 5 of Article 9 of the Uniform Commercial Code of such jurisdiction, as Agent may reasonably determine, together with any amendment and continuations with respect thereto, which authorization shall apply to all financing statements filed on, prior to or after the date hereof. Any such financing statements may indicate the Collateral as (i) all assets of the debtor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC of such jurisdiction, or (ii) by any other description which reasonably approximates the description contained herein. Each Borrower and Guarantor hereby ratifies and approves all financing statements naming Agent or its designee as secured party and such Borrower or Guarantor, as the case may be, as debtor with respect to the Collateral (and any amendments with respect to such financing statements) filed by or on behalf of Agent prior to the date hereof and ratifies and confirms the authorization of Agent to file such financing statements (and amendments, if any). Each Borrower and Guarantor hereby authorizes Agent to adopt on behalf of such Borrower and Guarantor any symbol required for authenticating any electronic filing. In the event that the description of the collateral in any financing statement naming Agent or its designee as the secured party and any Borrower or Guarantor as debtor includes assets and properties of such Borrower or Guarantor that do not at any time constitute Collateral, whether hereunder, under any of the other Financing Agreements or otherwise, the filing of such financing statement shall nonetheless be deemed authorized by such Borrower or Guarantor to the extent of the Collateral included in such description and it shall not render the financing statement ineffective as to any of the Collateral or otherwise affect the financing statement as it applies to any of the Collateral, provided, that, the inclusion of the description of assets and properties of such Borrower or Guarantor that do not constitute Collateral in any financing statement shall not be deemed a grant of a security interest in such asset of such Borrower or Guarantor in favor of Agent and Secured Parties. In no event shall any Borrower or Guarantor at any time file, or permit or cause to be filed, any correction statement or termination statement with respect to any financing statement (or amendment or continuation with respect thereto) naming Agent or its designee as secured party and such Borrower or Guarantor as debtor without the prior written consent of Agent. Each Borrower and Guarantor acknowledges that it is not authorized to file any financing statement, amendment, termination statement or correction statement with respect to any financing statement without the prior written consent of Agent.

 

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(b)               Each Borrower and Guarantor does not have any Chattel Paper (whether tangible or electronic) or Instruments as of the Closing Date, in each case with an individual face amount in excess of $5,000,000, except as set forth in the Information Certificate. In the event that any Borrower or Guarantor shall be entitled to or shall receive any Chattel Paper or Instrument after the date hereof with an individual face amount in excess of $5,000,000, such Borrower or Guarantor shall promptly notify Agent thereof in writing. Promptly upon the receipt thereof by or on behalf of any Borrower or Guarantor (including by any agent or representative), such Borrower or Guarantor shall deliver, or cause to be delivered to Agent, all such tangible Chattel Paper and Instruments that such Borrower or Guarantor has or may at any time acquire, accompanied by such instruments of transfer or assignment duly executed in blank as Agent may from time to time specify, in each case except as Agent may otherwise agree.

 

(c)               In the event that any Borrower or Guarantor shall at any time hold or acquire an interest in any electronic Chattel Paper or any “transferable record” (as such term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, or any similar or successor act, law or statute) with an individual face amount in excess of $5,000,000, such Borrower or Guarantor shall promptly notify Agent thereof in writing. Promptly upon Agent’s request, such Borrower or Guarantor shall take, or cause to be taken, such actions as Agent may request to give Agent control of such electronic Chattel Paper under Section 9-105 of the UCC and control of such transferable record under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such jurisdiction, or any similar or successor act, law or statute.

 

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(d)               Each Borrower and Guarantor does not have any Deposit Accounts as of the Closing Date, except (x) Store Accounts or (y) as set forth in the Information Certificate. Borrowers and Guarantors shall not, directly or indirectly, after the date hereof open, establish or maintain any Deposit Account unless each of the following conditions is satisfied: (i) Agent shall have received prompt written notice of the intention of any Borrower or Guarantor to open or establish such account which notice shall specify in reasonable detail and specificity reasonably acceptable to Agent the name of the account, the owner of the account, the name and address of the bank at which such account is to be opened or established, the individual at such bank with whom such Borrower or Guarantor is dealing and the purpose of the account and (ii) within thirty (30) Business Days after the opening of such Deposit Account (or such later date as Agent may agree), such Borrower or Guarantor shall as Agent may reasonably specify either (A) deliver to Agent a Deposit Account Control Agreement with respect to such Deposit Account duly authorized, executed and delivered by such Borrower or Guarantor and the bank at which such Deposit Account is opened and maintained or (B) arrange for Agent to become the customer of the bank with respect to the Deposit Account on terms and conditions reasonably acceptable to Agent; provided, that to the extent a Deposit Account Control Agreement has not been delivered to Agent as of the Closing Date for any Deposit Account in existence at such time, Borrowers shall deliver a Deposit Account Control Agreement for such Deposit Account pursuant to Section 9.31. The terms of this subsection (d) shall not apply to Excluded Accounts. Agent shall not exercise control over any Deposit Account until an Event of Default has occurred or a Compliance Period has commenced, and thereafter for only so long as it is continuing; and Agent shall cease to exercise control over any Deposit Accounts at such time as no Event of Default and no Compliance Period is then continuing.

 

(e)               No Borrower or Guarantor owns or holds, directly or indirectly, beneficially or as record owner or both, any Investment Property, as of the Closing Date, with an individual face amount in excess of $5,000,000, or have any investment account, Securities account, commodity account or other similar account with any bank or other financial institution or other securities intermediary or commodity intermediary as of the Closing Date, in each case except as set forth in the Information Certificate.

 

(i)                 In the event that any Borrower or Guarantor shall be entitled to or shall at any time after the date hereof hold or acquire any certificated Securities, with an individual fair market value in excess of $5,000,000, such Borrower or Guarantor shall promptly endorse, assign and deliver the same to Agent, accompanied by such instruments of transfer or assignment duly executed in blank as Agent may from time to time specify. If any Securities, now or hereafter acquired by any Borrower or Guarantor are uncertificated and are issued to such Borrower or Guarantor or its nominee directly by the issuer thereof, and such Securities with an individual fair market value in excess of $5,000,000, such Borrower or Guarantor shall immediately notify Agent thereof and shall as Agent may reasonably specify, either (A) cause the issuer to agree to comply with instructions