Exhibit 10.1 SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT This SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of August 3, 2018 (this “Second Amendment”), is by and among (i) Christopher & Banks Corporation, a Delaware corporation (the “Lead Borrower”), (ii) the Persons named on Schedule 1.01 to the Credit Agreement referred to below (collectively, the “Borrowers”) and (iii) Wells Fargo Bank, National Association, as Lender and as L/C Issuer. W I T N E S S E T H: WHEREAS, the Borrowers, the Lender and the L/C Issuer are party to that certain Second Amended and Restated Credit Agreement dated as of July 12, 2012 (as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, the “Credit Agreement”), pursuant to which the Lender agreed, subject to the terms and conditions contained therein, to extend credit to the Borrowers in the form of a revolving credit facility; and WHEREAS, the Loan Parties and the Lender have agreed to amend the Credit Agreement as set forth herein, including without limitation, to add a new $5,000,000 revolving “first-in, last-out” tranche and to extend the maturity date of the credit facility. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties signatory hereto agree as follows: 1. Defined Terms. All capitalized terms used herein and not otherwise defined shall have the same meaning herein as in the Credit Agreement. 2. Representations and Warranties. Each Loan Party hereby represents and warrants that (a) no Default or Event of Default has occurred and is continuing, and (b) after giving effect to this Second Amendment, all representations and warranties contained in the Credit Agreement and each other Loan Document are true and correct in all material respects on and as of the date hereof except (i) 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, (ii) in the case of any representation or warranty qualified by materiality, such representation or warranty is true and correct in all respects (subject to such qualification) and (iii) in the case of any representation or warranty qualified by knowledge, such representation or warranty is true and correct in all respects subject to such qualification. 3. Amendments to Credit Agreement. (a) The Credit Agreement is hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double- underlined text (indicated textually in the same manner as the following example: double- underlined text) as set forth in the agreement attached as Annex I hereto. (b) The Schedules attached as Annex II hereto hereby amend and restate the corresponding Schedules to the Credit Agreement in their entirety. (c) The Exhibits attached as Annex III hereto hereby amend and restate the corresponding Exhibits to the Credit Agreement in their entirety.
4. Conditions to Effectiveness. This Second Amendment shall not be effective until each of the following conditions precedent have been fulfilled to the satisfaction of the Lender: (a) the Lender shall have received this Second Amendment and the Second Amendment Fee Letter, each duly executed by each of the parties thereto; (b) the Lender shall have received a Borrowing Base Certificate dated the Second Amendment Effective Date, relating to the month ended on July 7, 2018, and executed by a Responsible Officer of the Lead Borrower. (c) the Loan Parties shall have paid all fees required to be paid to the Lender on or before the Second Amendment Effective Date, including, without limitation, pursuant to the Second Amendment Fee Letter (with all such fees described in this paragraph being fully earned as of the Second Amendment Effective Date, and no portion thereof shall be refunded or returned to the Loan Parties under any circumstances); (d) the Loan Parties shall have paid in full all invoiced Credit Party Expenses in connection with the preparation, execution, delivery and administration of this Second Amendment and the other instruments and documents to be delivered hereunder (with such fees and expenses described in this paragraph being fully earned as of the Second Amendment Effective Date, and no portion thereof shall be refunded or returned to the Loan Parties under any circumstances); (e) the Lender shall have received a secretary’s certificate from each of the Loan Parties certifying the recent passage and continued effectiveness of resolutions from the Loan Parties approving the transactions contemplated by this Second Amendment and the incumbency of the officers executing this Second Amendment and the documents delivered in connection therewith, in each case in form and substance satisfactory to the Lender; (f) the Lender shall have received and reviewed lien search results for the jurisdiction of incorporation and organization of each of the Loan Parties and judgment search results for the jurisdiction of the chief executive office of each of the Loan Parties, which search results shall be in form and substance reasonably satisfactory to the Lender; (g) the Lender shall have received duly executed opinions, in each case addressed to the Lender, of counsel to the Loan Parties addressing such matters as the Lender shall reasonably request; (h) the Lender shall have received all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the USA PATRIOT Act; (i) after giving effect to this Second Amendment, no Default or Event of Default shall have occurred and be continuing; and (j) all action on the part of the Loan Parties necessary for the valid execution, delivery and performance by the Loan Parties of this Second Amendment shall have been duly and effectively taken. 5. Effect on Loan Documents. The Credit Agreement and the other Loan Documents, after giving effect to this Second Amendment, shall be and remain in full force and effect in accordance with - 2 -
their terms and hereby are ratified and confirmed in all respects. Except as expressly set forth herein, the execution, delivery, and performance of this Second Amendment shall not operate as a waiver of any right, power, or remedy of the Lender or any other Credit Party under the Credit Agreement or any other Loan Document, as in effect prior to the date hereof. Each Loan Party hereby ratifies and confirms in all respects all of its obligations under the Loan Documents to which it is a party and each Loan Party hereby ratifies and confirms in all respects any prior grant of a security interest under the Loan Documents to which it is party. 6. Release. In consideration of the agreements of the Lender contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Loan Party, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges the Lender and its respective successors and assigns, and their respective present and former shareholders, Affiliates, trustees, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (the Lender and all such other Persons being hereinafter referred to collectively as the “Releasees” and individually as a “Releasee”), of and from all demands, actions, causes of action, suits, covenants, contracts, controversies, agreements, promises, sums of money, accounts, bills, reckonings, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever (individually, a “Claim” and collectively, “Claims”) of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which such Loan Party or any of its successors, assigns or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever which arises at any time on or prior to the day and date of this Second Amendment, including, without limitation, for or on account of, or in relation to, or in any way in connection with any of the Credit Agreement, or any of the other Loan Documents or transactions thereunder or related thereto. Each Loan Party understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release. Each Loan Party agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth herein. 7. No Novation; Entire Agreement. This Second Amendment evidences solely the amendment of certain specified terms and obligations of the Loan Parties under the Credit Agreement and is not a novation or discharge of any of the other obligations of the Loan Parties under the Credit Agreement. There are no other understandings, express or implied, among the Loan Parties or the Lender regarding the subject matter hereof or thereof. 8. Choice of Law. This Second Amendment shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to the conflicts of law principles thereof, but including Section 5-1401 of the New York General Obligations Law. 9. Counterparts; Facsimile Execution. This Second Amendment may be executed in any number of counterparts and by different parties and separate counterparts, each of which when so executed and delivered shall be deemed an original, and all of which, when taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Second Amendment by facsimile, .pdf, or other electronic transmission shall be as effective as delivery of a manually executed counterpart of this Second Amendment. Any party delivering an executed counterpart of this Second Amendment by facsimile also shall deliver a manually executed counterpart of this Second Amendment but the failure to deliver a manually executed - 3 -
counterpart shall not affect the validity, enforceability, and binding effect of this Second Amendment. 10. Construction. This Second Amendment is a Loan Document. This Second Amendment and the Credit Agreement shall be construed collectively and in the event that any term, provision or condition of any of such documents is inconsistent with or contradictory to any term, provision or condition of any other such document, the terms, provisions and conditions of this Second Amendment shall supersede and control the terms, provisions and conditions of the Credit Agreement. 11. Miscellaneous. The terms and provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns. [Signature Pages Follow] - 4 -
IN WITNESS WHEREOF, this Second Amendment has been duly executed and delivered by each of the parties hereto as of the date first above written. BORROWERS:: CHRISTOPHER & BANKS CORPORATION By: /s/ Luke R. Komarek Name: Luke R. Komarek Title: SVP, General Counsel & Corporate Secretary CHRISTOPHER & BANKS, INC. By: /s/ Luke R. Komarek Name: Luke R. Komarek Title: SVP, General Counsel & Corporate Secretary CHRISTOPHER & BANKS COMPANY By: /s/ Luke R. Komarek Name: Luke R. Komarek Title: SVP, General Counsel & Corporate Secretary [Signature Page to Second Amendment]
LENDER AND L/C ISSUER: WELLS FARGO BANK, NATIONAL ASSOCIATION By: /s/ Michael S. Watson Name: Michael S. Watson Title: Director [Signature Page to Second Amendment]
SECOND AMENDED AND RESTATED CREDIT AGREEMENT1 Dated as of July 12, 2012, among CHRISTOPHER & BANKS CORPORATION, as the Lead Borrower For The Borrowers Named Herein, The Guarantors from time to time party hereto, and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Lender 1 As of the Second Amendment Effective Date.
Table of Contents Page Article I DEFINITIONS AND ACCOUNTING TERMS .............................................................. 1 1.01 Defined Terms ............................................................................................ 1 1.02 Other Interpretive Provisions .................................................................... 42 1.03 Accounting Terms ..................................................................................... 43 1.04 Rounding ................................................................................................... 43 1.05 Times of Day............................................................................................. 43 1.06 Letter of Credit Amounts .......................................................................... 43 1.07 Currency Equivalents Generally ............................................................... 43 Article II THE COMMITMENTS AND CREDIT EXTENSIONS ............................................. 44 2.01 Loans; Reserves ........................................................................................ 44 2.02 Borrowings, Conversions and Continuations of Loans ............................ 44 2.03 Letters of Credit ........................................................................................ 46 2.04 Prepayments .............................................................................................. 52 2.05 Termination or Reduction of the Commitment ......................................... 53 2.06 Repayment of Loans ................................................................................. 54 2.07 Interest....................................................................................................... 54 2.08 Fees ........................................................................................................... 54 2.09 Computation of Interest and Fees ............................................................. 55 2.10 Evidence of Debt....................................................................................... 55 2.11 Payments Generally .................................................................................. 55 Article III TAXES, YIELD PROTECTION AND ILLEGALITY; APPOINTMENT OF LEAD BORROWER ............................................................................................ 56 3.01 Taxes ......................................................................................................... 56 3.02 Illegality .................................................................................................... 57 3.03 Inability to Determine Rates ..................................................................... 57 i
Table of Contents Page 3.04 Increased Costs; Reserves on LIBO Rate Loans ...................................... 58 3.05 Compensation for Losses .......................................................................... 59 3.06 Mitigation Obligations; Replacement of Lender ...................................... 59 3.07 Survival ..................................................................................................... 60 3.08 Designation of Lead Borrower as Borrowers’ Agent ............................... 60 Article IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS ..................................... 60 4.01 Conditions of Initial Credit Extension ...................................................... 60 4.02 Conditions to all Credit Extensions .......................................................... 63 Article V REPRESENTATIONS AND WARRANTIES............................................................. 64 5.01 Existence, Qualification and Power .......................................................... 64 5.02 Authorization; No Contravention ............................................................. 64 5.03 Governmental Authorization; Other Consents .......................................... 64 5.04 Binding Effect ........................................................................................... 64 5.05 Financial Statements; No Material Adverse Effect .................................. 64 5.06 Litigation ................................................................................................... 65 5.07 No Default ................................................................................................. 65 5.08 Ownership of Property; Liens ................................................................... 66 5.09 Environmental Compliance ...................................................................... 66 5.10 Insurance ................................................................................................... 67 5.11 Taxes ......................................................................................................... 67 5.12 ERISA Compliance ................................................................................... 67 5.13 Subsidiaries; Equity Interests .................................................................... 68 5.14 Margin Regulations; Investment Company Act ....................................... 68 5.15 Disclosure ................................................................................................. 68 5.16 Compliance with Laws ............................................................................. 69 ii
Table of Contents Page 5.17 Intellectual Property; Licenses, Etc .......................................................... 69 5.18 Labor Matters ............................................................................................ 69 5.19 Security Documents .................................................................................. 69 5.20 Solvency .................................................................................................... 70 5.21 Deposit Accounts; Credit Card Arrangements ......................................... 70 5.22 Brokers ...................................................................................................... 70 5.23 Customer and Trade Relations .................................................................. 70 5.24 Material Contracts ..................................................................................... 70 5.25 Casualty..................................................................................................... 71 5.26 OFAC; Sanctions ...................................................................................... 71 5.27 Beneficial Ownership Certification .......................................................... 71 Article VI AFFIRMATIVE COVENANTS ................................................................................. 71 6.01 Financial Statements ................................................................................. 71 6.02 Certificates; Other Information ................................................................. 72 6.03 Notices ...................................................................................................... 74 6.04 Payment of Obligations ............................................................................. 75 6.05 Preservation of Existence, Etc .................................................................. 75 6.06 Maintenance of Properties ........................................................................ 75 6.07 Maintenance of Insurance ......................................................................... 76 6.08 Compliance with Laws ............................................................................. 77 6.09 Books and Records; Accountants ............................................................. 77 6.10 Inspection Rights ...................................................................................... 77 6.11 Use of Proceeds ......................................................................................... 78 6.12 Additional Loan Parties ............................................................................ 78 6.13 Cash Management ..................................................................................... 79 iii
Table of Contents Page 6.14 Information Regarding the Collateral ....................................................... 81 6.15 Physical Inventories .................................................................................. 81 6.16 Environmental Laws ................................................................................. 82 6.17 Further Assurances.................................................................................... 82 6.18 Compliance with Terms of Leaseholds ..................................................... 83 6.19 Material Contracts ..................................................................................... 83 6.20 OFAC; Sanctions ...................................................................................... 83 6.21 Credit Card Processors .............................................................................. 83 Article VII NEGATIVE COVENANTS ...................................................................................... 83 7.01 Liens .......................................................................................................... 83 7.02 Investments ............................................................................................... 84 7.03 Indebtedness; Disqualified Stock .............................................................. 84 7.04 Fundamental Changes ............................................................................... 84 7.05 Dispositions............................................................................................... 84 7.06 Restricted Payments .................................................................................. 84 7.07 Prepayments of Indebtedness .................................................................... 85 7.08 Change in Nature of Business ................................................................... 85 7.09 Transactions with Affiliates ...................................................................... 85 7.10 Burdensome Agreements .......................................................................... 86 7.11 Use of Proceeds ......................................................................................... 86 7.12 Amendment of Material Documents ......................................................... 86 7.13 Fiscal Year ................................................................................................ 86 7.14 Deposit Accounts; Credit Card Processors ............................................... 86 7.15 Financial Covenant ................................................................................... 86 7.16 Maintenance of FILO Reserve .................................................................. 86 iv
Table of Contents Page Article VIII EVENTS OF DEFAULT AND REMEDIES ........................................................... 87 8.01 Events of Default ...................................................................................... 87 8.02 Remedies Upon Event of Default ............................................................. 89 8.03 Application of Funds................................................................................. 89 8.04 Separate Claims and Separate Classifications .......................................... 90 Article IX MISCELLANEOUS .................................................................................................... 91 9.01 Amendments, Etc ...................................................................................... 91 9.02 Notices; Effectiveness; Electronic Communications ................................ 91 9.03 No Waiver; Cumulative Remedies ........................................................... 92 9.04 Expenses; Indemnity; Damage Waiver ..................................................... 92 9.05 Payments Set Aside................................................................................... 93 9.06 Successors and Assigns ............................................................................. 94 9.07 Treatment of Certain Information; Confidentiality ................................... 95 9.08 Right of Setoff........................................................................................... 96 9.09 Interest Rate Limitation ............................................................................ 96 9.10 Counterparts; Integration; Effectiveness ................................................... 97 9.11 Survival ..................................................................................................... 97 9.12 Severability ............................................................................................... 97 9.13 Governing Law; Jurisdiction; Etc ............................................................. 97 9.14 Waiver of Jury Trial .................................................................................. 98 9.15 No Advisory or Fiduciary Responsibility ................................................. 99 9.16 USA PATRIOT Act Notice ...................................................................... 99 9.17 Foreign Asset Control Regulations ........................................................... 99 9.18 Time of the Essence ................................................................................ 100 9.19 Publicity .................................................................................................. 100 v
Table of Contents Page 9.20 Additional Waivers ................................................................................. 100 9.21 No Strict Construction ............................................................................ 101 9.22 Attachments ............................................................................................ 101 9.23 Amendment and Restatement ................................................................. 102 9.24 Keepwell ................................................................................................. 102 vi
SCHEDULES 1.01 Borrowers 1.03 Existing Letters of Credit 5.01 Loan Parties Organizational Information 5.05 Supplement to Interim Financial Statements 5.06 Litigation 5.08(b)(1) Owned Real Estate 5.08(b)(2) Leased Real Estate 5.09 Environmental Matters 5.10 Insurance 5.13 Subsidiaries; Other Equity Investments 5.17 Intellectual Property Matters 5.18 Collective Bargaining Agreements 5.21(a) DDAs 5.21(b) Credit Card Arrangements 5.24 Material Contracts 6.02 Financial and Collateral Reporting 7.01 Existing Liens 7.02 Existing Investments 7.03 Existing Indebtedness 7.09 Affiliate Transactions 9.02 Lender’s Office; Certain Addresses for Notices EXHIBITS Form of A Committed Loan Notice B-1 Revolving Note B-2 FILO Note C Compliance Certificate D Assignment and Assumption E Borrowing Base Certificate F Credit Card Notification G DDA Notification
SECOND AMENDED AND RESTATED CREDIT AGREEMENT This SECOND AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”) is entered into as of July 12, 2012, among CHRISTOPHER & BANKS CORPORATION, a Delaware corporation (the “Lead Borrower”), the Persons named on Schedule 1.01 hereto (collectively, the “Borrowers”), the Persons from time to time party hereto as Guarantors (collectively, the “Guarantors”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Lender and as L/C Issuer. The Borrowers and the Lender are party to that certain Amended and Restated Credit and Security Agreement dated as of November 4, 2005 (as amended, modified and supplemented from time to time prior to the date hereof, the “Existing Credit Agreement”). The Borrowers have requested that the Lender agree to amend and restate the Existing Credit Agreement as set forth herein, and the Lender is willing to do so on the terms and conditions set forth herein. In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below: “Accelerated Borrowing Base Delivery Event” means either (i) the occurrence and continuance of any Default or Event of Default, or (ii) the failure of the Borrowers to maintain Availability at least equal to the greater of (a) thirty percent (30%) of the Revolving Loan Cap (calculated without giving effect to the FILO Reserve), or (b) $10,000,000. For purposes of this Agreement, the occurrence of an Accelerated Borrowing Base Delivery Event shall be deemed continuing at the Lender’s option (i) so long as such Default or Event of Default has not been waived, and/or (ii) if the Accelerated Borrowing Base Delivery Event arises as a result of the Borrowers’ failure to achieve Availability as required hereunder, until Availability has exceeded the greater of (x) thirty percent (30%) of the Revolving Loan Cap (calculated without giving effect to the FILO Reserve), or (y) $10,000,000, in each case, for sixty (60) consecutive calendar days, in which case an Accelerated Borrowing Base Delivery Event shall no longer be deemed to be continuing for purposes of this Agreement; provided, that in the discretion of the Lender an Accelerated Borrowing Base Delivery Event shall be deemed continuing (even if a Default or an Event of Default is no longer continuing and/or Availability exceeds the required amount for such sixty (60) consecutive calendar days) at all times after an Accelerated Borrowing Base Delivery Event has occurred and has been discontinued on two (2) occasions in any one 12-month period after the Closing Date. The termination of an Accelerated Borrowing Base Delivery Event as provided herein shall in no way limit, waive or delay the occurrence of a subsequent Accelerated Borrowing Base Delivery Event in the event that the conditions set forth in this definition again arise. “Acceptable Document of Title” means, with respect to any Inventory, a tangible or electronic negotiable bill of lading or other Document (as defined in the UCC) that (a) is issued by a common carrier which is not an Affiliate of the Approved Foreign Vendor or any Loan Party and which is in actual possession of such Inventory, (b) is issued to the order of a Loan Party or, if so requested by the Lender after the occurrence and during the continuance of a Default or Event of Default, to the order of the
Lender, (c) is not subject to any Lien (other than in favor of the Lender), and (d) is on terms otherwise reasonably acceptable to the Lender. “ACH” means automated clearing house transfers. “Accommodation Payment” as defined in Section 9.20(d). “Account” means “accounts” as defined in the UCC. “Acquisition” means, with respect to any Person (a) an investment in, or a purchase of, a Controlling interest in the Equity Interests of any other Person, (b) a purchase or other acquisition of all or substantially all of the assets or properties of another Person or of any business unit of another Person, (c) any merger or consolidation of such Person with any other Person or other transaction or series of transactions resulting in the acquisition of all or substantially all of the assets, or a Controlling interest in the Equity Interests, of any Person, or (d) any acquisition of any Store locations from any Person (but not the opening of new individual Stores), in each case in any transaction or group of transactions which are part of a common plan. “Act” shall have the meaning provided in Section 9.16. “Adjusted LIBO Rate” means: (a) for any Interest Period with respect to any LIBO Borrowing, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of one percent) equal to (i) the LIBO Rate for such Interest Period multiplied by (ii) the Statutory Reserve Rate; and (b) for any interest rate calculation with respect to any Base Rate Loan, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of one percent) equal to (i) the LIBO Rate for an Interest Period commencing on the date of such calculation and ending on the date that is thirty (30) days thereafter multiplied by (ii) the Statutory Reserve Rate. The Adjusted LIBO Rate will be adjusted automatically as of the effective date of any change in the Statutory Reserve Rate. “Adjusted Payment Conditions” means, at the time of determination with respect to any specified transaction or payment, that (a) no Default or Event of Default then exists or would arise as a result of entering into such transaction or the making of such payment, (b) the specified transaction or payment shall be funded solely with cash on hand (and not, for the avoidance of doubt, with the proceeds of any Loans), (c) immediately after giving effect to such transaction or payment, Pro Forma Excess Availability will be greater than $10,000,000, (d) no Loans shall have been outstanding during the twelve (12) months immediately preceding the date of such transaction or the making of such payment, and (e) no Loans are projected to be outstanding during the twelve (12) months immediately following the date of such transaction or the making of such payment. “Adjustment Date” means the first day of each Fiscal Quarter, commencing October 28, 2012. “Affiliate” means, with respect to any Person, (i) another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified, (ii) any director, officer, managing member, partner, trustee, or beneficiary of that Person, (iii) any other Person directly or indirectly holding twenty percent (20%) or more of any class of -2-
the Equity Interests of that Person, and (iv) any other Person twenty percent (20%) or more of any class of whose Equity Interests is held directly or indirectly by that Person. “Agreement” means this Credit Agreement. “Allocable Amount” has the meaning specified in Section 9.20(d). “Anti-Corruption Laws” means the FCPA and all other applicable laws and regulations or ordinances concerning or relating to bribery, money laundering or corruption in any jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing business. “Anti-Money Laundering Laws” means the applicable laws or regulations in any jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing business that relates to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto. “Applicable Margin” means: (a) From and after the Second Amendment Effective Date until the first Adjustment Date following such date, the percentages set forth in Level II of the pricing grid below; and (b) From and after the first Adjustment Date following the Second Amendment Effective Date and on each Adjustment Date thereafter, the Applicable Margin shall be determined from the following pricing grid based upon the Average Daily Availability for the Fiscal Quarter immediately preceding such Adjustment Date; provided, that notwithstanding anything to the contrary set forth herein, upon the occurrence of an Event of Default, the Lender may immediately increase the Applicable Margin to that set forth in Level I (even if the requirements for a different Level have been met) and interest shall accrue at the Default Rate; provided, further, that if any Borrowing Base Certificates are at any time restated or otherwise revised (including as a result of an audit) or if the information set forth in such Borrowing Base Certificates otherwise proves to be false or incorrect such that the Applicable Margin would have been higher than was otherwise in effect during any period, without constituting a waiver of any Default or Event of Default arising as a result thereof, interest due under this Agreement shall be immediately recalculated at such higher rate for any applicable periods and shall be due and payable on demand. Applicable Applicable Applicable Margin for Margin for Margin for Applicable Revolving Revolving FILO Loans Margin for Standby Average Loans that Loans that that are FILO Loans Commercial Letter of Daily are LIBO are Base Rate LIBO Rate that are Base Letter of Credit Level Availability Rate Loans Loans Loans Rate Loans Credit Fee Fee 1.75% 0.75% 3.00% 2.00% 1.25% 1.75% I < $20,000,000 1.50% 0.50% 3.00% 2.00% 1.00% 1.50% II > $20,000,000 “Appraisal Percentage” means ninety percent (90%). -3-
“Appraised Value” means with respect to Eligible Inventory, the appraised orderly liquidation value, net of costs and expenses to be incurred in connection with any such liquidation, which value is expressed as a percentage of Cost of Eligible Inventory as set forth in the inventory stock ledger of the Borrowers, which value shall be determined from time to time by the most recent appraisal undertaken by an independent appraiser engaged by the Lender. “Approved Fund” means any Fund that is administered or managed by (a) the Lender, (b) an Affiliate of the Lender, (c) an entity or an Affiliate of an entity that administers or manages the Lender or (d) the same investment advisor or an advisor under common control with the Lender, Affiliate or advisor, as applicable. “Approved Foreign Vendor” means a Foreign Vendor which (a) is located in any country acceptable to the Lender in its discretion, (b) has not asserted and has no right to assert any reclamation, repossession, diversion, stoppage in transit, Lien or title retention rights in respect of such Inventory, and (c) if so requested by the Lender (which request may be made by the Lender only with respect to a Foreign Vendor from which the Loan Parties received more than ten percent (10%) of their Inventory in the prior Fiscal Year or with respect to which the Loan Parties have more than ten percent (10%) of their Inventory in transit at any time), has entered into and is in full compliance with the terms of a Foreign Vendor Agreement. “Assignment and Assumption” means an assignment and assumption entered into by the Lender and an Eligible Assignee, in substantially the form of Exhibit D or any other form approved by the Lender. “Attributable Indebtedness” means, on any date, (a) in respect of any Capital Lease Obligation of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease or similar payments under the relevant lease or other applicable agreement or instrument that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease, agreement or instrument were accounted for as a capital lease. “Audited Financial Statements” means the audited consolidated balance sheet of the Lead Borrower and its Subsidiaries for the Fiscal Year ended February 1, 2014, and the related consolidated statements of income or operations, Shareholders’ Equity and cash flows for such Fiscal Year of the Lead Borrower and its Subsidiaries, including the notes thereto. “Auto-Extension Letter of Credit” shall have the meaning specified in Section 2.03(b)(iii). “Availability” means, as of any date of determination thereof by the Lender, the result, if a positive number, of: (a) The Revolving Loan Cap minus (b) Total Revolving Outstandings. In calculating Availability at any time and for any purpose under this Agreement, the Lead Borrower shall certify to the Lender that all accounts payable more than thirty (30) days past due and all Taxes (other than such accounts payable and Taxes being contested in good faith not to exceed -4-
$1,000,000 in the aggregate at any time) are being paid in the ordinary course of the Borrowers’ business consistent with practices in effect on the Second Amendment Effective Date. “Availability Period” means the period from and including the Closing Date to the earliest of (a) the Maturity Date, (b) the date of termination of the Commitments pursuant to Section 2.05, and (c) the date of termination of the Commitments and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02. “Availability Reserves” means, without duplication of any other Reserves or items to the extent such items are otherwise addressed in calculating Appraised Value or otherwise or are excluded through eligibility criteria, such reserves as the Lender from time to time determines in its Permitted Discretion as being appropriate (a) to reflect the impediments to the Lender’s ability to realize upon the Collateral, (b) to reflect claims and liabilities that the Lender determines will need to be satisfied in connection with the realization upon the Collateral, (c) to reflect criteria, events, conditions, contingencies or risks which adversely affect any component of the Revolving Borrowing Base, or the financial performance or financial condition of any Loan Party, or (d) to reflect that a Default or an Event of Default then exists. Without limiting the generality of the foregoing, Availability Reserves may include, in the Lender’s Permitted Discretion, reserves based on: (i) rent at leased locations subject to landlords liens, past due rent, and up to three months future rent that would be payable to a landlord that has not executed and delivered a Collateral Access Agreement; (ii) customs duties, and other costs to release Inventory which is being imported into the United States; (iii) outstanding Taxes and other governmental charges, including, without limitation, ad valorem, real estate, personal property, sales, claims of the PBGC and other Taxes which may have priority over the interests of the Lender in the Collateral; (iv) salaries, wages and benefits due to employees of any Borrower; (v) fifty percent (50%) of all Customer Credit Liabilities; (vi) Customer Deposits; (vii) reserves for reasonably anticipated changes in the Appraised Value of Eligible Inventory between appraisals; (viii) warehousemen’s or bailee’s charges and other Permitted Encumbrances which may have priority over the interests of the Lender in the Collateral; (ix) amounts due to vendors on account of consigned goods or on account of purchase money or “floor plan financing” payables (provided, that the Lender shall only implement Reserves pursuant to this clause (ix) after the occurrence of a Cash Dominion Event); (x) Cash Management Reserves; (xi) Bank Products Reserves; and (xii) royalties payable in respect of licensed merchandise. “Average Daily Availability” means, for any period of determination, an amount equal to the sum of Availability for each day of such period divided by the actual number of days in such period, as determined by the Lender, which determination shall be conclusive absent manifest error. “Bank Products” means any services of facilities provided to any Loan Party by the Lender or any of its Affiliates (but excluding Cash Management Services) including, without limitation, on account of (a) Swap Contracts, (b) merchant services constituting a line of credit, (c) leasing, (d) Factored Receivables, and (e) supply chain finance services including, without limitation, trade payable services and supplier accounts receivable purchases. “Bank Product Reserves” means such reserves as the Lender from time to time determines in its discretion as being appropriate to reflect the liabilities and obligations of the Loan Parties with respect to Bank Products then provided or outstanding. “Base Rate” means, for any day, a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate, as in effect from time to time, plus one-half of one percent (0.50%), (b) the Adjusted LIBO Rate plus one percent (1.00%), or (c) the rate of interest in effect for such day as publicly announced from time to time by Wells Fargo as its “prime rate” (and if such announced rate is below zero, the rate pursuant to this clause (c) shall be deemed to be zero). The “prime rate” is a rate set by -5-
Wells Fargo based upon various factors including Wells Fargo’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Wells Fargo shall take effect at the opening of business on the day specified in the public announcement of such change. “Base Rate Loan” means a Loan that bears interest based on the Base Rate. “Beneficial Ownership Certificate” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation, which certification shall be substantially similar in form and substance to the form of Certification Regarding Beneficial Owners of Legal Entity Customers published jointly, in May 2018, by the Loan Syndications and Trading Association and Securities Industry and Financial Markets Association. “Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230. “Blocked Account” has the meaning provided in Section 6.13(a)(ii). “Blocked Account Agreement” means with respect to an account established by a Loan Party, an agreement, in form and substance satisfactory to the Lender, establishing control (as defined in the UCC) of such account by the Lender and whereby the bank maintaining such account agrees, upon receipt of notice from the Lender following the occurrence and during the continuance of a Cash Dominion Event, to comply only with the instructions originated by the Lender without the further consent of any Loan Party. “Blocked Account Bank” means each bank with whom deposit accounts are maintained in which any funds of any of the Loan Parties from one or more DDAs are concentrated and with whom a Blocked Account Agreement has been, or is required to be, executed in accordance with the terms hereof. “Borrowers” has the meaning specified in the introductory paragraph hereto. “Borrowing” means a borrowing consisting of a Loan or Loans of the same Type and, in the case of LIBO Rate Loans, having the same Interest Period made by the Lender pursuant to Section 2.01. “Borrowing Base” means the Revolving Borrowing Base plus the FILO Borrowing Base. “Borrowing Base Certificate” means a certificate substantially in the form of Exhibit E hereto (with such changes therein as may be required by the Lender to reflect the components of and reserves against the Borrowing Base as provided for hereunder from time to time), executed and certified as accurate and complete by a Responsible Officer of the Lead Borrower which shall include appropriate exhibits, schedules, supporting documentation, and additional reports as reasonably requested by the Lender. “Business” means designing, sourcing, marketing and selling women’s apparel, accessories, personal care products and fragrances. “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Lender’s Office is located and, if such day relates to any LIBO Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank market. -6-
“Capital Expenditures” means, with respect to any Person for any period, (a) all expenditures made (whether made in the form of cash or other property) or costs incurred for the acquisition or improvement of fixed or capital assets of such Person (excluding normal replacements and maintenance which are properly charged to current operations), in each case that are (or should be) set forth as capital expenditures in a Consolidated statement of cash flows of such Person for such period, in each case prepared in accordance with GAAP, and (b) Capital Lease Obligations incurred by a Person during such period. “Capital Lease Obligations” means, with respect to any Person for any period, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as liabilities on a balance sheet of such Person under GAAP and the amount of which obligations shall be the capitalized amount thereof determined in accordance with GAAP. “Cash Collateral Account” means a non-interest bearing account established by one or more of the Loan Parties with Wells Fargo, and in the name of the Lender (or as the Lender shall otherwise direct), and under the sole and exclusive dominion and control of the Lender, in which deposits are required to be made in accordance with Section 2.03(f) or 8.02(c). “Cash Collateralize” has the meaning specified in Section 2.03(f). Derivatives of such term have corresponding meanings. “Cash Dominion Event” means either (i) the occurrence and continuance of any Default or Event of Default, or (ii) the failure of the Borrowers to maintain Availability at least equal to the greater of (a) $10,000,000, or (b) thirty percent (30%) of the Revolving Loan Cap (calculated without giving effect to the FILO Reserve). For purposes of this Agreement, the occurrence of a Cash Dominion Event shall be deemed continuing at the Lender’s option (i) so long as such Default or Event of Default has not been waived, and/or (ii) if the Cash Dominion Event arises as a result of the Borrowers’ failure to achieve Availability as required hereunder, until Availability has exceeded the greater of (x) $10,000,000, or (y) thirty percent (30%) of the Revolving Loan Cap (calculated without giving effect to the FILO Reserve), in each case, for sixty (60) consecutive calendar days, in which case a Cash Dominion Event shall no longer be deemed to be continuing for purposes of this Agreement; provided, that a Cash Dominion Event shall be deemed continuing (even if a Default or an Event of Default is no longer continuing and/or Availability exceeds the required amount for sixty (60) consecutive calendar days) at all times after a Cash Dominion Event has occurred and been discontinued on three (3) occasion(s) after the Second Amendment Effective Date. The termination of a Cash Dominion Event as provided herein shall in no way limit, waive or delay the occurrence of a subsequent Cash Dominion Event in the event that the conditions set forth in this definition again arise. “Cash Management Reserves” means such reserves as the Lender, from time to time, determines in its Permitted Discretion as being appropriate to reflect the reasonably anticipated liabilities and obligations of the Loan Parties with respect to Cash Management Services then provided or outstanding. “Cash Management Services” means any cash management services or facilities provided to any Loan Party by the Lender or any of its Affiliates, including, without limitation: (a) ACH transactions, (b) controlled disbursement services, treasury, depository, overdraft, and electronic funds transfer services, (c) credit or debit cards, (d) credit card processing services, and (e) purchase cards. “CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq. -7-
“CERCLIS” means the Comprehensive Environmental Response, Compensation, and Liability Information System maintained by the United States Environmental Protection Agency. “CFC” means a Person that is a controlled foreign corporation under Section 957 of the Code. “Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided, however, for the purposes of this Agreement: (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines 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 regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued. “Change of Control” means an event or series of events by which: (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent, or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of forty percent (40%) or more of the Equity Interests of the Lead Borrower entitled to vote for members of the board of directors or equivalent governing body of the Lead Borrower on a fully-diluted basis (and taking into account all such Equity Interests that such “person” or “group” has the right to acquire pursuant to any option right); or (b) during any period of twelve (12) consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Lead Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or (c) any Person or two or more Persons acting in concert shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation thereof, will result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence over the management or policies of the Lead Borrower, or control over the Equity Interests of the Lead Borrower entitled to vote for members of the board -8-
of directors or equivalent governing body of the Lead Borrower on a fully-diluted basis (and taking into account all such securities that such Person or Persons have the right to acquire pursuant to any option right) representing forty percent (40%) or more of the combined voting power of such securities; or (d) any “change in control” or “sale” or “disposition” or similar event as defined in any Organization Document of any Loan Party; or (e) the Lead Borrower fails at any time to own, directly or indirectly, one hundred percent (100%) of the Equity Interests of each other Loan Party free and clear of all Liens (other than the Liens in favor of the Lender), except where such failure is as a result of a transaction permitted by the Loan Documents. “Closing Date” means July 12, 2012. “Code” means the Internal Revenue Code of 1986, and the regulations promulgated thereunder, as amended and in effect. “Collateral” means any and all “Collateral” as defined in any applicable Security Document and all other property that is or is intended under the terms of the Security Documents to be subject to Liens in favor of the Lender. “Collateral Access Agreement” means an agreement reasonably satisfactory in form and substance to the Lender executed by (a) a bailee or other Person in possession of Collateral, and (b) any landlord of Real Estate leased by any Loan Party, other than Stores, pursuant to which such Person (i) acknowledges the Lender’s Lien on the Collateral, (ii) releases or subordinates such Person’s Liens in the Collateral held by such Person or located on such Real Estate, (iii) provides the Lender with access to the Collateral held by such bailee or other Person or located in or on such Real Estate, (iv) as to any landlord, provides the Lender with a reasonable time to sell and dispose of the Collateral from such Real Estate, and (v) makes such other agreements with the Lender as the Lender may reasonably require. “Commercial Letter of Credit” means any Letter of Credit issued for the purpose of providing the primary payment mechanism in connection with the purchase of any materials, goods or services by a Loan Party in the ordinary course of business of such Loan Party. “Commercial Letter of Credit Agreement” means the Commercial Letter of Credit Agreement relating to the issuance of a Commercial Letter of Credit in the form from time to time in use by the L/C Issuer. “Commitments” means the Revolving Commitment and the FILO Commitment. “Committed Loan Notice” means a notice of (a) a Borrowing, (b) a conversion of Loans from one Type to the other, or (c) a continuation of LIBO Rate Loans, pursuant to Section 2.02, which, if in writing, shall be substantially in the form of Exhibit A. “Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute. “Competitor” means a Person, other than a Loan Party, who directly provides products or services that are the same or substantially similar to the products or services provided by, and that constitute a material part of the business of, the Loan Parties taken as a whole. -9-
“Compliance Certificate” means a certificate substantially in the form of Exhibit C. “Concentration Account” has the meaning provided in Section 6.13(c). “Consolidated” means, when used to modify a financial term, test, statement, or report of a Person, the application or preparation of such term, test, statement or report (as applicable) based upon the consolidation, in accordance with GAAP, of the financial condition or operating results of such Person and its Subsidiaries. “Consolidated EBITDA” means, at any date of determination, an amount equal to Consolidated Net Income of the Lead Borrower and its Subsidiaries on a Consolidated basis for the most recently completed Measurement Period, plus (a) the following to the extent deducted in calculating such Consolidated Net Income: (i) Consolidated Interest Charges, (ii) the provision for Federal, state, local and foreign income Taxes, (iii) depreciation and amortization expense and (iv) other non-recurring expenses reducing such Consolidated Net Income which do not represent a cash item (in each case of or by Lead Borrower and its Subsidiaries for such Measurement Period), minus (b) the following to the extent included in calculating such Consolidated Net Income: (i) Federal, state, local and foreign income tax credits and (ii) all non-recurring, non-cash items increasing Consolidated Net Income (in each case of or by Lead Borrower and its Subsidiaries for such Measurement Period), all as determined on a Consolidated basis in accordance with GAAP. “Consolidated Fixed Charge Coverage Ratio” means, at any date of determination, the ratio of (a) (i) Consolidated EBITDA minus (ii) unfinanced Capital Expenditures made during such period minus (iii) the aggregate amount of Federal, state, local and foreign income taxes paid in cash during such period, to (b) the sum of (i) Debt Service Charges plus (ii) the aggregate amount of all Restricted Payments, in each case, of or by Lead Borrower and its Subsidiaries for the most recently completed Measurement Period, all as determined on a Consolidated basis in accordance with GAAP. “Consolidated Interest Charges” means, for any Measurement Period, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under Swap Contracts, but excluding any non-cash or deferred interest financing costs, (b) all interest paid or payable with respect to discontinued operations and (c) the portion of rent expense with respect to such period under Capital Lease Obligations that is treated as interest in accordance with GAAP, in each case of or by Lead Borrower and its Subsidiaries for such Measurement Period, all as determined on a Consolidated basis in accordance with GAAP. “Consolidated Net Income” means, as of any date of determination, the net income of Lead Borrower and its Subsidiaries for the most recently completed Measurement Period, all as determined on a Consolidated basis in accordance with GAAP; provided, however, that there shall be excluded therefrom (a) extraordinary gains and extraordinary losses for such Measurement Period, (b) the income (or loss) of such Person during such Measurement Period in which any other Person has a joint interest, except to the extent of the amount of cash dividends or other distributions actually paid in cash to such Person during such period, (c) the income (or loss) of any Person during such Measurement Period accrued prior to the date it becomes a Subsidiary of the Lead Borrower or any of its Subsidiaries or is merged into or consolidated with the Lead Borrower or any of its Subsidiaries or that Person’s assets are acquired by the Lead Borrower or any of its Subsidiaries, and (d) the income of any direct or indirect Subsidiary of a Person to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its Organization -10-
Documents or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary, except that Lead Borrower’s equity in any net loss of any such Subsidiary for such Measurement Period shall be included in determining Consolidated Net Income. “Contractual Obligation” means, as to any Person, any provision of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto. “Cost” means the lower of cost or market value of Inventory, based upon the Borrowers’ accounting practices in effect on the Second Amendment Effective Date. “Credit Card Advance Rate” means ninety percent (90%). “Credit Card Issuer” means any person (other than a Borrower or other Loan Party) who issues or whose members issue credit cards, including, without limitation, MasterCard or VISA bank credit or debit cards or other bank credit or debit cards issued through MasterCard International, Inc., Visa, U.S.A., Inc. or Visa International and American Express, Discover, Diners Club, Carte Blanche, World Financial Bank, 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 Lender. “Credit Card Processor” means any servicing or processing agent or any factor or financial intermediary who facilitates, services, processes or manages the credit authorization, billing transfer and/or payment procedures with respect to any 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 Notifications” has the meaning provided in Section 6.13(a)(i). “Credit Card Receivables” means each “Account” (as defined in the UCC) together with all income, payments and proceeds thereof, owed by a Credit Card Issuer or Credit Card Processor to a Loan Party resulting from charges by a customer of a Loan Party on credit or debit cards issued by such issuer in connection with the sale of goods by a Loan Party, or services performed by a Loan Party, in each case in the ordinary course of its business. “Credit Extensions” mean each of the following: (a) a Borrowing and (b) an L/C Credit Extension. “Credit Party” or “Credit Parties” means (a) individually, (i) the Lender and its Affiliates, (ii) the L/C Issuer, (iii) any beneficiary of each indemnification obligation undertaken by any Loan Party under any Loan Document, (iv) any other Person to whom Obligations under this Agreement and other Loan Documents are owing, and (v) the successors and assigns of each of the foregoing, and (b) collectively, all of the foregoing. “Credit Party Expenses” means, without limitation, (a) all reasonable out-of-pocket expenses incurred by the Lender and its Affiliates, in connection with this Agreement and the other Loan Documents, including without limitation (i) the reasonable fees, charges and disbursements of (A) counsel for the Lender, (B) outside consultants for the Lender, (C) appraisers, (D) commercial finance examinations, and (E) all such out-of-pocket expenses incurred during any workout, restructuring or -11-
negotiations in respect of the Obligations, (ii) in connection with (A) the preparation, negotiation, administration, management, execution and delivery of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (B) the enforcement or protection of their rights in connection with this Agreement or the Loan Documents or efforts to preserve, protect, collect, or enforce the Collateral, or (C) any workout, restructuring or negotiations in respect of any Obligations, and (b) with respect to the L/C Issuer and its Affiliates, all reasonable out-of-pocket expenses incurred in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder; and (c) all customary fees and charges (as adjusted from time to time) of Lender with respect to the disbursement of funds (or the receipt of funds) to or for the account of Loan Parties (whether by wire transfer or otherwise), together with any out-of-pocket costs and expenses incurred in connection therewith. “Customer Credit Liabilities” means at any time, the aggregate remaining value at such time of (a) outstanding gift certificates and gift cards of the Borrowers entitling the holder thereof to use all or a portion of the certificate or gift card to pay all or a portion of the purchase price for any Inventory, and (b) outstanding merchandise credits of the Borrowers. “Customer Deposits” means at any time, the aggregate amount at such time of (a) deposits made by customers with respect to the purchase of goods or the performance of services and (b) layaway obligations of the Borrowers. “Customs Broker/Carrier Agreement” means an agreement in form and substance satisfactory to the Lender among a Borrower, a customs broker, freight forwarder, consolidator or carrier, and the Lender, in which the customs broker, freight forwarder, consolidator or carrier acknowledges that it has control over and holds the documents evidencing ownership of the subject Inventory for the benefit of the Lender and agrees, upon notice from the Lender, to hold and dispose of the subject Inventory solely as directed by the Lender. “DDA” means each checking, savings or other demand deposit account maintained by any of the Loan Parties. All funds in each DDA shall be conclusively presumed to be Collateral and proceeds of Collateral and the Lender shall have no duty to inquire as to the source of the amounts on deposit in any DDA. “DDA Notification” has the meaning provided therefor in Section 6.13(a)(iii). “Debt Service Charges” means, for any Measurement Period, the sum of (a) Consolidated Interest Charges paid or required to be paid for such Measurement Period, plus (b) principal payments made or required to be made on account of Indebtedness (excluding the Obligations and any Synthetic Lease Obligations but including, without limitation, Capital Lease Obligations) for such Measurement Period, in each case determined on a Consolidated basis in accordance with GAAP. “Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally. “Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default. -12-
“Default Rate” means (a) when used with respect to Obligations other than Letter of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Margin, if any, applicable to Base Rate Loans, plus (iii) two percent (2%) per annum; provided, however, that with respect to a LIBO Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Margin) otherwise applicable to such Loan plus two percent (2%) per annum, and (b) when used with respect to Letter of Credit Fees, a rate equal to the Applicable Margin for Standby Letters of Credit or Commercial Letters of Credit, as applicable, plus two percent (2%) per annum. “Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (whether in one transaction or in a series of transactions, and including any sale and leaseback transaction and any sale, transfer, license or other disposition) of any property (including, without limitation, any Equity Interests) by any Person (or the granting of any option or other right to do any of the foregoing), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith. “Disqualified Stock” means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is ninety-one (91) days after the date on which the Loans mature; provided, however, that (i) only the portion of such Equity Interests which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock and (ii) with respect to any Equity Interests issued to any employee or to any plan for the benefit of employees of the Lead Borrower or its Subsidiaries or by any such plan to such employees, such Equity Interest shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Lead Borrower or one of its Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, resignation, death or disability and if any class of Equity Interest of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of an Equity Interest that is not Disqualified Stock, such Equity Interests shall not be deemed to be Disqualified Stock. Notwithstanding the preceding sentence, any Equity Interest that would constitute Disqualified Stock solely because the holders thereof have the right to require a Loan Party to repurchase such Equity Interest upon the occurrence of a change of control or an asset sale shall not constitute Disqualified Stock. The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Agreement will be the maximum amount that the Lead Borrower and its Subsidiaries may become obligated to pay upon maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock or portion thereof, plus accrued dividends. “Dollars” and “$” mean lawful money of the United States. “Eligible Assignee” means (a) a Credit Party or any of its Affiliates; (b) a bank, insurance company, or company engaged in the business of making commercial loans, which Person, together with its Affiliates, has a combined capital and surplus in excess of $1,000,000,000; (c) an Approved Fund; (d) any Person to whom a Credit Party assigns its rights and obligations under this Agreement as part of an assignment and transfer of such Credit Party’s rights in and to a material portion of such Credit Party’s portfolio of asset based credit facilities, and (e) any other Person (other than a natural person) approved by (i) the Lender, and (ii) unless a Default or Event of Default has occurred and is continuing, the Lead Borrower (each such approval not to be unreasonably withheld or delayed); provided, that notwithstanding the foregoing, “Eligible Assignee” shall not include a Loan Party or any of the Loan Parties’ Affiliates, Subsidiaries or (other than after the occurrence and during the continuance of a Specified Event of Default) Competitors. -13-
“Eligible Credit Card Receivables” means at the time of any determination thereof, each Credit Card Receivable that satisfies the following criteria at the time of creation and continues to meet the same at the time of such determination: such Credit Card Receivable (i) has been earned by performance and represents the bona fide amounts due to a Borrower from a Credit Card Issuer or Credit Card Processor, and in each case originated in the ordinary course of business of such Borrower, and (ii) in each case is acceptable to the Lender in its Permitted Discretion, and is not ineligible for inclusion in the calculation of the Borrowing Base pursuant to any of clauses (a) through (j) below. Without limiting the foregoing, to qualify as an Eligible Credit Card Receivable, an Account shall indicate no Person other than a Borrower as payee or remittance party. In determining the amount to be so included, the face amount of an Account shall be reduced by, without duplication, to the extent not reflected in such face amount, (i) the amount of all accrued and actual discounts, claims, credits or credits pending, promotional program allowances, price adjustments, finance charges or other allowances (including any amount that a Borrower may be obligated to rebate to a customer, a Credit Card Issuer or Credit Card Processor 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 the Loan Parties to reduce the amount of such Credit Card Receivable. Except as otherwise agreed by the Lender, any Credit Card Receivable included within any of the following categories shall not constitute an Eligible Credit Card Receivable: (a) Credit Card Receivable which do not constitute an “Account” (as defined in the UCC); (b) Credit Card Receivables that have been outstanding for more than five (5) Business Days from the date of sale; (c) Credit Card Receivables (i) that are not subject to a perfected first priority security interest in favor of the Lender, or (ii) with respect to which a Borrower does not have good, valid and marketable title thereto, free and clear of any Lien (other than Liens granted to the Lender pursuant to the Security Documents); (d) Credit Card Receivables which are disputed, as to which the Credit Card Issuer or Credit Card Processor has recourse to a Loan Party due to the creditworthiness of the cardholder, or with respect to which a claim, counterclaim, offset or chargeback has been asserted (to the extent of such claim, counterclaim, offset or chargeback); (e) Credit Card Receivables as to which the Credit Card Issuer or Credit Card Processor has the right due to the creditworthiness of the cardholder to require a Loan Party to repurchase the Accounts from such Credit Card Issuer or Credit Card Processor; (f) Credit Card Receivables due from a Credit Card Issuer or Credit Card Processor of the applicable credit card which is the subject of any bankruptcy or insolvency proceedings; (g) Credit Card Receivables which are not a valid, legally enforceable obligation of the applicable Credit Card Issuer or Credit Card Processor with respect thereto; (h) Credit Card Receivables which do not conform to all representations, warranties or other provisions in the Loan Documents relating to Credit Card Receivables; (i) Credit Card Receivables which are evidenced by “chattel paper” or an “instrument” of any kind unless such “chattel paper” or “instrument” is in the possession of the Lender, and to the extent necessary or appropriate, endorsed to the Lender; or -14-
(j) Credit Card Receivables which the Lender determines in its discretion to be uncertain of collection or which do not meet such other reasonable eligibility criteria for Credit Card Receivables as the Lender may determine. (k) “Eligible In-Transit Inventory” means, as of any date of determination thereof, without duplication of other Eligible Inventory, In-Transit Inventory: (l) Which has been shipped from a foreign location for receipt by a Borrower, but which has not yet been delivered to such Borrower, which In-Transit Inventory has been in transit for sixty (60) days or less from the date of shipment of such Inventory; (m) For which the purchase order is in the name of a Borrower and title and risk of loss has passed to such Borrower; (n) For which an Acceptable Document of Title has been issued, and in each case as to which at all times on and after September 15, 2012, the Lender has control (as defined in the UCC) over the documents of title which evidence ownership of the subject Inventory pursuant to a Customs Broker/Carrier Agreement; (o) Which is insured to the reasonable satisfaction of the Lender (including, without limitation, marine cargo insurance); (p) the Foreign Vendor with respect to such In-Transit Inventory is an Approved Foreign Vendor; and (q) Which otherwise would constitute Eligible Inventory; provided, that the Lender may, in its discretion, exclude any particular Inventory from the definition of “Eligible In-Transit Inventory” in the event the Lender determines that such Inventory is subject to any Person’s right of reclamation, repudiation, stoppage in transit or any event has occurred or is reasonably anticipated by the Lender to arise which may otherwise adversely impact the ability of the Lender to realize upon such Inventory. “Eligible Inventory” means, as of the date of determination thereof, without duplication, (i) Eligible In-Transit Inventory, and (ii) items of Inventory of a Borrower that are finished goods, merchantable and readily saleable to the public in the ordinary course of the Borrowers’ business and deemed by the Lender in its Permitted Discretion to be eligible for inclusion in the calculation of the Borrowing Base, in each case that, except as otherwise agreed by the Lender, (A) complies with each of the representations and warranties respecting Inventory made by the Borrowers in the Loan Documents, and (B) is not excluded as ineligible by virtue of one or more of the criteria set forth below. Except as otherwise agreed by the Lender, in its discretion, the following items of Inventory shall not be included in Eligible Inventory: (a) Inventory that is not solely owned by a Borrower or a Borrower does not have good and valid title thereto; (b) Inventory that is leased by or is on consignment to a Borrower or which is consigned by a Borrower to a Person which is not a Loan Party; (c) Inventory (other than Eligible In-Transit Inventory) that is not located in the United States of America (excluding territories or possessions of the United States); -15-
(d) Inventory that is not located at a location that is owned or leased by a Borrower or at a warehouse with respect to which there exists an executed Collateral Access Agreement, except (i) Inventory in transit between such locations or locations which meet the criteria set forth in clause (ii) below, or (ii) to the extent that the Borrowers have furnished the Lender with (A) any UCC financing statements or other documents that the Lender may determine to be necessary to perfect its security interest in such Inventory at such location, and (B) a Collateral Access Agreement executed by the Person owning any such location on terms reasonably acceptable to the Lender; (e) Inventory that is located: (i) in a warehouse or distribution center leased by a Borrower unless the applicable lessor has delivered to the Lender a Collateral Access Agreement, or (ii) at any leased location in a Landlord Lien State unless the applicable lessor has delivered to the Lender a Collateral Access Agreement or the Lender has implemented Reserves for such location; (f) Inventory that is comprised of goods which (i) are damaged, defective, “seconds,” or otherwise unmerchantable, (ii) are to be returned to the vendor, (iii) are obsolete or slow moving, or custom items, work in process, raw materials, or that constitute samples, spare parts, promotional, marketing, labels, bags and other packaging and shipping materials or supplies used or consumed in a Borrower’s business, (iv) are seasonal in nature and which have been packed away for sale in the subsequent season, (v) not in compliance with all standards imposed by any Governmental Authority having regulatory authority over such Inventory, its use or sale, or (vi) are bill and hold goods; (g) Inventory that is not subject to a perfected first priority security interest in favor of the Lender; (h) Inventory that is not insured in compliance with the provisions of Section 5.10 hereof; (i) Inventory that has been sold but not yet delivered or as to which a Borrower has accepted a deposit; (j) Inventory that is subject to any material licensing, patent, royalty, trademark, trade name or copyright agreement with any third party from which any Borrower or any of its Subsidiaries has received notice of a material dispute in respect of any such agreement; or (k) Inventory acquired in a Permitted Acquisition or which is not of the type usually sold in the ordinary course of the Borrowers’ business, unless and until the Lender has completed or received (A) an appraisal of such Inventory from appraisers satisfactory to the Lender and establishes Inventory Reserves (if applicable) therefor, and otherwise agrees that such Inventory shall be deemed Eligible Inventory, and (B) such other due diligence as the Lender may require, all of the results of the foregoing to be reasonably satisfactory to the Lender. “Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems. -16-
“Environmental Liability” means any liability, obligation, damage, loss, claim, action, suit, judgment, order, fine, penalty, fee, expense, or cost, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of any Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal or presence of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment 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” has the meaning set forth in the UCC. “Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination. “ERISA” means the Employee Retirement Income Security Act of 1974. “ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Lead Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code). “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Lead Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Lead Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Lead Borrower or any ERISA Affiliate. “Event of Default” has the meaning specified in Section 8.01. An Event of Default shall be deemed to be continuing unless and until that Event of Default has been duly waived as provided in Section 9.01 hereof. “Excluded Swap Obligation” means, with respect to any Loan Party, any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Loan Party of, or the grant by such Loan Party of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Loan Party’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity -17-
Exchange Act and the regulations thereunder at the time the Guarantee of such Loan Party or the grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal. “Excluded Taxes” means, with respect to the Lender, the L/C Issuer or any other recipient of any payment to be made by or on account of any obligation of the Loan Parties hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located, (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which any Loan Party is located, (c) any U.S. federal, state or local backup withholding tax, and (d) any U.S. federal withholding tax imposed under FATCA. “Executive Order” has the meaning set forth in Section 9.17. “Existing Credit Agreement” has the meaning specified in the introductory paragraph hereto. “Existing Letters of Credit” means those letters of credit identified on Schedule 1.03. “Extraordinary Receipt” means any cash received by or paid to or for the account of any Person not in the ordinary course of business, including tax refunds, pension plan reversions, proceeds of insurance (other than proceeds of business interruption insurance to the extent such proceeds constitute compensation for lost earnings), condemnation awards (and payments in lieu thereof), indemnity payments and any purchase price adjustments. “Facility Guaranty” means any Guarantee made by a Guarantor in favor of the Lender and the other Credit Parties, in form reasonably satisfactory to the Lender, as amended, modified, supplemented, renewed, restated or replaced. “FATCA” means current Section 1471 through 1474 of the Code or any amended version or successor provision that is substantively similar to and, in each case, any regulations promulgated thereunder and any interpretation and other guidance issued in connection therewith. “Factored Receivables” means any Accounts owed by a Loan Party which have been factored or sold by an account debtor of a Loan Party to Wells Fargo or any of its Affiliates pursuant to a factoring arrangement or otherwise. “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided, that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Wells Fargo on such day on such transactions as determined by the Lender. “Fee Letter” means the letter agreement, dated as of July 12, 2012, among the Borrowers and Lender. -18-
“FILO Advance Rate” means, with respect to the applicable period set forth below, the percentage set forth below opposite such period: Period FILO Advance Rate From the Second Amendment Effective 10.00% Date until September 30, 2018 From October 1, 2018 until December 31, 9.75% 2018 From January 1, 2019 until March 31, 9.50% 2019 From April 1, 2019 until June 30, 2019 9.25% From July 1, 2019 until September 30, 9.00% 2019 From October 1, 2019 until December 31, 8.75% 2019 From January 1, 2020 until March 31, 8.50% 2020 From April 1, 2020 until June 30, 2020 8.25% From July 1, 2020 until September 30, 8.00% 2020 From October 1, 2020 until December 31, 7.75% 2020 From January 1, 2021 until March 31, 7.50% 2021 From April 1, 2021 until June 30, 2021 7.25% From July 1, 2021 until September 30, 7.00% 2021 From October 1, 2021 until December 31, 6.75% 2021 From January 1, 2022 until March 31, 6.50% 2022 From April 1, 2022 until June 30, 2022 6.25% From July 1, 2022 until September 30, 6.00% 2022 From October 1, 2022 until December 31, 5.75% 2022 From January 1, 2023 until March 31, 5.50% 2023 From April 1, 2023 until June 30, 2023 5.25% -19-
From July 1, 2023 until the Maturity Date 5.00% “FILO Borrowing Base” means, at any time of calculation, an amount equal to: (a) the face amount of Eligible Credit Card Receivables multiplied by the FILO Advance Rate; plus (b) the Cost of Eligible Inventory, net of Inventory Reserves, multiplied by the product of the FILO Advance Rate multiplied by the Appraised Value of Eligible Inventory (expressed as a percentage of Cost of Eligible Inventory) (provided that in no event shall Eligible In-Transit Inventory be included in the calculation of the Eligible Inventory for purposes of the FILO Borrowing Base). “FILO Commitment” means, the obligation of the Lender to make the FILO Loans to the Borrowers pursuant to Section 2.01(a), in an aggregate principal amount not to exceed $5,000,000. “FILO Loan” has the meaning specified in Section 2.01(a). “FILO Note” means a promissory note made by the Borrowers in favor of the Lender evidencing the FILO Loans made by the Lender, substantially in the form of Exhibit B-2. “FILO Reserve” means the amount, if any, by which the outstanding amount of the FILO Loans exceed the FILO Borrowing Base as the Lender determines in its reasonable discretion. “First Amendment” means that certain First Amendment to Second Amended and Restated Credit Agreement entered into by and among the Borrowers, the Lender and the L/C Issuer dated as of September 8, 2014. “First Amendment Effective Date” means September 8, 2014. “Fiscal Month” means any fiscal month of any Fiscal Year, which month shall generally end on the Saturday nearest to the last day of each calendar month in accordance with the fiscal accounting calendar of the Loan Parties. “Fiscal Quarter” means any fiscal quarter of any Fiscal Year, which quarters shall generally end on the Saturday nearest to the last day of each April, July, October and January of such Fiscal Year in accordance with the fiscal accounting calendar of the Loan Parties. “Fiscal Year” means the fiscal year ended January 28, 2012 and any subsequent period of fifty- two (52) or fifty-three (53) consecutive weeks ending on the Saturday nearest to January 31 of each calendar year. “Foreign Assets Control Regulations” has the meaning set forth in Section 9.17. “Foreign Vendor” means a Person that sells In-Transit Inventory to a Borrower. “Foreign Vendor Agreement” means an agreement between a Foreign Vendor and the Lender in form and substance satisfactory to the Lender and pursuant to which, among other things, the parties shall -20-
agree upon their relative rights with respect to In-Transit Inventory of a Borrower purchased from such Foreign Vendor. “FRB” means the Board of Governors of the Federal Reserve System of the United States. “Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business. “GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and 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, that are applicable to the circumstances as of the date of determination, consistently applied. “Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra- national bodies such as the European Union or the European Central Bank). “Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning. “Guarantor” has the meaning specified in the introductory paragraph hereto and includes each Subsidiary of the Lead Borrower that shall be required to execute and deliver a Facility Guaranty pursuant to Section 6.12. “Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law. “Honor Date” has the meaning specified in Section 2.03(c)(i). -21-
“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP: (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments; (b) the maximum amount of all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments; (c) net obligations of such Person under any Swap Contract; (d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business and, in each case, not past due for more than sixty (60) days after the date on which such trade account payable was created); (e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; (f) All Attributable Indebtedness of such Person; (g) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person (including, without limitation, Disqualified Stock), or any warrant, right or option to acquire such Equity Interest, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and (h) all Guarantees of such Person in respect of any of the foregoing. For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date. “Indemnified Taxes” means Taxes other than Excluded Taxes. “Indemnitee” has the meaning specified in Section 9.04(b). “Information” has the meaning specified in Section 9.07. “Intellectual Property” means all present and future: trade secrets, know-how and other proprietary information; trademarks, trademark applications, internet domain names, service marks, trade dress, trade names, business names, designs, logos, slogans (and all translations, adaptations, derivations and combinations of the foregoing) indicia and other source and/or business identifiers, and all registrations or applications for registrations which have heretofore been or may hereafter be issued thereon throughout the world; copyrights and copyright applications; (including copyrights for computer programs) and all tangible and intangible property embodying the copyrights, unpatented inventions -22-
(whether or not patentable); patents and patent applications; industrial design applications and registered industrial designs; license agreements related to any of the foregoing and income therefrom; books, records, writings, computer tapes or disks, flow diagrams, specification sheets, computer software, source codes, object codes, executable code, data, databases and other physical manifestations, embodiments or incorporations of any of the foregoing; all other intellectual property; and all common law and other rights throughout the world in and to all of the foregoing. “Interest Payment Date” means: (a) as to any LIBO Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided, however, that if any Interest Period for a LIBO Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the first day after the end of each month and the Maturity Date. “Interest Period” means, as to each LIBO Rate Loan, the period commencing on the date such LIBO Rate Loan is disbursed or converted to or continued as a LIBO Rate Loan and ending on the date one, two, three or six months thereafter, as selected by the Lead Borrower in its Committed Loan Notice; provided, that: (a) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day; (b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; (c) no Interest Period shall extend beyond the Maturity Date; and (d) notwithstanding the provisions of clause (iii) no Interest Period shall have a duration of less than one (1) month, and if any Interest Period applicable to a LIBO Borrowing would be for a shorter period, such Interest Period shall not be available hereunder. 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. “Internal Control Event” means a material weakness in, or fraud that involves management or other employees who have a significant role in, the Lead Borrower’s and/or its Subsidiaries’ internal controls over financial reporting, in each case as described in the Securities Laws. “In-Transit Inventory” means Inventory of a Borrower which is in the possession of a common carrier and is in transit from a Foreign Vendor of a Borrower from a location outside of the continental United States to a location of a Borrower that is within the continental United States. “Inventory” has the meaning given that term in the UCC. “Inventory Reserves” means such reserves as may be established from time to time by the Lender in its Permitted Discretion with respect to the determination of the saleability, at retail, of the Eligible Inventory, which reflect factors that affect the market value of the Eligible Inventory to the extent not reflected in Appraised Value or which reflect claims and liabilities that the Lender determines will need to be satisfied in connection with the realization upon the Inventory. -23-
“Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or interest in, another Person, or (c) any Acquisition, or (d) any other investment of money or capital in order to obtain a profitable return. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment. “IRS” means the United States Internal Revenue Service. “ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance). “Issuer Documents” means with respect to any Letter of Credit, the Letter Credit Application, the Standby Letter of Credit Agreement or Commercial Letter of Credit Agreement, as applicable, and any other document, agreement and instrument entered into by the L/C Issuer and a Borrower (or any Subsidiary) or in favor of the L/C Issuer and relating to any such Letter of Credit. “Joinder” means an agreement, in form satisfactory to the Lender, pursuant to which, among other things, a Person becomes a party to, and bound by the terms of, this Agreement and/or the other Loan Documents in the same capacity and to the same extent as either a Borrower or a Guarantor, as the Lender may determine. “Landlord Lien State” means such state(s) in which a landlord’s claim for rent may have priority over the Lien of the Lender in any of the Collateral. “Laws” means each international, foreign, Federal, state and local statute, treaty, rule, guideline, regulation, ordinance, code and administrative or judicial precedent or authority, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and each applicable administrative order, directed duty, license, authorization and permit of, and agreement with, any Governmental Authority, in each case whether or not having the force of law. “L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof. “L/C Issuer” means (a) solely with respect to the Existing Letters of Credit and until such Existing Letters of Credit expire or are returned undrawn, Wells Fargo, and (b) in all other instances, Wells Fargo in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder. The L/C Issuer may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the L/C Issuer and/or for such Affiliate to act as an advising, transferring, confirming and/or nominated bank in connection with the issuance or administration of any such Letter of Credit, in which case the term “L/C Issuer” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate. “L/C Obligations” means, as at any date of determination, the aggregate undrawn amount available to be drawn under all outstanding Letters of Credit. For purposes of computing the amounts available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the -24-
operation of any “rule” under the ISP or any article of UCP 600, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn. “Lead Borrower” has the meaning specified in the introductory paragraph hereto. “Lease” means any agreement, whether written or oral, no matter how styled or structured, pursuant to which a Loan Party is entitled to the use or occupancy of any space in a structure, land, improvements or premises for any period of time. “Lender” has the meaning specified in the introductory paragraph hereto. “Lender’s Office” means, the office or offices of the Lender’s address and as appropriate, account as set forth on Schedule 9.02 or such other address or account as the Lender may from time to time notify the Lead Borrower. “Letter of Credit” means each Standby Letter of Credit and each Commercial Letter of Credit issued hereunder and shall include the Existing Letters of Credit. “Letter of Credit Application” means an application for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer. “Letter of Credit Expiration Date” means the day that is five days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day). “Letter of Credit Fee” has the meaning specified in Section 2.03(h). “Letter of Credit Sublimit” means an amount equal to $12,500,000. The Letter of Credit Sublimit is part of, and not in addition to, the Revolving Commitment. A permanent reduction of the Revolving Commitment shall not require a corresponding pro rata reduction in the Letter of Credit Sublimit; provided, however, that if the Revolving Commitment is reduced to an amount less than the Letter of Credit Sublimit, then the Letter of Credit Sublimit shall be reduced to an amount equal to (or, at Lead Borrower’s option, less than) the Revolving Commitment. “LIBO Borrowing” means a Borrowing comprised of LIBO Rate Loans. “LIBO Rate” means, the rate per annum as published by ICE Benchmark Administration Limited (or any successor page or other commercially available source as the Lender may designate from time to time) as of 11:00 a.m., London time, two Business Days prior to the commencement of the requested Interest Period, for a term, and in an amount, comparable to the Interest Period and the amount of the LIBO Rate Loan requested (whether as an initial LIBO Rate Loan or as a continuation of a LIBO Rate Loan or as a conversion of a Base Rate Loan to a LIBO Rate Loan) by Borrowers in accordance with this Agreement (and, if any such published rate is below zero, then the rate shall be deemed to be zero). Each determination of the LIBO Rate shall be made by the Lender and shall be conclusive in the absence of manifest error. “LIBO Rate Loan” means a Loan that bears interest at a rate based on the Adjusted LIBO Rate. “Lien” means (a) any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale, Capital Lease Obligation, Synthetic Lease Obligation, or other title -25-
retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing) and (b) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities. “Loan” means, individually, a Revolving Loan or a FILO Loan, and collectively, all Revolving Loans and FILO Loans. “Loan Account” has the meaning assigned to such term in Section 2.10(a). “Loan Cap” means, at any time of determination, (i) the lesser of (a) the Revolving Commitment and (b) the Revolving Borrowing Base (without giving effect to the FILO Reserve) plus (ii) the lesser of (a) the FILO Commitment and (b) the FILO Borrowing Base. “Loan Documents” means this Agreement, the First Amendment, the Second Amendment, the Revolving Note, the FILO Note, each Issuer Document, all Borrowing Base Certificates, the Blocked Account Agreements, the DDA Notifications, the Credit Card Notifications, the Security Documents, any Facility Guaranty, the Fee Letter, the Second Amendment Fee Letter and any other instrument or agreement now or hereafter executed and delivered in connection herewith, or in connection with any transaction arising out of any Cash Management Services and Bank Products provided by the Lender or any of its Affiliates, each as amended and in effect from time to time, “Loan Parties” means, collectively, the Borrowers and the Guarantors. “Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, assets, properties, liabilities (actual or contingent), or condition (financial or otherwise) of the Lead Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material impairment of the rights and remedies of the Lender under any Loan Document or a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party. In determining whether any individual event would result in a Material Adverse Effect, notwithstanding that such event in and of itself does not have such effect, a Material Adverse Effect shall be deemed to have occurred if the cumulative effect of such event and all other then existing events would result in a Material Adverse Effect. “Material Contract” means, with respect to any Loan Party, each contract or agreement to which such Loan Party is a party (a) that is deemed to be a material contract or material definitive agreement under any Securities Laws applicable to such Loan Party, or (b) under which the Loan Parties receive a material portion of their revenue in the ordinary course of business. “Material Indebtedness” means Indebtedness (other than the Obligations) of the Loan Parties in an aggregate principal amount exceeding $5,000,000. For purposes of determining the amount of Material Indebtedness at any time, (a) the amount of the obligations in respect of any Swap Contract at such time shall be calculated at the Swap Termination Value thereof, (b) undrawn committed or available amounts shall be included, and (c) all amounts owing to all creditors under any combined or syndicated credit arrangement shall be included. “Maturity Date” means August 3, 2023. “Maximum Rate” has the meaning provided therefor in Section 9.09. -26-
“Measurement Period” means, at any date of determination, the most recently completed twelve (12) Fiscal Months of the Lead Borrower. “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto. “Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Lead Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions. “Net Proceeds” means (a) with respect to any Disposition by any Loan Party or any of its Subsidiaries, or any Extraordinary Receipt received or paid to the account of any Loan Party or any of its Subsidiaries, the excess, if any, of (i) the sum of cash and cash equivalents received in connection with such transaction (including any cash or cash equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) over (ii) the sum of (A) the principal amount of any Indebtedness that is secured by a Lien permitted hereunder on the applicable asset which is senior to the Lender’s Lien on such asset and that is required to be repaid (or to establish an escrow for the future repayment thereof) in connection with such transaction (other than Indebtedness under the Loan Documents), and (B) the reasonable and customary out-of-pocket expenses incurred by such Loan Party or such Subsidiary in connection with such transaction (including, without limitation, appraisals, and brokerage, legal, title and recording or transfer tax expenses, other taxes paid in cash in connection with the consummation of such transaction, and commissions) paid by any Loan Party to third parties (other than Affiliates); and (b) with respect to the sale or issuance of any Equity Interest by any Loan Party or any of its Subsidiaries, or the incurrence or issuance of any Indebtedness by any Loan Party or any of its Subsidiaries, the excess of (i) the sum of the cash and cash equivalents received in connection with such transaction over (ii) the underwriting discounts and commissions, and other reasonable and customary out-of-pocket expenses, incurred by such Loan Party or such Subsidiary in connection therewith. “Non-Extension Notice Date” has the meaning specified in Section 2.03(b)(iii). “Note” means (a) the Revolving Note, and (b) the FILO Note, as each may be amended, restated, supplemented or modified from time to time. “NPL” means the National Priorities List under CERCLA. “Obligations” means (a) all advances to, and debts (including principal, interest, fees, costs, and expenses), liabilities, obligations, covenants, indemnities, and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit (including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral therefor), whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest, fees, costs, expenses and indemnities that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest, fees, costs, expenses and indemnities are allowed claims in such proceeding, and (b) any Other Liabilities; provided that the Obligations shall not include any Excluded Swap Obligations. “OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury. -27-
“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity. “Other Liabilities” means (a) any obligation on account of (i) any Cash Management Services furnished to any of the Loan Parties or any of their Subsidiaries and/or (ii) any transaction with the Lender or any of its Affiliates that arises out of any Bank Product entered into with any Loan Party and any such Person, as each may be amended from time to time. “Other Taxes” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document. “Outstanding Amount” means (i) with respect to Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Loans occurring on such date; and (ii) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date. “Overadvance” means a Credit Extension to the extent that, immediately after its having been made, Availability is less than zero. “Participant” has the meaning specified in Section 9.06(b). “Payment Conditions” means, at the time of determination with respect to any specified transaction or payment, that (a) no Default or Event of Default then exists or would arise as a result of entering into such transaction or the making of such payment, and (b) immediately after giving effect to such transaction or payment, either (x) (i) the Pro Forma Availability Condition has been satisfied, (ii) the Trailing Twelve Month Availability Condition has been satisfied, (iii) Availability as of the date of such transaction or payment will be greater than thirty percent (30%) of the Revolving Loan Cap, and (iv) the Consolidated Fixed Charge Coverage Ratio for the twelve (12) months immediately preceding the date of such transaction or payment for which the Lender has received financial statements shall be equal to or greater than 1.10:1.00 after giving pro forma effect to such transaction or payment as if such transaction had been entered into or such payment had been made as of the first day of such twelve-month period, or (y) (i) Pro Forma Excess Availability following, and after giving effect to, such transaction or payment, will be greater than fifty percent (50%) of the Revolving Loan Cap, (ii) Trailing Twelve Month Excess Availability following, and after giving effect to, such transaction or payment, will be greater than fifty percent (50%) of the Revolving Loan Cap, and (iii) Availability as of the date of such transaction or payment will be greater than fifty percent (50%) of the Revolving Loan Cap. Prior to undertaking any transaction or payment which is subject to the Payment Conditions, the Loan Parties shall deliver to the Lender evidence of satisfaction of the conditions contained in clause (b) above on a basis (including, without limitation, giving due consideration to results for prior periods) reasonably satisfactory to the Lender. -28-
“PBGC” means the Pension Benefit Guaranty Corporation. “PCAOB” means the Public Company Accounting Oversight Board. “Pension Plan” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Lead Borrower or any ERISA Affiliate or to which the Lead Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years. “Permitted Acquisition” means an Acquisition in which all of the following conditions are satisfied: (a) No Default or Event of Default then exists or would arise from the consummation of such Acquisition; (b) Such Acquisition shall have been approved by the Board of Directors of the Person (or similar governing body if such Person is not a corporation) which is the subject of such Acquisition and such Person shall not have announced that it will oppose such Acquisition or shall not have commenced any action which alleges that such Acquisition shall violate applicable Law; (c) The Lead Borrower shall have furnished the Lender with ten (10) days’ prior written notice of such intended Acquisition and shall have furnished the Lender with a current draft of the acquisition documents (and final copies thereof as and when executed), a summary of any due diligence undertaken by the Loan Parties in connection with such Acquisition, appropriate financial statements of the Person which is the subject of such Acquisition, pro forma projected financial statements for the twelve (12) month period following such Acquisition after giving effect to such Acquisition (including balance sheets, cash flows and income statements by month for the acquired Person, individually, and on a Consolidated basis with all Loan Parties), and such other information as the Lender may reasonably require, all of which shall be reasonably satisfactory to the Lender; (d) Either (i) the legal structure of the Acquisition shall be acceptable to the Lender in its discretion, or (ii) the Loan Parties shall have provided the Lender with a favorable solvency opinion from an unaffiliated third party valuation firm reasonably satisfactory to the Lender; (e) After giving effect to the Acquisition, if the Acquisition is an Acquisition of the Equity Interests, a Loan Party shall acquire and own, directly or indirectly, a majority of the Equity Interests in the Person being acquired and shall Control a majority of any voting interests or shall otherwise Control the governance of the Person being acquired; (f) Any assets acquired shall be utilized in, and if the Acquisition involves a merger, consolidation or Acquisition of Equity Interests, the Person which is the subject of such Acquisition shall be engaged in, a business otherwise permitted to be engaged in by a Borrower under this Agreement; (g) If the Person which is the subject of such Acquisition will be maintained as a Subsidiary of a Loan Party, or if the assets acquired in an acquisition will be transferred to a Subsidiary which is not then a Loan Party, such Subsidiary shall have been joined as a -29-
“Borrower” hereunder or as a Guarantor, as the Lender shall determine, and the Lender shall have received a first priority security interest in such Subsidiary’s Equity Interests, Inventory, Accounts, and other personal property of the same nature as constitutes collateral under the Security Documents; (h) [Reserved]; and (i) The Loan Parties shall have satisfied the Payment Conditions. “Permitted Discretion” means a determination made in good faith and in the exercise of reasonable (from the perspective of a secured, asset-based lender in the retail industry) business or credit judgment. “Permitted Disposition” means any of the following: (a) Dispositions of inventory in the ordinary course of business; (b) bulk sales or other Dispositions of the Inventory of a Loan Party not in the ordinary course of business in connection with Store closings, at arm’s length; provided, that such Store closings and related Inventory Dispositions shall not exceed (i) in any Fiscal Year of the Lead Borrower and its Subsidiaries, ten percent (10%) of the number of the Loan Parties’ Stores as of the beginning of such Fiscal Year (net of new Store openings in such Fiscal Year) and (ii) in the aggregate from and after the Second Amendment Effective Date, twenty-five percent (25%) of the number of the Loan Parties’ Stores in existence as of the Second Amendment Effective Date (net of cumulative new Store openings since the Second Amendment Effective Date); provided, further, that all sales of Inventory in connection with Store closings which exceed, in any Fiscal Year of the Lead Borrower and its Subsidiaries, five percent (5%) of the number of the Loan Parties’ Stores as of the beginning of such Fiscal Year shall be in accordance with liquidation agreements in form and substance reasonably satisfactory to the Lender; provided, however, that the consolidation of Christopher & Banks Stores and CJ Banks Stores into MPW Stores shall be excluded from such limits set forth in the foregoing provisos; provided, further that all Net Proceeds received in connection with Store closings and related sales of Inventory are applied to the Obligations if then required in accordance with Section 2.04 hereof; (c) non-exclusive licenses of Intellectual Property of a Loan Party or any of its Subsidiaries in the ordinary course of business; (d) licenses for the conduct of licensed departments within the Loan Parties’ Stores in the ordinary course of business; provided, that, if requested by the Lender, the Lender shall have entered into an intercreditor agreement with the Person operating such licensed department on terms and conditions reasonably satisfactory to the Lender; (e) Dispositions of Equipment in the ordinary course of business that is substantially worn, damaged, obsolete or, in the judgment of a Loan Party, no longer useful or necessary in its business or that of any Subsidiary and is replaced with similar property having at least equivalent value; (f) sales, transfers and Dispositions among the Loan Parties or by any Subsidiary to a Loan Party; -30-
(g) sales, transfers and Dispositions by any Subsidiary which is not a Loan Party to another Subsidiary that is not a Loan Party; and (h) as long as no Default or Event of Default then exists or would arise therefrom, sales of Real Estate of any Loan Party (or sales of any Person or Persons created to hold such Real Estate or the Equity Interests in such Person or Persons), including sale-leaseback transactions involving any such Real Estate pursuant to leases on market terms, as long as, (A) such sale is made for fair market value, (B) the proceeds of such sale are utilized to repay the Obligations, and (C) in the case of any sale-leaseback transaction permitted hereunder, the Lender shall have received from each such purchaser or transferee a Collateral Access Agreement on terms and conditions reasonably satisfactory to the Lender. “Permitted Encumbrances” means: (a) Liens imposed by law for Taxes that are not yet due or are being contested in compliance with Section 6.04; (b) Carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by applicable Law, arising in the ordinary course of business and securing obligations that are not overdue or are being contested in compliance with Section 6.04; (c) Pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations, other than any Lien imposed by ERISA; (d) Deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (e) Liens in respect of judgments that would not constitute an Event of Default hereunder; (f) Easements, covenants, conditions, restrictions, building code laws, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or materially interfere with the ordinary conduct of business of a Loan Party and such other minor title defects or survey matters that are disclosed by current surveys that, in each case, do not materially interfere with the current use of the real property; (g) Liens existing on the Second Amendment Effective Date and listed on Schedule 7.01 and any Permitted Refinancings thereof; (h) Liens on fixed or capital assets acquired by any Loan Party which are permitted under clause (c) of the definition of Permitted Indebtedness so long as (i) such Liens and the Indebtedness secured thereby are incurred prior to or within ninety (90) days after such acquisition, (ii) the Indebtedness secured thereby does not exceed the cost of acquisition of such fixed or capital assets and (iii) such Liens shall not extend to any other property or assets of the Loan Parties; (i) Liens in favor of the Lender; -31-
(j) Statutory Liens of landlords and lessors in respect of rent not in default; (k) Possessory Liens in favor of brokers and dealers arising in connection with the acquisition or disposition of Investments owned as of the Second Amendment Effective Date and Permitted Investments, provided that such liens (a) attach only to such Investments and (b) secure only obligations incurred in the ordinary course and arising in connection with the acquisition or disposition of such Investments and not any obligation in connection with margin financing; (l) Liens arising solely by virtue of any statutory or common law provisions relating to banker’s liens, liens in favor of securities intermediaries, rights of setoff or similar rights and remedies as to deposit accounts or securities accounts or other funds maintained with depository institutions or securities intermediaries; (m) Liens arising from precautionary UCC filings regarding “true” operating leases or, to the extent permitted under the Loan Documents, the consignment of goods to a Loan Party; (n) voluntary Liens on property (other than property of the type included in the Borrowing Base) in existence at the time such property is acquired pursuant to a Permitted Acquisition or on such property of a Subsidiary of a Loan Party in existence at the time such Subsidiary is acquired pursuant to a Permitted Acquisition; provided, that such Liens are not incurred in connection with or in anticipation of such Permitted Acquisition and do not attach to any other assets of any Loan Party or any Subsidiary; and (o) Liens in favor of customs and revenues authorities imposed by applicable Law arising in the ordinary course of business in connection with the importation of goods and securing obligations that are being contested in good faith by appropriate proceedings, (B) the applicable Loan Party or Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (C) such contest effectively suspends collection of the contested obligation and enforcement of any Lien securing such obligation. “Permitted Indebtedness” means each of the following as long as no Default or Event of Default exists or would arise from the incurrence thereof: (a) Indebtedness outstanding on the Second Amendment Effective Date and listed on Schedule 7.03 and any Permitted Refinancing thereof; (b) Indebtedness of any Loan Party to any other Loan Party; (c) Purchase money Indebtedness of any Loan Party to finance the acquisition of any personal property consisting solely of fixed or capital assets, including Capital Lease Obligations, and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and Permitted Refinancings thereof; provided, however, that the aggregate principal amount of Indebtedness permitted by this clause (c) shall not exceed $5,000,000 at any time outstanding; provided, further, that, if requested by the Lender, the Loan Parties shall cause the holders of such Indebtedness secured by Real Estate or other personal property material to the operation of the Business to enter into a Collateral Access Agreement on terms reasonably satisfactory to the Lender; (d) obligations (contingent or otherwise) of any Loan Party or any Subsidiary thereof existing or arising under any Swap Contract, provided that such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks -32-
associated with fluctuations in interest rates or foreign exchange rates, and not for purposes of speculation or taking a “market view;” provided, that the aggregate Swap Termination Value thereof shall not exceed $2,000,000 at any time outstanding; (e) Contingent liabilities under surety bonds or similar instruments incurred in the ordinary course of business in connection with the construction or improvement of Stores or other Real Estate; (f) Indebtedness incurred for the construction or acquisition or improvement of, or to finance or to refinance, any Real Estate owned by any Loan Party (including therein any Indebtedness incurred in connection with sale-leaseback transactions permitted hereunder and any Synthetic Lease Obligations), provided that, the Loan Parties shall cause the holders of such Indebtedness and the lessors under any sale-leaseback transaction to enter into a Collateral Access Agreement on terms reasonably satisfactory to the Lender; (g) Indebtedness with respect to the deferred purchase price for any Permitted Acquisition, provided that such Indebtedness does not require the payment in cash of principal (other than in respect of working capital adjustments) prior to the Maturity Date, has a maturity which extends beyond the Maturity Date, and is subordinated to the Obligations on terms reasonably acceptable to the Lender; (h) Indebtedness of any Person that becomes a Subsidiary of a Loan Party in a Permitted Acquisition, which Indebtedness is existing at the time such Person becomes a Subsidiary of a Loan Party (other than Indebtedness incurred solely in contemplation of such Person’s becoming a Subsidiary of a Loan Party); (i) The Obligations; and (j) Unsecured Indebtedness not otherwise specifically described herein in an aggregate principal amount not to exceed $10,000,000 at any time outstanding. “Permitted Investments” means each of the following as long as no Default or Event of Default exists or would arise from the making of such Investment: (a) readily marketable obligations issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof having maturities of not more than 360 days from the date of acquisition thereof; provided, that the full faith and credit of the United States of America is pledged in support thereof; (b) commercial paper issued by any Person organized under the laws of any state of the United States of America and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in each case with maturities of not more than 180 days from the date of acquisition thereof; (c) time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is the Lender or (B) is organized under the laws of the United States of America, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States of America, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (c) of this -33-
definition and (iii) has combined capital and surplus of at least $1,000,000,000, in each case with maturities of not more than 180 days from the date of acquisition thereof; (d) Fully collateralized repurchase agreements with a term of not more than thirty (30) days for securities described in clause (a) above (without regard to the limitation on maturity contained in such clause) and entered into with a financial institution satisfying the criteria described in clause (c) above or with any primary dealer and having a market value at the time that such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such counterparty entity with whom such repurchase agreement has been entered into; (e) Investments, classified in accordance with GAAP as current assets of the Loan Parties, in any money market fund, mutual fund, or other investment companies that are registered under the Investment Company Act of 1940, as amended, which are administered by financial institutions that have the highest rating obtainable from either Moody’s or S&P, and which invest solely in one or more of the types of securities described in clauses (a) through (d) above; (f) Investments existing on the Second Amendment Effective Date, and set forth on Schedule 7.02, but not any increase in the amount thereof or any other modification of the terms thereof; (g) (i) Investments by any Loan Party and its Subsidiaries in their respective Subsidiaries outstanding on the Second Amendment Effective Date, (ii) additional Investments by any Loan Party and its Subsidiaries in Loan Parties (other than the Lead Borrower), (iii) additional Investments by Subsidiaries of the Loan Parties that are not Loan Parties in other Subsidiaries that are not Loan Parties and (iv) so long as no Default or Event of Default has occurred and is continuing or would result from such Investment and the Payment Conditions are satisfied, additional Investments by the Loan Parties in wholly-owned Subsidiaries that are not Loan Parties in an aggregate amount invested after the Second Amendment Effective Date not to exceed $2,000,000; (h) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss; (i) Guarantees constituting Permitted Indebtedness; (j) Investments by any Loan Party in Swap Contracts entered into in the ordinary course of business and for bona fide business (and not speculative) purposes to protect against fluctuations in interest rates in respect of the Obligations; (k) Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business; (l) advances to officers, directors and employees of the Loan Parties and Subsidiaries in the ordinary course of business in an amount not to exceed $250,000 to any individual at any time or in an aggregate amount not to exceed $500,000 at any time outstanding; (m) Investments constituting Permitted Acquisitions; -34-
(n) Capital contributions made by any Loan Party to another Loan Party; (o) Investments in accordance with that certain Christopher & Banks Corporation and Subsidiaries Investment Policy dated December 3, 2014, approved by the Audit Committee and attached hereto as part of Schedule 7.02; and (p) Other Investments not otherwise specifically described herein and not exceeding $1,000,000 in the aggregate at any time outstanding. provided, however, that notwithstanding the foregoing, no such Investments specified in clauses (a) through (e) and clauses (o) and (p) shall be permitted unless (i) either (A) no Loans are then outstanding and, if required hereunder, all Letters of Credit required to be Cash Collateralized, are Cash Collateralized, or (B) the Investment is a temporary Investment pending expiration of an Interest Period for a LIBO Rate Loan, the proceeds of which Investment will be applied to the Obligations after the expiration of such Interest Period, and (ii) such Investments shall be pledged to the Lender as additional collateral for the Obligations pursuant to such agreements as may be reasonably required by the Lender. “Permitted Refinancing” means, with respect to any Person, any Indebtedness issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund (collectively, to “Refinance”), the Indebtedness being Refinanced (or previous refinancings thereof constituting a Permitted Refinancing); provided, that (a) the principal amount (or accreted value, if applicable) of such Permitted Refinancing does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so Refinanced (plus unpaid accrued interest and premiums thereon and underwriting discounts, defeasance costs, fees, commissions and expenses), (b) the weighted average life to maturity of such Permitted Refinancing is greater than or equal to the weighted average life to maturity of the Indebtedness being Refinanced (c) such Permitted Refinancing shall not require any scheduled principal payments due prior to the Maturity Date if the amount of such payments in any Fiscal Year would be greater than the scheduled principal payments due with respect to the Indebtedness so Refinanced during such Fiscal Year, (d) if the Indebtedness being Refinanced is subordinated in right of payment to the Obligations under this Agreement, such Permitted Refinancing shall be subordinated in right of payment to such Obligations on terms at least as favorable to the Credit Parties as those contained in the documentation governing the Indebtedness being Refinanced, (e) no Permitted Refinancing shall have direct or indirect obligors who were not also obligors of the Indebtedness being Refinanced, or greater guarantees or security, than the Indebtedness being Refinanced, (f) such Permitted Refinancing shall be otherwise on terms not materially less favorable to the Credit Parties than those contained in the documentation governing the Indebtedness being Refinanced, including, without limitation, with respect to financial and other covenants and events of default, (g) the interest rate applicable to any such Permitted Refinancing shall not exceed the then applicable market interest rate, and (h) at the time thereof, no Default or Event of Default shall have occurred and be continuing. “Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, limited partnership, Governmental Authority or other entity. “Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by the Lead Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate. “Prepayment Event” means: (a) Any Disposition (including pursuant to a sale and leaseback transaction) of any property or asset of a Loan Party other than to another Loan Party (provided that any Disposition -35-
in an amount less than $2,000,000 prior to the occurrence of a Cash Dominion Event shall not be deemed a Prepayment Event); (b) Any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of (and payments in lieu thereof), any property or asset of a Loan Party in an amount in excess of $2,000,000, unless (i) the proceeds therefrom are required to be paid to the holder of a Lien on such property or asset having priority over the Lien of the Lender or (ii) prior to the occurrence of a Cash Dominion Event, the proceeds therefrom are deposited into a segregated account and utilized for purposes of replacing or repairing the assets in respect of which such proceeds, awards or payments were received within two hundred and seventy (270) days of the occurrence of the damage to or loss of the assets being repaired or replaced; (c) The issuance by a Loan Party of any Equity Interests, other than any such issuance of Equity Interests (i) to a Loan Party, (ii) as consideration for a Permitted Acquisition or (iii) to any employee, director, or consultant (including under any option plan) (provided that the issuance by the Loan Parties of any Equity Interests in an amount less than $2,000,000 prior to the occurrence of a Cash Dominion Event shall not be deemed a Prepayment Event); (d) The incurrence by a Loan Party of any Indebtedness for borrowed money other than Permitted Indebtedness(provided that the incurrence by the Loan Parties of any Indebtedness in an amount less than $2,000,000 prior to the occurrence of a Cash Dominion Event shall not be deemed a Prepayment Event); or (e) The receipt by any Loan Party of any Extraordinary Receipts (provided that any receipt by the Loan Parties of any Extraordinary Receipts in an amount less than $1,000,000 prior to the occurrence of a Cash Dominion Event shall not be deemed a Prepayment Event). “Pro Forma Availability Condition” means, for any date of calculation with respect to any transaction or payment, the Pro Forma Excess Availability following, and after giving effect to, such transaction or payment, will be greater than thirty percent (30%) of the Revolving Loan Cap. “Pro Forma Excess Availability” means, for any date of calculation, after giving pro forma effect to the transaction then to be consummated, the projected Availability at all times during any subsequent projected twelve (12) Fiscal Months. “Qualified ECP Guarantor” means, in respect of any Swap Obligation, any Borrower, any Guarantor or any other guarantor of the Obligations that has total assets exceeding $10,000,000 at the time such Swap Obligation is incurred or such other person as constitutes an “Eligible Contract Participant” (an “ECP”) as that term is defined 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. “Real Estate” means all land, together with the buildings, structures, parking areas, and other improvements thereon, now or hereafter owned by any Loan Party or subject to any Lease, including all easements, rights-of-way, and similar rights relating thereto and all leases, tenancies, and occupancies thereof. “Receipts and Collections” has the meaning specified in Section 6.13(c). -36-
“Registered Public Accounting Firm” has the meaning specified by the Securities Laws and shall be independent of the Lead Borrower and its Subsidiaries as prescribed by the Securities Laws. “Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates. “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty (30) day notice period has been waived. “Request for Credit Extension” means (a) with respect to a Borrowing, conversion or continuation of Loans, a Committed Loan Notice, and (b) with respect to an L/C Credit Extension, a Letter of Credit Application and, if required by the L/C Issuer, a Standby Letter of Credit Agreement or Commercial Letter of Credit Agreement, as applicable. “Reserves” means all Inventory Reserves, Availability Reserves and the FILO Reserve. “Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer, chief accounting officer, or assistant treasurer of a Loan Party or any of the other individuals designated in writing to the Lender by an existing Responsible Officer of a Loan Party as an authorized signatory of any certificate or other document to be delivered hereunder. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party. “Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of any Person or any of its Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on account of any return of capital to such Person’s stockholders, partners or members (or the equivalent of any thereof), or any option, warrant or other right to acquire any such dividend or other distribution or payment. Without limiting the foregoing, “Restricted Payments” with respect to any Person shall also include all payments made by such Person with any proceeds of a dissolution or liquidation of such Person. “Revolving Borrowing Base” means, at any time of calculation, an amount equal to: (a) the face amount of Eligible Credit Card Receivables multiplied by the Credit Card Advance Rate; plus (b) the Cost of Eligible Inventory, net of Inventory Reserves, multiplied by the product of the Appraisal Percentage multiplied by the Appraised Value of Eligible Inventory (expressed as a percentage of Cost of Eligible Inventory) (provided that in no event shall Eligible In-Transit Inventory included in Eligible Inventory included in the Revolving Borrowing Base exceed $7,500,000); minus (c) the FILO Reserve; -37-
minus (d) the then amount of all Availability Reserves. “Revolving Commitment” means the obligation of the Lender to (a) make Revolving Loans to the Borrowers pursuant to Section 2.01(a) and (b) purchase participations in L/C Obligations, in an aggregate principal amount at any one time outstanding not to exceed $50,000,000, as such amount may be adjusted from time to time in accordance with this Agreement. “Revolving Loan” has the meaning set forth in Section 2.01(a). “Revolving Loan Cap” means, at any time of determination, the lesser of (a) the Revolving Commitment and (b) the Revolving Borrowing Base. “Revolving Note” means a promissory note made by the Borrowers in favor of the Lender evidencing the Revolving Loans made by the Lender, substantially in the form of Exhibit B-1. “Sanctioned Entity” means (a) a country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its government, or (d) a Person resident in or determined to be resident in a country, in each case of clauses (a) through (d) that is a target of Sanctions, including a target of any country sanctions program administered and enforced by OFAC. “Sanctioned Person” means, at any time (a) any Person named on the list of Specially Designated Nationals and Blocked Persons maintained by OFAC (“SDN”), OFAC’s consolidated Non-SDN list or any other Sanctions-related list maintained by any Governmental Authority, (b) a Person or legal entity that is a target of Sanctions, (c) any Person operating, organized or resident in a Sanctioned Entity, or (d) any Person directly or indirectly owned or controlled (individually or in the aggregate) by or acting on behalf of any such Person or Persons described in clauses (a) through (c) above. “Sanctions” means individually and collectively, respectively, any and all economic sanctions, trade sanctions, financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes anti- terrorism laws and other sanctions laws, regulations or embargoes, including those imposed, administered or enforced from time to time by: (a) the United States of America, including those administered by OFAC, the U.S. Department of State, the U.S. Department of Commerce, or through any existing or future executive order, (b) the United Nations Security Council, or (c) any other Governmental Authority with jurisdiction over any Credit Party or any Loan Party or any of their respective Subsidiaries or Affiliates. “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto. “Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002. “SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions. “Second Amendment” means that certain Second Amendment to Second Amended and Restated Credit Agreement entered into by and among the Borrowers, the Lender and the L/C Issuer dated as of August 3, 2018. -38-
“Second Amendment Effective Date” means August 3, 2018. “Second Amendment Fee Letter” means the letter agreement, dated as of August 3, 2018, among the Borrowers and Lender. “Securities Laws” means the Securities Act of 1933, the Securities Exchange Act of 1934, Sarbanes-Oxley, and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the PCAOB. “Security Agreement” means the Security Agreement dated as of the Closing Date among the Loan Parties and the Lender, as the same now exists or may hereafter be amended, modified, supplemented, renewed, restated or replaced. “Security Documents” means the Security Agreement, the Blocked Account Agreements, the DDA Notifications, the Credit Card Notifications, and each other security agreement or other instrument or document executed and delivered to the Lender pursuant to this Agreement or any other Loan Document granting a Lien to secure any of the Obligations. “Shareholders’ Equity” means, as of any date of determination, consolidated shareholders’ equity of the Lead Borrower and its Subsidiaries as of that date determined in accordance with GAAP. “Solvent” and “Solvency” means, with respect to any Person on a particular date, that on such date (a) at fair valuation, excluding the impact of intercompany assets and liabilities which are eliminated in consolidation, all of the properties and assets of such Person are greater than the sum of the debts, including contingent liabilities, of such Person, (b) the present fair saleable value of the properties and assets of such Person is not less than the amount that would be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person is able to realize upon its properties and assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (d) such Person does not intend to, and does not believe that it will, incur debts beyond such Person’s ability to pay as such debts mature, and (e) such Person is not engaged in a business or a transaction, and is not about to engage in a business or transaction, for which such Person’s properties and assets would constitute unreasonably small capital after giving due consideration to the prevailing practices in the industry in which such Person is engaged. The amount of all guarantees at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, can reasonably be expected to become an actual or matured liability. “Specified Event of Default” means the occurrence of (a) any Event of Default described in Sections 8.01(f) or (b) the Lender’s exercise of any of its remedies pursuant to Section 8.02 following any other Event of Default. “Spot Rate” has the meaning given to such term in Section 1.07 hereof. “Standby Letter of Credit” means any Letter of Credit that is not a Commercial Letter of Credit and that (a) is used in lieu or in support of performance guaranties or performance, surety or similar bonds (excluding appeal bonds) arising in the ordinary course of business, (b) is used in lieu or in support of stay or appeal bonds, (c) supports the payment of insurance premiums for reasonably necessary casualty insurance carried by any of the Loan Parties, or (d) supports payment or performance for identified purchases or exchanges of products or services in the ordinary course of business. “Standby Letter of Credit Agreement” means the Standby Letter of Credit Agreement relating to the issuance of a Standby Letter of Credit in the form from time to time in use by the L/C Issuer. -39-
“Stated Amount” means at any time the maximum amount for which a Letter of Credit may be honored. “Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the FRB to which the Lender is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. LIBO 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 the Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage. “Store” means any retail store (which may include any owned or leased real property, fixtures, equipment, inventory and other property related thereto) operated, or to be operated, by any Loan Party. “Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the Equity Interests having ordinary voting power for the election of directors or other governing body are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of a Loan Party. “Swap Contract” 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. “Swap Obligation” means any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act. “Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include the Lender or any of its Affiliates). -40-
“Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property (including sale and leaseback transactions), in each case, creating obligations that do not appear on the balance sheet of such Person but which, upon the application of any Debtor Relief Laws to such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment). “Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto. “Termination Date” means the earliest to occur of (i) the Maturity Date, (ii) the date on which the maturity of the Obligations is accelerated (or deemed accelerated) and the Commitments are irrevocably terminated (or deemed terminated) in accordance with Article VIII, or (iii) the termination of the Commitments in accordance with the provisions of Section 2.05(a) hereof. “Total Outstandings” means the aggregate Outstanding Amount of all Loans and all L/C Obligations. “Total Revolving Outstandings” means the aggregate Outstanding Amount of all Revolving Loans and all L/C Obligations. “Trading with the Enemy Act” has the meaning set forth in Section 9.17. “Trailing Twelve Month Availability Condition” means, for any date of calculation with respect to any transaction or payment, the Trailing Twelve Month Excess Availability following, and after giving effect to, such transaction or payment, will be greater than thirty percent (30%) of the Revolving Loan Cap. “Trailing Twelve Month Excess Availability” means, for any date of calculation, after giving pro forma effect to the transaction then to be consummated, the Average Daily Availability for each of the twelve (12) Fiscal Months immediately preceding the date of such transaction or payment for which the Lender has received financial statements. “Type” means, with respect to a Loan, its character as a Base Rate Loan or a LIBO Rate Loan. “UCC” or “Uniform Commercial Code” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided, however, that if a term is defined in Article 9 of the Uniform Commercial Code differently than in another Article thereof, the term shall have the meaning set forth in Article 9; provided, further, that if by reason of mandatory provisions of law, perfection, or the effect of perfection or non-perfection, of a security interest in any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “Uniform Commercial Code” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection or availability of such remedy, as the case may be. “UCP 600” means the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce and in effect as of July 1, 2007 (or such later version thereof as may be in effect at the time of issuance). “UFCA” has the meaning specified in Section 9.20(d). -41-
“UFTA” has the meaning specified in Section 9.20(d). “UVTA” has the meaning specified in Section 9.20(d). “Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year. “United States” and “U.S.” mean the United States of America. “Wells Fargo” means Wells Fargo Bank, National Association and its successors. 1.02 Other Interpretive Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document: (a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. (b) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.” (c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document. (d) Any reference herein or in any other Loan Document to the satisfaction, repayment, or payment in full of the Obligations shall mean the repayment in Dollars in full in cash or immediately available funds (or, in the case of contingent reimbursement obligations with respect to Letters of Credit and Bank Products (other than Swap Contracts) and any other contingent Obligations, providing Cash Collateralization or other collateral as may be requested by the Lender) of all of the Obligations (including the payment of any termination amount then applicable (or which would or could -42-
become applicable as a result of the repayment of the other Obligations) under Swap Contracts) other than (i) unasserted contingent indemnification Obligations, (ii) any Obligations relating to Bank Products (other than Swap Contracts) that, at such time, are allowed by the applicable Bank Product provider to remain outstanding without being required to be repaid or Cash Collateralized or otherwise collateralized as may be requested by the Lender, and (iii) any Obligations relating to Swap Contracts that, at such time, are allowed by the applicable provider of such Swap Contracts to remain outstanding without being required to be repaid. 1.03 Accounting Terms. (a) Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein. (b) Changes in GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and the Lead Borrower shall so request, the Lender and the Lead Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP; provided, that until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Lead Borrower shall provide to the Lender financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. 1.04 Rounding. Any financial ratios required to be maintained by the Borrowers pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number). 1.05 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable). 1.06 Letter of Credit Amounts. Unless otherwise specified, all references herein to the amount of a Letter of Credit at any time shall be deemed to be the Stated Amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms of any Issuer Documents related thereto, provides for one or more automatic increases in the Stated Amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum Stated Amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum Stated Amount is in effect at such time. 1.07 Currency Equivalents Generally. Any amount specified in this Agreement (other than in Article II, and Article IX,) or any of the other Loan Documents to be in Dollars shall also include the equivalent of such amount in any currency other than Dollars, such equivalent amount thereof in the applicable currency to be determined by the Lender at such time on the basis of the Spot Rate (as defined below) for the purchase of such currency with Dollars. For purposes of this Section 1.07, the “Spot Rate” for a currency means the rate determined by the Lender to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through -43-
its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date of such determination; provided, that the Lender may obtain such spot rate from another financial institution designated by the Lender if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency. ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS 2.01 Loans; Reserves. (a) Subject to the terms and conditions set forth herein, (i) the Lender agrees to make loans (each such loan, a “Revolving Loan”) to the Borrowers from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the Revolving Loan Cap and (ii) the Lender agrees to make loans (each such loan, a “FILO Loan”) to the Borrowers from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the FILO Commitment; subject in each case to the following limitations: (i) after giving effect to any Borrowing, the Total Outstandings shall not exceed the Loan Cap, (ii) after giving effect to any Borrowing, the Total Revolving Outstandings shall not exceed the Revolving Loan Cap, (iii) after giving effect to any Borrowing, the aggregate Outstanding Amount of the FILO Loans shall not exceed the FILO Commitment; and (iv) The Outstanding Amount of all L/C Obligations shall not at any time exceed the Letter of Credit Sublimit. Within the limits of the Commitments, and subject to the other terms and conditions hereof, the Borrowers may borrow under this Section 2.01, prepay under Section 2.04, and reborrow under this Section 2.01. Loans may be Base Rate Loans or LIBO Rate Loans, as further provided herein. (b) The Inventory Reserves and Availability Reserves as of July 7, 2018 are set forth in the Borrowing Base Certificate delivered pursuant to Section 4(b) of the Second Amendment. (c) The Lender shall have the right, at any time and from time to time after the Closing Date in its Permitted Discretion to establish, modify or eliminate Reserves. 2.02 Borrowings, Conversions and Continuations of Loans. (a) Loans shall be either Base Rate Loans or LIBO Rate Loans as the Lead Borrower may request subject to and in accordance with this Section 2.02. Subject to the other provisions of this Section 2.02, Borrowings of more than one Type may be incurred at the same time. (b) Each Borrowing, each conversion of Loans from one Type to the other, and each continuation of LIBO Rate Loans shall be made upon the Lead Borrower’s irrevocable notice to the Lender, which may be given by telephone. Each such notice must be received by the Lender not later than 11:00 a.m. (i) two (2) Business Days prior to the requested date of any Borrowing of, conversion to or continuation of LIBO Rate Loans or of any conversion of LIBO Rate Loans to Base Rate Loans, and -44-
(ii) one (1) Business Day prior to the requested date of any Borrowing of Base Rate Loans. Each telephonic notice by the Lead Borrower pursuant to this Section 2.02(b) must be confirmed promptly by delivery to the Lender of a written Committed Loan Notice, appropriately completed and signed by a Responsible Officer of the Lead Borrower. Each Borrowing of, conversion to or continuation of LIBO Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $500,000 in excess thereof. Except as provided in Section 2.03(c), each Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Committed Loan Notice (whether telephonic or written) shall specify (i) whether the Lead Borrower is requesting a Borrowing, a conversion of Loans from one Type to the other, or a continuation of LIBO Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to which existing Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto. If the Lead Borrower fails to specify a Type of Loan in a Committed Loan Notice or if the Lead Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Loans shall be made as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable LIBO Rate Loans. If the Lead Borrower requests a Borrowing of, conversion to, or continuation of LIBO Rate Loans in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one (1) month. (c) Notwithstanding anything to the contrary contained in this Agreement, the Borrowers shall not request, and the Lender shall be under no obligation to fund, any Revolving Loan unless the Borrowers have borrowed the full amount available under the FILO Commitment. If any FILO Loan is prepaid in whole or in part pursuant to Section 2.04, any Loans to the Borrowers thereafter requested shall be FILO Loans until the maximum principal amount of the FILO Loans outstanding equals the FILO Commitment and thereafter shall be Revolving Loans. (d) Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section 4.01), the Lender shall use reasonable efforts to make funds available to the Borrowers by no later than 4:00 p.m. on the day of such requested Borrowing either by (i) crediting the account of the Lead Borrower on the books of Wells Fargo with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Lender by the Lead Borrower. (e) The Lender, without the request of the Lead Borrower, may advance any interest, fee, service charge (including direct wire fees), Credit Party Expenses, or other payment to which any Credit Party is entitled from the Loan Parties pursuant hereto or any other Loan Document and may charge the same to the Loan Account notwithstanding that an Overadvance may result thereby. The Lender shall advise the Lead Borrower of any such advance or charge promptly after the making thereof. Such action on the part of the Lender shall not constitute a waiver of the Lender’s rights and the Borrowers’ obligations under Section 2.04(b). Any amount which is added to the principal balance of the Loan Account as provided in this Section 2.02(e) shall bear interest at the interest rate then and thereafter applicable to Base Rate Loans. (f) Except as otherwise provided herein, a LIBO Rate Loan may be continued or converted only on the last day of an Interest Period for such LIBO Rate Loan. During the existence of a Default or an Event of Default, no Loans may be requested as, converted to or continued as LIBO Rate Loans unless the Lender otherwise consents. (g) The Lender shall promptly notify the Lead Borrower of the interest rate applicable to any Interest Period for LIBO Rate Loans upon determination of such interest rate. At any -45-
time that Base Rate Loans are outstanding, the Lender shall notify the Lead Borrower of any change in the Base Rate promptly following the public announcement of such change. (h) After giving effect to all Borrowings, all conversions of Loans from one Type to the other, and all continuations of Loans as the same Type, there shall not be more than six (6) Interest Periods in effect with respect to LIBO Rate Loans. (i) The Lender and the L/C Issuer shall have no obligation to make any Loan or to provide any Letter of Credit if an Overadvance would result. The Lender may, in its discretion, make Overadvances without the consent of the Borrowers, and the L/C Issuer and the Borrowers and L/C Issuer shall be bound thereby. Any Overadvance shall constitute a Loan. An Overadvance is for the account of the Borrowers and shall constitute a Base Rate Loan and an Obligation and shall be repaid by the Borrowers in accordance with the provisions of Section 2.04(b). The making of any such Overadvance on any one occasion shall not obligate the Lender to make or permit any Overadvance on any other occasion or to permit such Overadvances to remain outstanding. The making by the Lender of an Overadvance shall not modify or abrogate any of the provisions of Section 2.03 regarding the Lender’s obligations to purchase participations with respect to Letter of Credits. 2.03 Letters of Credit. (a) The Letter of Credit Commitment. (i) Subject to the terms and conditions set forth herein, the L/C Issuer agrees, (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit for the account of the Borrowers, and to amend or extend Letters of Credit previously issued by it, in accordance with Section 2.03(b) below, and (2) to honor drawings under the Letters of Credit; provided, that after giving effect to any L/C Credit Extension with respect to any Letter of Credit, (x) the Total Revolving Outstandings shall not exceed the Revolving Loan Cap, and (y) the Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit Sublimit. Each request by the Lead Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by the Borrowers that the L/C Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrowers’ ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrowers may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed. All Existing Letters of Credit shall be deemed to have been issued pursuant hereto, and from and after the Closing Date shall be subject to and governed by the terms and conditions hereof. (ii) No Letter of Credit shall be issued if: (A) subject to Section (b)(iii), the expiry date of such requested Standby Letter of Credit would occur more than twelve (12) months after the date of issuance or last extension, unless the Lender has approved such expiry date; or (B) subject to Section (b)(iii), the expiry date of such requested Commercial Letter of Credit would occur more than one hundred and twenty (120) days after the date of issuance or last extension, unless the Lender has approved such expiry date; or -46-
(C) the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless either such Letter of Credit is Cash Collateralized on or prior to the date of issuance of such Letter of Credit (or such later date as to which the Lender may agree) or the Lender has approved such expiry date. (iii) No Letter of Credit shall be issued without the prior consent of the Lender if: (A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Second Amendment Effective Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Second Amendment Effective Date and which the L/C Issuer in good faith deems material to it; (B) the issuance of such Letter of Credit would violate one or more policies of the L/C Issuer applicable to letters of credit generally; (C) such Letter of Credit is to be denominated in a currency other than Dollars; provided, that if the L/C Issuer, in its discretion, issues a Letter of Credit denominated in a currency other than Dollars, all reimbursements by the Borrowers of the honoring of any drawing under such Letter of Credit shall be paid in Dollars based on the Spot Rate; (D) such Letter of Credit contains any provisions for automatic reinstatement of the Stated Amount after any drawing thereunder. (iv) The L/C Issuer shall not amend any Letter of Credit if (A) the L/C Issuer would not be permitted at such time to issue such Letter of Credit in its amended form under the terms hereof or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit. (b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension Letters of Credit. (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Lead Borrower delivered to the L/C Issuer (with a copy to the Lender) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Lead Borrower. Such Letter of Credit Application must be received by the L/C Issuer and the Lender not later than 11:00 a.m. at least two (2) Business Days (or such other later date and time as the Lender and the L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the Lender and the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text -47-
of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (G) such other matters as the Lender or L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the Lender and the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the Lender or the L/C Issuer may require. Additionally, the Lead Borrower shall furnish to the L/C Issuer and the Lender such other documents and information pertaining to such requested Letter of Credit issuance or amendment, and any Issuer Documents (including, if requested by the L/C Issuer, a Standby Letter of Credit Agreement or Commercial Letter of Credit Agreement, as applicable), as the L/C Issuer or the Lender may require. (ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Lender (by telephone or in writing) that the Lender has received a copy of such Letter of Credit Application from the Lead Borrower and, if not, the L/C Issuer will provide the Lender with a copy thereof. Unless the L/C Issuer has received written notice from Lender or any Loan Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Article IV shall not then be satisfied or unless the L/C Issuer would not be permitted, or would have no obligation, at such time to issue such Letter of Credit under the terms hereof (by reason of the provisions of clause (ii) or (iii) of Section 2.03(a) or otherwise), then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the applicable Borrower or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer’s usual and customary business practices. (iii) If the Lead Borrower so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole and absolute discretion, agree to issue a Standby Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided, that any such Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Standby Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve-month period to be agreed upon at the time such Standby Letter of Credit is issued. Unless otherwise directed by the Lender or the L/C Issuer, the Lead Borrower shall not be required to make a specific request to the Lender or the L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lender shall be deemed to have authorized (but may not require) the L/C Issuer to permit the extension of such Standby Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that the Lender shall instruct the L/C Issuer not to permit any such extension if (A) the L/C Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Standby Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of Section 2.03(a) or otherwise), or (B) the L/C Issuer has received notice (which may be by telephone or in writing) on or before the day that is five (5) Business Days before the Non- Extension Notice Date (1) from the Lender that it has elected not to permit such extension or (2) from the Lender or the Lead Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case directing the L/C Issuer not to permit such extension. (iv) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C -48-
Issuer will also deliver to the Lead Borrower and the Lender a true and complete copy of such Letter of Credit or amendment. (c) Drawings and Reimbursements. (i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the L/C Issuer shall notify the Lead Borrower and the Lender thereof not less than two (2) Business Days prior to the Honor Date (as defined below); provided, however, that any failure to give or delay in giving such notice shall not relieve the Borrowers of their obligation to reimburse the L/C Issuer and the Lender with respect to any such payment. On the date of any payment by the L/C Issuer under a Letter of Credit (each such date, an “Honor Date”), unless (i) the Lead Borrower, in accordance with Section 2.02(b), has requested a Borrowing of LIBO Rate Loans to be disbursed on such date to reimburse such payment by the L/C Issuer, or (ii) on or before such date the Borrowers have deposited with the L/C Issuer cash in an amount sufficient to reimburse such payment by the L/C Issuer and directed the L/C Issuer that such cash is to be used to satisfy such payment, then the Borrowers shall be deemed to have requested a Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the amount of such payment, without regard to the minimum and multiples specified in Section 2.02(b) for the principal amount of Base Rate Loans, and without regard to whether the conditions set forth in Section 4.02 have been met. Any notice given by the L/C Issuer or the Lender pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided, that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice. (ii) The Lender’s obligation to make Loans to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which the Lender may have against the L/C Issuer, any Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default or Event of Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing, and without regard to whether the conditions set forth in Section 4.02 have been met. (d) Obligations Absolute. The obligation of the Borrowers to reimburse the L/C Issuer for each drawing under each Letter of Credit shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following (provided that nothing herein shall prevent any Borrower from pursuing any claim it may have against the L/C Issuer as provided in Section 2.03(e)): (i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document; (ii) the existence of any claim, counterclaim, setoff, defense or other right that the Borrowers or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction; (iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any -49-
statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit; (iv) any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; (v) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrowers or any of their Subsidiaries; or (vi) the fact that any Default or Event of Default shall have occurred and be continuing. The Lead Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Lead Borrower’s instructions or other irregularity, the Lead Borrower will immediately notify the Lender and the L/C Issuer. The Borrowers shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid. (e) Role of L/C Issuer. The Lender and the Borrowers agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, the Lender, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable to the Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lender, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; (iii) 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 or any error in interpretation of technical terms; or (iv) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. The Borrowers hereby assume all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Borrowers’ pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuer, the Lender, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 2.03(d) or for any action, neglect or omission under or in connection with any Letter of Credit or Issuer Documents, including, without limitation, the issuance or any amendment of any Letter of Credit, the failure to issue or amend any Letter of Credit, or the honoring or dishonoring of any demand under any Letter of Credit, and such action or neglect or omission will bind the Borrowers; provided, however, that anything in Section 2.03(d) to the contrary notwithstanding, but subject to any applicable rules of the ISP and the UCP 600, the Borrowers may have a claim against the L/C Issuer, and the L/C Issuer may be liable to the Borrowers, to the extent, but only to the extent, of any direct, as opposed to consequential, exemplary or punitive damages suffered by the Borrowers which the Borrowers prove were caused by the L/C Issuer’s willful misconduct or gross -50-
negligence in (A) making payment under any Letter of Credit against presentation of a draft or other document that on its face does not comply with the terms of such Letter of Credit, or (B) failing to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit; provided, further, that any claim against the L/C Issuer by the Borrowers for any loss suffered or incurred by the Borrowers shall be reduced by an amount equal to the sum of (i) the amount (if any) saved by the Borrowers as a result of the breach or other wrongful conduct that allegedly caused such loss, and (ii) the amount (if any) of the loss that would have been avoided had the Borrowers taken all reasonable steps to mitigate such loss, including, without limitation, by enforcing their rights against any beneficiary and, in case of a claim of wrongful dishonor, by specifically and timely authorizing the L/C Issuer to cure such dishonor. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary (or the L/C Issuer may 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), and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. The L/C Issuer shall not be responsible for the wording of any Letter of Credit (including, without limitation, any drawing conditions or any terms or conditions that are ineffective, ambiguous, inconsistent, unduly complicated or reasonably impossible to satisfy), notwithstanding any assistance the L/C Issuer may provide to the Borrowers with drafting or recommending text for any Letter of Credit Application or with the structuring of any transaction related to any Letter of Credit, and the Borrowers hereby acknowledge and agree that any such assistance will not constitute legal or other advice by the L/C Issuer or any representation or warranty by the L/C Issuer that any such wording or such Letter of Credit will be effective. Without limiting the foregoing, the L/C Issuer may, as it deems appropriate, modify or alter and use in any Letter of Credit the terminology contained on the Letter of Credit Application for such Letter of Credit. (f) Cash Collateral. Upon the request of the Lender, (i) if the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Obligation not paid in cash by the Borrowers or by a Loan in accordance with Section 2.03(c)(i), or (ii) if, as of the Letter of Credit Expiration Date, any L/C Obligation for any reason remains outstanding, the Borrowers shall, in each case, immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations. Sections 2.04(b) and 8.02(c) set forth certain additional requirements to deliver Cash Collateral hereunder. For purposes of this Section 2.03, Section 2.04(b) and Section 8.02(c), “Cash Collateralize” means to pledge and deposit with or deliver to the Lender, for its benefit and the benefit of the L/C Issuer and the Lender, as collateral for the L/C Obligations, cash or deposit account balances in an amount equal to 105% of the Outstanding Amount of all L/C Obligations (other than L/C Obligations with respect to Letters of Credit denominated in a currency other than Dollars, which L/C Obligations shall be Cash Collateralized in an amount equal to 115% of the Outstanding Amount of such L/C Obligations), pursuant to documentation in form and substance satisfactory to the Lender and the L/C Issuer. The Borrowers hereby grant to the Lender a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Cash Collateral shall be maintained in a Cash Collateral Account at Wells Fargo. If at any time the Lender determines that any funds held as Cash Collateral are subject to any right or claim of any Person other than the Lender or that the total amount of such funds is less than the aggregate Outstanding Amount of all L/C Obligations, the Borrowers will, forthwith upon demand by the Lender, pay to the Lender, as additional funds to be deposited as Cash Collateral, an amount equal to the excess of (x) such aggregate Outstanding Amount over (y) the total amount of funds, if any, then held as Cash Collateral that the Lender determines to be free and clear of any such right and claim. Upon the drawing of any Letter of Credit for which funds are on deposit as -51-
Cash Collateral, such funds shall be applied, to the extent permitted under applicable Laws, to reimburse the L/C Issuer and, to the extent not so applied, shall thereafter be applied to satisfy other Obligations. (g) Applicability of ISP and UCP 600. Unless otherwise expressly agreed by the L/C Issuer and the Lead Borrower when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), the rules of the UCP 600 shall apply to each Letter of Credit, provided that solely to the extent the rules of the UCP 600 do not address an issue relating to a Standby Letter of Credit, the rules of the ISP shall apply. (h) Letter of Credit Fees. The Borrowers shall pay to the Lender a Letter of Credit fee (the “Letter of Credit Fee”) for each Letter of Credit equal to the Applicable Margin times the daily Stated Amount under each such Letter of Credit (whether or not such maximum amount is then in effect under such Letter of Credit). For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of the Letter of Credit shall be determined in accordance with Section 1.06. Letter of Credit Fees shall be (i) due and payable on the first Business Day after the end of each month commencing with the first such date to occur after the issuance of such Letter of Credit and thereafter on demand, and (ii) computed on a monthly basis in arrears. If there is any change in the Applicable Margin during any quarter, the daily amount available to be drawn under of each Letter of Credit shall be computed and multiplied by the Applicable Margin separately for each period during such quarter that such Applicable Margin was in effect. Notwithstanding anything to the contrary contained herein, while any Event of Default exists, all Letter of Credit Fees shall accrue at the Default Rate as provided in Section 2.07(b) hereof. (i) Documentary and Processing Charges Payable to L/C Issuer. The Borrowers shall pay directly to the L/C Issuer, for its own account, the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable. (j) Conflict with Issuer Documents. In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control. 2.04 Prepayments. (a) The Borrowers may, upon irrevocable notice from the Lead Borrower to the Lender, at any time or from time to time voluntarily prepay Loans in whole or in part without premium or penalty; provided, that (i) such notice must be received by the Lender not later than 11:00 a.m. (A) two (2) Business Days prior to any date of prepayment of LIBO Rate Loans and (B) on the date of prepayment of Base Rate Loans; (ii) any prepayment of LIBO Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $500,000 in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid and, if LIBO Rate Loans, the Interest Period(s) of such Loans. If such notice is given by the Lead Borrower, the Borrowers shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a LIBO Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05. All payments pursuant to this Section 2.04(a) shall first be applied to the Revolving Loans, and upon payment of the Revolving Loans in full, shall be applied next to the FILO Loans. -52-
(b) If for any reason the Total Revolving Outstandings at any time exceed the Revolving Loan Cap as then in effect, the Borrowers shall immediately prepay the Revolving Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to such excess; provided, however, that the Borrowers shall not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.04(b) unless, after the prepayment in full of the Revolving Loans the Total Revolving Outstandings exceed the Revolving Loan Cap as then in effect. If for any reason the Total Outstandings exceed the Loan Cap, the Borrowers shall immediately prepay the Loans in an aggregate amount necessary to eliminate such excess, which amounts shall be applied in the following order: (i) first, the principal amount of the Revolving Loans, (ii) second, if there remains an excess after payments made under clause (i) above, the principal amount of the FILO Loans, and (iii) third, if there remains an excess after the payments made under clauses (i) and (ii) above, to Cash Collateralize the L/C Obligations. (c) If for any reason the aggregate Outstanding Amount of the FILO Loans at any time exceeds the FILO Commitment as then in effect, the Borrowers shall, after making any payments required pursuant to Section 2.04(b), immediately repay the FILO Loans in an aggregate amount equal to such excess. (d) After the occurrence and during the continuance of a Cash Dominion Event, the Borrower shall prepay the Loans and Cash Collateralize the L/C Obligations with proceeds and collections received by the Loan Parties to the extent so required under the provisions of Section 6.13 hereof. (e) The Borrowers shall prepay the Loans in an amount equal to the Net Cash Proceeds received by a Loan Party on account of a Prepayment Event, irrespective of whether a Cash Dominion Event then exists and is continuing, and, if an Event of Default has occurred and is continuing, apply any remaining Net Cash Proceeds to the Cash Collateralization of the L/C Obligations. (f) Prepayments made pursuant to Section 2.04(d) and (e) above, first, shall be applied ratably to the outstanding Revolving Loans, second, shall be applied ratably to the outstanding FILO Loans, third, shall be used to Cash Collateralize the remaining L/C Obligations if an Event of Default has occurred and is continuing, and, fourth, the amount remaining, if any, after the prepayment in full of Loans outstanding at such time and the Cash Collateralization of the remaining L/C Obligations in full may be retained by the Borrowers for use in the ordinary course of its business. Upon the drawing of any Letter of Credit that has been Cash Collateralized, the funds held as Cash Collateral shall be applied (without any further action by or notice to or from the Borrowers or any other Loan Party) to reimburse the L/C Issuer or the Lender, as applicable. 2.05 Termination or Reduction of the Commitment. (a) The Borrowers may, upon irrevocable notice from the Lead Borrower to the Lender, terminate the Revolving Commitment or the Letter of Credit Sublimit or from time to time permanently reduce the Revolving Commitment or the Letter of Credit Sublimit; provided, that (i) any such notice shall be received by the Lender not later than 11:00 a.m. five (5) Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) the Borrowers shall not terminate or reduce (A) the Revolving Commitment if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Revolving Outstandings would exceed the Revolving Commitment and (B) the Letter of Credit Sublimit if, after giving effect thereto, the Outstanding Amount of L/C Obligations not fully Cash Collateralized hereunder would exceed the Letter of Credit Sublimit. -53-
(b) If, after giving effect to any reduction of the Revolving Commitment or the Letter of Credit Sublimit, the Letter of Credit Sublimit exceeds the amount of the Revolving Commitment, such Letter of Credit Sublimit shall be automatically reduced by the amount of such excess. (c) In the event that the Revolving Commitment is terminated or reduced to zero, the FILO Commitment shall automatically be terminated. (d) All fees (including, without limitation, commitment fees and Letter of Credit Fees) and interest in respect of the Revolving Commitment or FILO Commitment, as applicable, accrued until the effective date of any termination of the Commitments shall be paid on the effective date of such termination. 2.06 Repayment of Loans. The Borrower shall repay to the Lender on the Termination Date the aggregate principal amount of Loans outstanding on such date. 2.07 Interest. (a) Subject to the provisions of Section 2.07(b) below, (i) each LIBO Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Adjusted LIBO Rate for such Interest Period plus the Applicable Margin; and (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Margin. (b) (i) If any amount payable under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws. (ii) If any other Event of Default exists, at the option of the Lender all outstanding Obligations shall bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws. (iii) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand. (c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law. 2.08 Fees. In addition to certain fees described in Sections 2.03(h) and 2.03(i): (a) Revolving Commitment Fee. The Borrowers shall pay to the Lender a commitment fee calculated on a per annum basis equal to 0.250% times the actual daily amount by which the Revolving Commitment exceeds the Total Revolving Outstandings during the immediately preceding Fiscal Quarter. The commitment fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be calculated and due and payable quarterly in arrears on the first day after the end of each Fiscal Quarter, commencing with the first such date to occur after the Closing Date, and on the last day of the Availability Period. -54-
(b) FILO Commitment Fee. The Borrowers shall pay to the Lender a commitment fee calculated on a per annum basis equal to 0.250% times the actual daily amount by which the FILO Commitment exceeds the Outstanding Amount of the FILO Loans during the immediately preceding Fiscal Quarter. The commitment fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be calculated and due and payable quarterly in arrears on the first day after the end of each Fiscal Quarter, commencing with the first such date to occur after the Second Amendment Effective Date, and on the last day of the Availability Period. (c) Other Fees. The Borrower shall pay to the Lender the fees set forth in the Fee Letter and the Second Amendment Fee Letter in the amounts and at the times specified in the Fee Letter or Second Amendment Fee Letter, as applicable. Such fees shall be fully earned when paid and shall not be refundable for any reason or under any circumstances whatsoever. 2.09 Computation of Interest and Fees. All computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed. Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.11(a), bear interest for one day. Each determination by the Lender of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error. 2.10 Evidence of Debt. (a) The Credit Extensions made by the Lender shall be evidenced by one or more accounts or records maintained by the Lender (the “Loan Account”) in the ordinary course of business. The accounts or records maintained by the Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lender to the Borrowers and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with respect to the Obligations. Upon the request of the Lender, the Borrowers shall execute and deliver to the Lender a Note, which shall evidence the Lender’s Loans in addition to such accounts or records. The Lender may attach schedules to the Note and endorse thereon the date, Type (if applicable), amount and maturity of the Loans and payments with respect thereto. Upon receipt of an affidavit of the Lender as to the loss, theft, destruction or mutilation of the Lender’s Note and upon cancellation of such Note, the Borrowers will issue, in lieu thereof, a replacement Note in favor of the Lender, in the same principal amount thereof and otherwise of like tenor. (b) Lender shall render monthly statements regarding the Loan Account to the Lead Borrower including principal, interest, fees, and including an itemization of all charges and expenses constituting Credit Party Expenses owing, and such statements, absent manifest error, shall be conclusively presumed to be correct and accurate and constitute an account stated between Borrowers and the Credit Parties unless, within thirty (30) days after receipt thereof by the Lead Borrower, the Lead Borrower shall deliver to Lender written objection thereto describing the error or errors contained in any such statements. 2.11 Payments Generally. (a) General. All payments to be made by the Borrowers shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrowers hereunder shall be made to the Lender, at the Lender’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date -55-
specified herein. All payments received by the Lender after 2:00 p.m., at the option of the Lender, shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by the Borrowers shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be. (b) Presumptions by Lender. Unless the Lender shall have received notice from the Lead Borrower prior to the time at which any payment is due to the Lender or the L/C Issuer hereunder that the Borrowers will not make such payment, the Lender may assume that the Borrowers have made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the L/C Issuer the amount due. In such event, if the Borrowers have not in fact made such payment, then the L/C Issuer agrees to repay to the Lender forthwith on demand the amount so distributed to the L/C Issuer, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Lender, at the greater of the Federal Funds Rate and a rate determined by the Lender in accordance with banking industry rules on interbank compensation. A notice of the Lender to the Lead Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error. (c) Funding Source. Nothing herein shall be deemed to obligate the Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by the Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner. ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY; APPOINTMENT OF LEAD BORROWER 3.01 Taxes. (a) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrowers hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if the Borrowers shall be required by applicable law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Lender or the L/C Issuer, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrowers shall make such deductions and (iii) the Borrowers shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. (b) Payment of Other Taxes by the Borrowers. Without limiting the provisions of subsection (a) above, the Borrowers shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law. (c) Indemnification by the Loan Parties. The Loan Parties shall indemnify the Lender and the L/C Issuer, within fifteen (15) days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Lender or the L/C Issuer, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by -56-
the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Lead Borrower by the Lender or the L/C Issuer, or by the Lender on behalf of the L/C Issuer, shall be conclusive absent manifest error. (d) Evidence of Payments. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrowers to a Governmental Authority pursuant to this Section, the Lead Borrower shall deliver to the Lender 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 Lender. (e) Treatment of Certain Refunds. If the Lender or the L/C Issuer determines, in its Permitted Discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrowers or with respect to which the Borrowers have paid additional amounts pursuant to this Section, it shall pay to the Borrowers an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrowers under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Lender or the L/C Issuer, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrowers, upon the request of the Lender or the L/C Issuer, agree to repay the amount paid over to the Borrowers (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Lender or the L/C Issuer in the event the Lender or the L/C Issuer is required to repay such refund to such Governmental Authority. This subsection shall not be construed to require the Lender or the L/C Issuer to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrowers or any other Person. 3.02 Illegality. If the Lender determines that any Change in Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for the Lender to make, maintain or fund LIBO Rate Loans, or to determine or charge interest rates based upon the LIBO Rate, or any Governmental Authority has imposed material restrictions on the authority of the Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by the Lender to the Lead Borrower, any obligation of the Lender to make or continue LIBO Rate Loans or to convert Base Rate Loans to LIBO Rate Loans shall be suspended until the Lender notifies the Lead Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrowers shall, upon demand from the Lender, prepay or, if applicable, convert all LIBO Rate Loans of the Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if the Lender may lawfully continue to maintain such LIBO Rate Loans to such day, or immediately, if the Lender may not lawfully continue to maintain such LIBO Rate Loans. Upon any such prepayment or conversion, the Borrowers shall also pay accrued interest on the amount so prepaid or converted. 3.03 Inability to Determine Rates. If the Lender determines that for any reason in connection with any request for a LIBO Rate Loan or a conversion to or continuation thereof that (a) Dollar deposits are not being offered to banks in the London interbank market for the applicable amount and Interest Period of such LIBO Rate Loan, (b) adequate and reasonable means do not exist for determining the LIBO Rate for any requested Interest Period with respect to a proposed LIBO Rate Loan, or (c) the LIBO Rate for any requested Interest Period with respect to a proposed LIBO Rate Loan does not adequately and fairly reflect the cost to the Lender of funding such Loan, the Lender will promptly so notify the Lead Borrower. Thereafter, the obligation of the Lender to make or maintain LIBO Rate Loans shall be suspended until the Lender revokes such notice. Upon receipt of such notice, the Lead Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of LIBO Rate Loans or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein. -57-
3.04 Increased Costs; Reserves on LIBO Rate Loans. (a) Increased Costs Generally. If any Change in Law shall: (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, the Lender (except any reserve requirement reflected in the LIBO Rate) or the L/C Issuer; (ii) subject the Lender or the L/C Issuer to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any LIBO Rate Loan made by it, or change the basis of taxation of payments to the Lender or the L/C Issuer in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by the Lender or the L/C Issuer); or (iii) impose on the Lender or the L/C Issuer or the London interbank market any other condition, cost or expense affecting this Agreement or LIBO Rate Loans made by the Lender or any Letter of Credit or participation therein; and the result of any of the foregoing shall be to increase the cost to the Lender of making or maintaining any LIBO Rate Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to the Lender or the L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by the Lender or the L/C Issuer hereunder (whether of principal, interest or any other amount) then, upon request of the Lender or the L/C Issuer, the Borrowers will pay to the Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate the Lender or the L/C Issuer, as the case may be, for such additional costs incurred or reduction suffered. (b) Capital Requirements. If the Lender or the L/C Issuer determines that any Change in Law affecting the Lender or the L/C Issuer or the Lender’s Office or the Lender’s or the L/C Issuer’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on the Lender’s or the L/C Issuer’s capital or on the capital of the Lender’s or the L/C Issuer’s holding company, if any, as a consequence of this Agreement, the Commitment of the Lender or the Loans made by, or participations in Letters of Credit held by, the Lender, or the Letters of Credit issued by the L/C Issuer, to a level below that which the Lender or the L/C Issuer or the Lender’s or the L/C Issuer’s holding company could have achieved but for such Change in Law (taking into consideration the Lender’s or the L/C Issuer’s policies and the policies of the Lender’s or the L/C Issuer’s holding company with respect to capital adequacy), then from time to time the Borrowers will pay to the Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate the Lender or the L/C Issuer or the Lender’s or the L/C Issuer’s holding company for any such reduction suffered. (c) Certificates for Reimbursement. A certificate of the Lender or the L/C Issuer setting forth the amount or amounts necessary to compensate the Lender or the L/C Issuer or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Lead Borrower shall be conclusive absent manifest error. The Borrowers shall pay the Lender or the L/C Issuer, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof. (d) Delay in Requests. Failure or delay on the part of the Lender or the L/C Issuer to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of -58-
the Lender’s or the L/C Issuer’s right to demand such compensation, provided that the Borrowers shall not be required to compensate the Lender or the L/C Issuer pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than six (6) months prior to the date that the Lender or the L/C Issuer, as the case may be, notifies the Lead Borrower of the Change in Law giving rise to such increased costs or reductions and of the Lender’s or the L/C Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof). (e) Reserves on LIBO Rate Loans. The Borrowers shall pay to the Lender, as long as the Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each LIBO Rate Loan equal to the actual costs of such reserves allocated to such Loan by the Lender (as determined by the Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided the Lead Borrower shall have received at least ten (10) days’ prior notice of such additional interest from the Lender. If the Lender fails to give notice ten (10) days prior to the relevant Interest Payment Date, such additional interest shall be due and payable ten (10) days from receipt of such notice. 3.05 Compensation for Losses. Upon demand of the Lender from time to time, the Borrowers shall promptly compensate the Lender for and hold the Lender harmless from any loss, cost or expense incurred by it as a result of: (a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); or (b) any failure by the Borrowers to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Lead Borrower; including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. The Borrowers shall also pay any customary administrative fees charged by the Lender in connection with the foregoing. For purposes of calculating amounts payable by the Borrowers to the Lender under this Section 3.05, Lender shall be deemed to have funded each LIBO Rate Loan made by it at the LIBO Rate for such Loan by a matching deposit or other borrowing in the London interbank market for a comparable amount and for a comparable period, whether or not such LIBO Rate Loan was in fact so funded. 3.06 Mitigation Obligations; Replacement of Lender. If the Lender requests compensation under Section 3.04, or the Borrowers are required to pay any additional amount to the Lender or any Governmental Authority for the account of the Lender pursuant to Section 3.01, or if the Lender gives a notice pursuant to Section 3.02, then the 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 the Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02, as applicable, and (ii) in each case, would not subject the Lender to any unreimbursed cost or expense and would not otherwise -59-
be disadvantageous to the Lender. The Borrowers hereby agree to pay all reasonable costs and expenses incurred by the Lender in connection with any such designation or assignment. 3.07 Survival. All of the Borrowers’ obligations under this Article III shall survive termination of the Commitment and repayment of all Obligations hereunder. 3.08 Designation of Lead Borrower as Borrowers’ Agent. (a) Each Borrower hereby irrevocably designates and appoints the Lead Borrower as such Borrower’s agent to obtain Credit Extensions, the proceeds of which shall be available to each Borrower for such uses as are permitted under this Agreement. As the disclosed principal for its agent, each Borrower shall be obligated to each Credit Party on account of Credit Extensions so made as if made directly by the applicable Credit Party to such Borrower, notwithstanding the manner by which such Credit Extensions are recorded on the books and records of the Lead Borrower and of any other Borrower. In addition, each Loan Party other than the Borrowers hereby irrevocably designates and appoints the Lead Borrower as such Loan Party’s agent to represent such Loan Party in all respects under this Agreement and the other Loan Documents. (b) Each Borrower recognizes that credit available to it hereunder is in excess of and on better terms than it otherwise could obtain on and for its own account and that one of the reasons therefor is its joining in the credit facility contemplated herein with all other Borrowers. Consequently, each Borrower hereby assumes and agrees to discharge all Obligations of each of the other Borrowers. (c) The Lead Borrower shall act as a conduit for each Borrower (including itself, as a “Borrower”) on whose behalf the Lead Borrower has requested a Credit Extension. Neither the Lender nor any other Credit Party shall have any obligation to see to the application of such proceeds therefrom. ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS 4.01 Conditions of Initial Credit Extension. The obligation of the L/C Issuer and the Lender to make its initial Credit Extension hereunder is subject to satisfaction of the following conditions precedent: (a) The Lender’s receipt of the following, each of which shall be originals, facsimiles or other electronic image scan transmission (e.g., “pdf” or “tif” via e-mail) (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party or the Lender, as applicable, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Lender: (i) executed counterparts of this Agreement sufficient in number for distribution to the Lender and the Lead Borrower; (ii) a Note executed by the Borrowers in favor of the Lender; (iii) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Lender may require evidencing (A) the authority of each Loan Party to enter into this Agreement and the other Loan Documents to which such Loan Party is a party or is to become a party and (B) the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible -60-
Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party or is to become a party; (iv) copies of each Loan Party’s Organization Documents and such other documents and certifications as the Lender may reasonably require to evidence that each Loan Party is duly organized or formed, and that each Loan Party is validly existing, in good standing and qualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to so qualify in such jurisdiction could not reasonably be expected to have a Material Adverse Effect; (v) a favorable opinion of Dorsey & Whitney LLP, counsel to the Loan Parties, addressed to the Lender, as to such matters concerning the Loan Parties and the Loan Documents as the Lender may reasonably request; (vi) a certificate signed by a Responsible Officer of the Lead Borrower certifying (A) that the conditions specified in Sections 4.02(a) and 4.02(b) have been satisfied, (B) that there has been no event or circumstance since the date of the Audited Financial Statements that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect, (C) to the Solvency of the Loan Parties as of the Closing Date after giving effect to the transactions contemplated hereby, and (D) either that (1) no consents, licenses or approvals are required in connection with the execution, delivery and performance by such Loan Party and the validity against such Loan Party of the Loan Documents to which it is a party, or (2) that all such consents, licenses and approvals have been obtained and are in full force and effect; (vii) evidence that all insurance required to be maintained pursuant to the Loan Documents and all endorsements in favor of the Lender required under the Loan Documents have been obtained and are in effect; (viii) the Security Agreement, the Blocked Account Agreements, the DDA Notifications, the Credit Card Notifications and certificates evidencing any stock being pledged under any of the foregoing, together with undated stock powers executed in blank, each duly executed by the applicable Loan Parties; (ix) all other Loan Documents required to be executed pursuant to the terms hereof as of such date, each duly executed by the applicable Loan Parties; (x) results of searches or other evidence reasonably satisfactory to the Lender (in each case dated as of a date reasonably satisfactory to the Lender) indicating the absence of Liens on the assets of the Loan Parties, except for Permitted Encumbrances; (xi) (A) all documents and instruments, including Uniform Commercial Code financing statements, required by law or reasonably requested by the Lender to be filed, registered or recorded to create or perfect the first priority Liens intended to be created under the Loan Documents and all such documents and instruments shall have been so filed, registered or recorded to the satisfaction of the Lender, (B) the DDA Notifications, Credit Card Notifications, and Blocked Account Agreements required pursuant to Section 6.13 hereof, (C) control agreements with respect to the Loan Parties’ material securities and investment accounts, and (D) Collateral Access Agreements as required by the Lender (but in no case with respect to any Store); and -61-
(xii) such other assurances, certificates, documents, consents or opinions as the Lender reasonably may require. (b) After giving effect to (i) the first funding under the Loans, (ii) any charges to the Loan Account made in connection with the establishment of the credit facility contemplated hereby and (iii) all Letters of Credit to be issued at, or immediately subsequent to, such establishment, Availability shall be not less than $15,000,000. (c) The Lender shall have received a Borrowing Base Certificate dated the Closing Date, relating to the month ended on May 26, 2012, and executed by a Responsible Officer of the Lead Borrower. (d) The Lender shall be reasonably satisfied that any financial statements delivered to it fairly present the business and financial condition of the Loan Parties and that there has been no Material Adverse Effect since the date of the Audited Financial Statements. (e) The Lender shall have received and be satisfied with (i) a detailed forecast for the Fiscal Year ending February 2, 2013, which shall include an Availability model, Consolidated income statement, balance sheet, and statement of cash flow, by month, each prepared in conformity with GAAP and consistent with the Loan Parties’ then current practices and (b) such other information (financial or otherwise) reasonably requested by the Lender. (f) There shall not be pending any litigation or other proceeding, the result of which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. (g) There shall not have occurred any default of any Material Contract of any Loan Party the result of which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. (h) The consummation of the transactions contemplated hereby shall not violate any applicable Law or any Organization Document. (i) All fees and expenses required to be paid to the Lender on or before the Closing Date shall have been paid in full. (j) The Borrowers shall have paid all fees, charges and disbursements of counsel to the Lender to the extent invoiced prior to or on the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the Closing Date (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrowers and the Lender). (k) The Lender shall have received all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the USA PATRIOT Act. (l) No material changes in governmental regulations or policies affecting any Loan Party or any Credit Party shall have occurred prior to the Closing Date. (m) There shall not have occurred any disruption or material adverse change in the United States financial or capital markets in general that has had, in the reasonable opinion of the Lender, -62-
a material adverse effect on the market for loan syndications or adversely affecting the syndication of the Loans. (n) The Closing Date shall have occurred on or before July 31, 2012. The Lender shall notify the Lead Borrower of the Closing Date, and such notice shall be conclusive and binding on the Loan Parties. 4.02 Conditions to all Credit Extensions. The obligation of the Lender to honor any Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Loans to the other Type, or a continuation of LIBO Rate Loans) and the L/C Issuer to issue each Letter of Credit is subject to the following conditions precedent: (a) The representations and warranties of each Loan Party contained in Article V or in any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects on and as of the date of such Credit Extension, except (i) to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date, (ii) in the case of any representation or warranty qualified by materiality, such representation or warranty shall be true and correct in all respects, (subject to such qualification), (iii) for purposes of this Section 4.02, the representations and warranties contained in subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01, and (iv) for purposes of this Section 4.02, the representations and warranties with respect to any Schedules shall be deemed to refer to the most recently updated Schedules furnished by the Lead Borrower pursuant to Section 6.14(b) and accepted by the Lender in writing; (b) No Default or Event of Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds thereof; (c) The Lender and, if applicable, the L/C Issuer shall have received a Request for Credit Extension in accordance with the requirements hereof; (d) No event or circumstance which could reasonably be expected to result in a Material Adverse Effect shall have occurred since the date of the Audited Financial Statements; and (e) No Overadvance shall result from such Credit Extension: provided, that without limiting the foregoing, the Lender shall have no obligation to honor a Request for Credit Extension on or after the Closing Date, until the Lender shall have received from the Borrowers a written report regarding the results of a commercial finance examination of the Loan Parties, which shall be satisfactory to the Lender, and until the delivery thereof the decision to honor any Request for Credit Extension shall be made in the sole discretion of the Lender or the L/C Issuer, as applicable. Each Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Loans to the other Type or a continuation of LIBO Rate Loans) submitted by the Lead Borrower shall be deemed to be a representation and warranty by the Borrowers that the conditions specified in Sections 4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension. -63-
ARTICLE V REPRESENTATIONS AND WARRANTIES To induce the Credit Parties to enter into this Agreement and to make Loans and to issue Letters of Credit hereunder, each Loan Party represents and warrants to the Credit Parties that: 5.01 Existence, Qualification and Power. Each Loan Party (a) is a corporation, limited liability company, partnership or limited partnership, duly incorporated, organized or formed, validly existing and, where applicable, in good standing under the Laws of the jurisdiction of its incorporation, organization, or formation (b) has all requisite power and authority and all requisite governmental licenses, permits, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, and (c) is duly qualified and is licensed and, where applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect. Schedule 5.01 annexed hereto sets forth, as of the Second Amendment Effective Date, each Loan Party’s name as it appears in official filings in its state of incorporation or organization, its state of incorporation or organization, organization type, organization number, if any, issued by its state of incorporation or organization, and its federal employer identification number. 5.02 Authorization; No Contravention. The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is a party has been duly authorized by all necessary corporate or other organizational action, and does not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach, termination, or contravention of, or constitute a default under, or require any payment to be made under (i) any Material Contract or any Material Indebtedness to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; (c) result in or require the creation of any Lien upon any asset of any Loan Party (other than Liens in favor of the Lender under the Security Documents); or (d) violate any Law. 5.03 Governmental Authorization; Other Consents. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, except for (a) the perfection or maintenance of the Liens created under the Security Documents (including the first priority nature thereof) or (b) such as have been obtained or made and are in full force and effect. 5.04 Binding Effect. This Agreement has been, and each other Loan Document, when delivered, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. 5.05 Financial Statements; No Material Adverse Effect. (a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; -64-
(ii) fairly present the financial condition of the Lead Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all Material Indebtedness and other material liabilities, direct or contingent, of the Lead Borrower and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness, in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein. (b) The unaudited Consolidated and consolidating balance sheet of the Lead Borrower and its Subsidiaries dated April 28, 2012, and the related Consolidated and consolidating statements of income or operations, and cash flows for the Fiscal Quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of the Lead Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments. Schedule 5.05 sets forth all Material Indebtedness. (c) Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect. (d) To the best knowledge of the Lead Borrower, no Internal Control Event exists or has occurred since the date of the Audited Financial Statements that has resulted in or could reasonably be expected to result in a misstatement in any material respect (i) in any financial information delivered or to be delivered to the Lender, (ii) of the Borrowing Base, (iii) of covenant compliance calculations provided hereunder or (iv) of the assets, liabilities, financial condition or results of operations of the Lead Borrower and its Subsidiaries on a Consolidated basis. (e) The Consolidated and consolidating forecasted balance sheet and statements of income and cash flows of the Lead Borrower and its Subsidiaries delivered pursuant to Section 6.01(c) were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair in light of the conditions existing at the time of delivery of such forecasts, and represented, at the time of delivery, the Loan Parties’ best estimate of its future financial performance. 5.06 Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Loan Parties, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against any Loan Party or any of its Subsidiaries or against any of its properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) except as specifically disclosed in Schedule 5.06, either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse Effect, and since the Second Amendment Effective Date, there has been no adverse change in the status, or financial effect on any Loan Party or any Subsidiary thereof, of the matters described on Schedule 5.06. 5.07 No Default. No Loan Party is in default under or with respect to, or party to, any Material Contract or any Material Indebtedness. No Default or Event of Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document. -65-
5.08 Ownership of Property; Liens. (a) Each of the Loan Parties has good record and marketable title in fee simple to or valid leasehold interests in, all Real Estate necessary or used in the ordinary conduct of its business. Each of the Loan Parties has good and marketable title to, valid leasehold interests in, or valid licenses to use all personal property and assets material to the ordinary conduct of its business. (b) Schedule 5.08(b)(1) sets forth the address (including street address, county and state) of all Real Estate that is owned by the Loan Parties, together with a list of the holders of any mortgage or other Lien thereon as of the Second Amendment Effective Date. Each Loan Party has good, marketable and insurable fee simple title to the Real Estate owned by such Loan Party, free and clear of all Liens, other than Permitted Encumbrances. Schedule 5.08(b)(2) sets forth the address (including street address, county and state) of all Leases of the Loan Parties, together with a list of the lessor and its contact information with respect to each such Lease as of the Second Amendment Effective Date. Each of such Leases is in full force and effect and the Loan Parties are not in default of the terms thereof, except as could not reasonably be expected to have a Material Adverse Effect. (c) Schedule 7.01 sets forth a complete and accurate list of all Liens on the property or assets of each Loan Party, other than statutory or common law Liens against or by landlords of the Stores, showing as of the Second Amendment Effective Date the lienholder thereof, the principal amount of the obligations secured thereby and the property or assets of such Loan Party subject thereto. The property of each Loan Party is subject to no Liens, other than Permitted Encumbrances. (d) Schedule 7.02 sets forth a complete and accurate list of all Investments held by any Loan Party on the Second Amendment Effective Date, showing as of the Second Amendment Effective Date the amount, obligor or issuer and maturity, if any, thereof. (e) Schedule 7.03 sets forth a complete and accurate list of all Indebtedness of each Loan Party on the Second Amendment Effective Date, showing as of the Second Amendment Effective Date the amount, obligor or issuer and maturity thereof. 5.09 Environmental Compliance. (a) Except as specifically disclosed in Schedule 5.09, no Loan Party (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) has a Responsible Officer with knowledge of any basis for any Environmental Liability, except, in each case, as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. (b) Except as otherwise set forth in Schedule 5.09, (i) none of the properties currently owned by any Loan Party is listed or proposed for listing on the NPL or on the CERCLIS or any analogous foreign, state or local list or is adjacent to any such property, and (ii) to the knowledge of any Responsible Officer of any Loan Party none of the properties currently operated or formerly owned by any Loan Party is listed or proposed for listing on the NPL or on the CERCLIS or any analogous foreign, state or local list or is adjacent to any such property in connection with any matter for which any Loan Party would have any material liability; there are not and never have been any underground or above- ground storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been treated, stored or disposed by any Loan Party in violation of any Environmental Laws on any property currently owned or operated by any Loan Party or, to the knowledge of any Responsible Officer of any Loan Party, on any property formerly owned by any Loan -66-
Party; there is no friable asbestos or friable asbestos-containing material on any property currently owned or operated by any Loan Party; and Hazardous Materials have not been released, discharged or disposed of by any Loan Party in violation of any Environmental Laws on any property currently owned or operated or formerly owned by any Loan Party. (c) Except as otherwise set forth on Schedule 5,09, no Loan Party is undertaking, and no Loan Party has completed, either individually or together with other potentially responsible parties, any investigation or assessment or remedial or response action relating to any actual or threatened release, discharge or disposal of Hazardous Materials at any site, location or operation, either voluntarily or pursuant to the order of any Governmental Authority or the requirements of any Environmental Law; and all Hazardous Materials generated, used, treated, handled or stored at, or transported to or from, any property currently or formerly owned or operated by any Loan Party have been disposed of in a manner not reasonably expected to result in material liability to any Loan Party. 5.10 Insurance. The properties of the Loan Parties are insured with financially sound and reputable insurance companies which are not Affiliates of the Loan Parties, in such amounts, with such deductibles and covering such risks (including, without limitation, workmen’s compensation, public liability, business interruption and property damage insurance) as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Loan Parties operate. Schedule 5.10 sets forth a description of all insurance maintained by or on behalf of the Loan Parties as of the Second Amendment Effective Date. Each insurance policy listed on Schedule 5.10 is in full force and effect and all premiums in respect thereof that are due and payable have been paid. 5.11 Taxes. The Loan Parties have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings being diligently conducted, for which adequate reserves have been provided in accordance with GAAP, as to which Taxes no Lien has been filed and which contest effectively suspends the collection of the contested obligation and the enforcement of any Lien securing such obligation. There is no proposed tax assessment against any Loan Party that would, if made, have a Material Adverse Effect. No Loan Party is a party to any tax sharing agreement. 5.12 ERISA Compliance. (a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of the Lead Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification. The Loan Parties and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan. No Lien imposed under the Code or ERISA exists or is likely to arise on account of any Plan. (b) There are no pending or, to the best knowledge of the Lead Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect. -67-
(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither any Loan Party nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA, in each case except as could not reasonably be expected to result in a Material Adverse Effect. 5.13 Subsidiaries; Equity Interests. The Loan Parties have no Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13, which Schedule sets forth the legal name, jurisdiction of incorporation or formation and authorized Equity Interests of each such Subsidiary. All of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and non- assessable and are owned by a Loan Party (or a Subsidiary of a Loan Party) in the amounts specified on Part (a) of Schedule 5.13 free and clear of all Liens except for those created under the Security Documents. Except as set forth in Schedule 5.13, there are no outstanding rights to purchase any Equity Interests in any Subsidiary. The Loan Parties have no equity investments in any other corporation or entity other than those specifically disclosed in Part (b) of Schedule 5.13. All of the outstanding Equity Interests in the Loan Parties have been validly issued, and are fully paid and non-assessable and are owned in the amounts specified on Part (c) of Schedule 5.13 free and clear of all Liens except for those created under the Security Documents. The copies of the Organization Documents of each Loan Party and each amendment thereto provided pursuant to Section 4.01 are true and correct copies of each such document, each of which is valid and in full force and effect. 5.14 Margin Regulations; Investment Company Act. (a) No Loan Party is engaged or will be engaged, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock. None of the proceeds of the Credit Extensions shall be used directly or indirectly for the purpose of purchasing or carrying any margin stock, for the purpose of reducing or retiring any Indebtedness that was originally incurred to purchase or carry any margin stock or for any other purpose that might cause any of the Credit Extensions to be considered a “purpose credit” within the meaning of Regulations T, U, or X issued by the FRB. (b) None of the Loan Parties, any Person Controlling any Loan Party, or any Subsidiary is or is required to be registered as an “investment company” under the Investment Company Act of 1940. 5.15 Disclosure. Each Loan Party has disclosed to the Lender all agreements, instruments and corporate or other restrictions to which it is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Loan Party to the Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, that with respect to projected financial information, the -68-
Loan Parties represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time of preparation thereof. 5.16 Compliance with Laws. Each of the Loan Parties is in compliance (a) in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, and (b) with Sections 9.16 and 9.17 hereof. 5.17 Intellectual Property; Licenses, Etc. The Loan Parties own, or possess the right to use, all of the Intellectual Property, licenses, permits and other authorizations that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person. To the knowledge of the Lead Borrower, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by any Loan Party infringes upon any rights held by any other Person. Except as specifically disclosed in Schedule 5.17, no claim or litigation regarding any of the foregoing is pending or, to the best knowledge of the Lead Borrower, threatened, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. 5.18 Labor Matters. There are no strikes, lockouts, slowdowns or other material labor disputes against any Loan Party pending or, to the knowledge of any Loan Party, threatened. The hours worked by and payments made to employees of the Loan Parties comply with the Fair Labor Standards Act and any other applicable federal, state, local or foreign Law dealing with such matters. No Loan Party has incurred any liability or obligation under the Worker Adjustment and Retraining Act or similar state Law. All payments due from any Loan Party, or for which any claim may be made against any Loan Party, on account of wages and employee health and welfare insurance and other benefits, have been paid or properly accrued in accordance with GAAP as a liability on the books of such Loan Party. Except as set forth on Schedule 5.18, no Loan Party is a party to or bound by any collective bargaining agreement. There are no representation proceedings pending or, to any Loan Party’s knowledge, threatened to be filed with the National Labor Relations Board, and no labor organization or group of employees of any Loan Party has made a pending demand for recognition. There are no complaints, unfair labor practice charges, grievances, arbitrations, unfair employment practices charges or any other claims or complaints against any Loan Party pending or, to the knowledge of any Loan Party, threatened to be filed with any Governmental Authority or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment of any employee of any Loan Party. The consummation of the transactions contemplated by the Loan Documents will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which any Loan Party is bound. 5.19 Security Documents. (a) The Security Agreement creates in favor of the Lender, for the benefit of the Secured Parties (as defined in the Security Agreement) referred to therein, a legal, valid, continuing and enforceable security interest in the Collateral (as defined in the Security Agreement), the enforceability of which is subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. The financing statements, releases and other filings are in appropriate form and have been or will be filed in the offices specified in Schedule II of the Security Agreement. Upon such filings and/or the obtaining of “control” (as defined in the UCC), the Lender will have a perfected Lien on, and security interest in, to and under all right, title and interest of the grantors -69-
thereunder in all Collateral that may be perfected by filing, recording or registering a financing statement or analogous document (including without limitation the proceeds of such Collateral subject to the limitations relating to such proceeds in the UCC) or by obtaining control, under the UCC (in effect on the date this representation is made) in each case prior and superior in right to any other Person. (b) When the Security Agreement (or a short form thereof) is filed in the United States Patent and Trademark Office and when financing statements, releases and other filings in appropriate form are filed in the offices specified in Schedule II of the Security Agreement, the Lender shall have a fully perfected Lien on, and security interest in, all right, title and interest of the applicable Loan Parties in the Intellectual Property (as defined in the Security Agreement) in which a security interest may be perfected by filing, recording or registering a security agreement, financing statement or analogous document in the United States Patent and Trademark Office in each case prior and superior in right to any other Person (it being understood that subsequent recordings in the United States Patent and Trademark Office may be necessary to perfect a Lien on registered trademarks and trademark applications acquired by the Loan Parties after the Closing Date). 5.20 Solvency. After giving effect to the transactions contemplated by this Agreement, and before and after giving effect to each Credit Extension, the Loan Parties, on a Consolidated basis, are Solvent. No transfer of property has been or will be made by any Loan Party and no obligation has been or will be incurred by any Loan Party in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of any Loan Party. 5.21 Deposit Accounts; Credit Card Arrangements. (a) Annexed hereto as Schedule 5.21(a) is a list of all DDAs maintained by the Loan Parties as of the Second Amendment Effective Date, which Schedule includes, with respect to each DDA (i) the name and address of the depository; (ii) the account number(s) maintained with such depository; (iii) a contact person at such depository, and (iv) the identification of each Blocked Account Bank. (b) Annexed hereto as Schedule 5.21(b) is a list describing all arrangements as of the Second Amendment Effective Date to which any Loan Party is a party with respect to the processing and/or payment to such Loan Party of the proceeds of any credit card charges and debit card charges for sales made by such Loan Party. 5.22 Brokers. No broker or finder brought about the obtaining, making or closing of the Loans or transactions contemplated by the Loan Documents, and no Loan Party or Affiliate thereof has any obligation to any Person in respect of any finder’s or brokerage fees in connection therewith. 5.23 Customer and Trade Relations. There exists no actual or, to the knowledge of any Loan Party, threatened, termination or cancellation of, or any material adverse modification or change in the business relationship of any Loan Party with any supplier material to its operations. 5.24 Material Contracts. Schedule 5.24 sets forth all Material Contracts to which any Loan Party is a party or is bound as of the Second Amendment Effective Date. The Loan Parties have delivered true, correct and complete copies of such Material Contracts to the Lender on or before the Closing Date or the Second Amendment Effective Date, as applicable. The Loan Parties are not in breach or in default in any material respect of or under any Material Contract and have not received any notice of the intention of any other party thereto to terminate any Material Contract. -70-
5.25 Casualty. Neither the businesses nor the properties of any Loan Party or any of its Subsidiaries are affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. 5.26 OFAC; Sanctions. No Loan Party nor any of its Subsidiaries is in violation of any Sanctions. No Loan Party nor any of its Subsidiaries nor, to the knowledge of such Loan Party, any director, officer, employee, agent or Affiliate of such Loan Party or such Subsidiary (a) is a Sanctioned Person or a Sanctioned Entity, (b) has any assets located in Sanctioned Entities, or (c) to the knowledge of such Loan Party, derives revenues from investments in, or transactions with Sanctioned Persons or Sanctioned Entities. Each of the Loan Parties and its Subsidiaries has implemented and maintains in effect policies and procedures designed to ensure compliance by the Loan Parties and their Subsidiaries and their respective directors, officers, employees, agents and Affiliates with all Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws. Each of the Loan Parties and its Subsidiaries, and to the knowledge of each such Loan Party, each director, officer, employee, agent and Affiliate of each such Loan Party and each such Subsidiary, is in compliance with all applicable Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws in all material respects. No proceeds of any Loan made or Letter of Credit issued hereunder will be used directly, or to the knowledge of any Loan Party, indirectly, to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity, or otherwise used in any manner that would result in a violation of any applicable Sanctions, Anti- Corruption Laws or Anti-Money Laundering Laws by any Person (including any Credit Party or other individual or entity participating in any transaction). 5.27 Beneficial Ownership Certification. As of the Second Amendment Effective Date, the information included in the Beneficial Ownership Certification is true and correct in all respects. ARTICLE VI AFFIRMATIVE COVENANTS So long as the Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied (other than contingent indemnification obligations for which a claim has not been asserted), or any Letter of Credit shall remain outstanding, the Loan Parties shall: 6.01 Financial Statements. Deliver to the Lender, in form and detail satisfactory to the Lender: (a) as soon as available, but in any event within ninety (90) days after the end of each Fiscal Year of the Lead Borrower, a Consolidated and consolidating balance sheet of the Lead Borrower and its Subsidiaries as at the end of such Fiscal Year, and the related consolidated and consolidating statements of income or operations, Shareholders’ Equity and cash flows for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by (i) a report and unqualified opinion of KPMG LLP or another Registered Public Accounting Firm of nationally recognized standing reasonably acceptable to the Lender, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to -71-
the scope of such audit and (ii) an opinion of KPMG LLP or such other Registered Public Accounting Firm independently assessing Loan Parties’ internal controls over financial reporting in accordance with Item 308 of SEC Regulation S-K, PCAOB Auditing Standard No. 2, and Section 404 of Sarbanes-Oxley expressing a conclusion that contains no statement that there is a material weakness in such internal controls, except for such material weaknesses as to which the Lender do not object, and such consolidating statements to be certified by a Responsible Officer of the Lead Borrower to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of the Lead Borrower and its Subsidiaries; (b) as soon as available, but in any event on or before the third Friday (or if such day is not a Business Day, on the next succeeding Business Day) after the end of each of the Fiscal Months of each Fiscal Year of the Lead Borrower, a Consolidated and consolidating balance sheet of the Lead Borrower and its Subsidiaries as at the end of such Fiscal Month, and the related Consolidated and consolidating statements of income or operations, and cash flows for such Fiscal Month, and for the portion of the Lead Borrower’s Fiscal Year then ended, setting forth in each case in comparative form the figures for (A) such period set forth in the budget delivered pursuant to Section 6.01(c) hereof, (B) the corresponding Fiscal Month of the previous Fiscal Year and (C) the corresponding portion of the previous Fiscal Year, all in reasonable detail, such consolidated statements to be certified by a Responsible Officer of the Lead Borrower as fairly presenting the financial condition, results of operations, and cash flows of the Lead Borrower and its Subsidiaries as of the end of such Fiscal Month in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes, and such consolidating statements to be certified by a Responsible Officer of the Lead Borrower to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of the Lead Borrower and its Subsidiaries; (c) as soon as available, but in any event no more than forty-five (45) days after the end of each Fiscal Year of the Lead Borrower, budgets prepared by management of the Lead Borrower and approved by the board of directors of the Lead Borrower, in form satisfactory to the Lender, of consolidated balance sheets and statements of income or operations and cash flows of the Lead Borrower and its Subsidiaries on a monthly basis for the immediately following Fiscal Year (including the Fiscal Year in which the Maturity Date occurs), and as soon as available, any significant revisions to such budget with respect to such Fiscal Year. 6.02 Certificates; Other Information. Deliver to the Lender, in form and detail satisfactory to the Lender: (a) concurrently with the delivery of the financial statements referred to in Section 6.01(a), a certificate of its Registered Public Accounting Firm certifying such financial statements and stating that in making the examination necessary for their certification of such financial statements, such Registered Public Accounting Firm has not obtained any knowledge of the existence of any Default or Event of Default or, if any such Default or Event of Default shall exist, stating the nature and status of such event; (b) concurrently with the delivery of the financial statements referred to in Sections 6.01(a) and 6.01(b), a duly completed Compliance Certificate signed by a Responsible Officer of the Lead Borrower, and in the event of any change in generally accepted accounting principles used in the preparation of such financial statements, the Lead Borrower shall also provide a statement of reconciliation conforming such financial statements to GAAP; (c) on or before the third Friday of each Fiscal Month (or, if such day is not a Business Day, on the next succeeding Business Day), a Borrowing Base Certificate showing the -72-
Borrowing Base as of the close of business as of the last day of the immediately preceding Fiscal Month (provided that the Appraised Value percentage applied to the Eligible Inventory set forth in each Borrowing Base Certificate shall be the percentage set forth in the most recent appraisal obtained by the Lender pursuant to Section 6.10 hereof for the applicable month in which such Borrowing Base Certificate is delivered), each Borrowing Base Certificate to be certified as complete and correct by a Responsible Officer of the Lead Borrower; provided, that at any time that an Accelerated Borrowing Base Delivery Event has occurred and is continuing, at the election of the Lender, such Borrowing Base Certificate shall be delivered on Wednesday of each week (or, if Wednesday is not a Business Day, on the next succeeding Business Day), as of the close of business on the immediately preceding Saturday; provided, further, that should any of the information contained in any Borrowing Base Certificate be incorrect or misleading in any material respect, the Lead Borrower shall advise the Lender in writing of such revisions or updates as may be necessary or appropriate to update or correct the same, in which case such revision or update shall be deemed to the have modified the applicable Borrowing Base Certificate if accepted by the Lender in writing; provided, further, that notwithstanding the foregoing proviso, no such revision or update to any Borrowing Base Certificate shall be deemed the Credit Parties’ waiver of any Default or Event or Default resulting from the matters disclosed therein; (d) promptly upon receipt, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of any Loan Party by its Registered Public Accounting Firm in connection with the accounts or books of the Loan Parties, or any audit of any of them, including, without limitation, specifying any Internal Control Event; (e) promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Lead Borrower, and copies of all annual, regular, periodic and special reports and registration statements which any Loan Party may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934 or with any national securities exchange, and in any case not otherwise required to be delivered to the Lender pursuant hereto; (f) The financial and collateral reports described on Schedule 6.02 hereto, at the times set forth in such Schedule; (g) promptly after the furnishing thereof, copies of any statement or report furnished to any holder of debt securities of any Loan Party or any Subsidiary thereof pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lender pursuant to Section 6.01 or any other clause of this Section 6.02; (h) as soon as available, but in any event within thirty (30) days after the end of each Fiscal Year of the Loan Parties, a report summarizing the insurance coverage (specifying type, amount and carrier) in effect for each Loan Party and its Subsidiaries and containing such additional information as the Lender may reasonably specify; (i) promptly after the Lender’s request therefor, copies of all Material Contracts and documents evidencing Material Indebtedness; (j) promptly, and in any event within five (5) Business Days after receipt thereof by any Loan Party, copies of each notice or other correspondence received from any Governmental Authority (including, without limitation, the SEC (or comparable agency in any applicable non-U.S. jurisdiction)) concerning any proceeding with, or investigation or possible investigation or other inquiry by such Governmental Authority regarding financial or other operational results of any Loan Party or any -73-
other matter which, if adversely determined, could reasonably be expected to have a Material Adverse Effect; (k) promptly, following any request therefor, information and documentation reasonably requested by the Lender for purposes of compliance with applicable “know your customer” requirements under the act, the Beneficial Ownership Regulation or other applicable Anti-Corruption Laws and Anti-Money Laundering Laws; and (l) promptly, such additional information regarding the business affairs, financial condition or operations of any Loan Party, or compliance with the terms of the Loan Documents, as the Lender may from time to time reasonably request. Documents required to be delivered pursuant to Sections 6.01(a) or 6.01(b) or Section 6.02(d) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Lead Borrower posts such documents, or provides a link thereto on the Lead Borrower’s website on the Internet at the website address listed on Schedule 9.02; or (ii) on which such documents are posted on the Lead Borrower’s behalf on an Internet or intranet website, if any, to which the Lender has access (whether a commercial, third-party website or whether sponsored by the Lender); provided, that: (i) the Lead Borrower shall deliver paper copies of such documents to the Lender upon request to deliver such paper copies until a written request to cease delivering paper copies is given by the Lender and (ii) the Lead Borrower shall notify the Lender (by facsimile or electronic mail) of the posting of any such documents and provide to the Lender by electronic mail electronic versions (i.e., soft copies) of such documents. Notwithstanding anything contained herein, in every instance the Lead Borrower shall be required to provide paper copies of the Compliance Certificates required by Section 6.02(b) to the Lender. 6.03 Notices. Promptly notify the Lender: (a) of the occurrence of any Default or Event of Default; (b) of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect; (c) of any breach or non-performance of, or any default under, a Material Contract or with respect to Material Indebtedness of any Loan Party thereof; (d) of any material dispute, litigation, investigation, proceeding or suspension between any Loan Party or any Subsidiary thereof and any Governmental Authority or the commencement of, or any material development in, any litigation or proceeding affecting any Loan Party or any Subsidiary thereof, including pursuant to any applicable Environmental Laws; (e) of the occurrence of any ERISA Event; (f) of any material change in accounting policies or financial reporting practices by any Loan Party; (g) of any change in any Loan Party’s senior executive officers; (h) of the discharge by any Loan Party of its present Registered Public Accounting Firm or any withdrawal or resignation by such Registered Public Accounting Firm; -74-
(i) of any collective bargaining agreement or other labor contract to which a Loan Party becomes a party, or the application for the certification of a collective bargaining agent; (j) of the filing of any Lien for unpaid Taxes against any Loan Party; (k) of any casualty or other insured damage to any material portion of the Collateral or the commencement of any action or proceeding for the taking of any interest in a material portion of the Collateral under power of eminent domain or by condemnation or similar proceeding or if any material portion of the Collateral is damaged or destroyed; (l) of any transaction of the nature contained in Article VII hereof; (m) of any failure by any Loan Party to pay rent at (i) any distribution centers or warehouses; or (ii) ten percent (10%) or more of such Loan Party’s locations or (ii) any of such Loan Party’s locations if such failure continues for more than ten (10) days following the day on which such rent first came due and such failure would be reasonably likely to result in a Material Adverse Effect; and (n) any change in the information provided in the Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified in parts (c) or (d) of such certification. Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of the Lead Borrower setting forth details of the occurrence referred to therein and stating what action the Lead Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached. 6.04 Payment of Obligations. Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, (b) all lawful claims (including, without limitation, claims of landlords, warehousemen, customs brokers, freight forwarders, consolidators and carriers) which, if unpaid, would by law become a Lien upon its property; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness, except, in each case, where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) such Loan Party has set aside on its books adequate reserves with respect thereto in accordance with GAAP, (c) such contest effectively suspends collection of the contested obligation and enforcement of any Lien securing such obligation, (d) no Lien has been filed with respect thereto and (e) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect. Nothing contained herein shall be deemed to limit the rights of the Lender with respect to determining Reserves pursuant to this Agreement. 6.05 Preservation of Existence, Etc. Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization or formation except in a transaction permitted by Section 7.04 or 7.05; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its Intellectual Property, except to the extent such Intellectual Property is no longer used or useful in the conduct of the business of the Loan Parties. 6.06 Maintenance of Properties. Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary -75-
wear and tear excepted; and (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. 6.07 Maintenance of Insurance. (a) Maintain with financially sound and reputable insurance companies reasonably acceptable to the Lender not Affiliates of the Loan Parties, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business and operating in the same or similar locations or as is required by applicable Law, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons and as are reasonably acceptable to the Lender. (b) Cause fire and extended coverage policies maintained with respect to any Collateral to be endorsed or otherwise amended to include (i) a non-contributing mortgage clause (regarding improvements to Real Estate) and lenders’ loss payable clause (regarding personal property), in form and substance satisfactory to the Lender, which endorsements or amendments shall provide that the insurer shall pay all proceeds otherwise payable to the Loan Parties under the policies directly to the Lender, (ii) a provision to the effect that none of the Loan Parties, Credit Parties or any other Person shall be a co-insurer and (iii) such other provisions as the Lender may reasonably require from time to time to protect the interests of the Credit Parties. (c) Cause commercial general liability policies to be endorsed to name the Lender as an additional insured. (d) Cause business interruption policies to name the Lender as a loss payee and to be endorsed or amended to include (i) a provision that, from and after the Closing Date, the insurer shall pay all proceeds otherwise payable to the Loan Parties under the policies directly to the Lender, (ii) a provision to the effect that none of the Loan Parties, the Lender or any other Credit Party shall be a co- insurer and (iii) such other provisions as the Lender may reasonably require from time to time to protect the interests of the Credit Parties. (e) Cause each such policy referred to in this Section 6.07 to also provide that it shall not be canceled, modified or not renewed (i) by reason of nonpayment of premium except upon not less than ten (10) days’ prior written notice thereof by the insurer to the Lender (giving the Lender the right to cure defaults in the payment of premiums) or (ii) for any other reason except upon not less than thirty (30) days’ prior written notice thereof by the insurer to the Lender. (f) Deliver to the Lender, prior to the cancellation, modification or non-renewal of any such policy of insurance, a copy of a renewal or replacement policy (or other evidence of renewal of a policy previously delivered to the Lender, including an insurance binder) together with evidence satisfactory to the Lender of payment of the premium therefor. (g) [Reserved]. (h) Maintain for themselves, a Directors and Officers insurance policy, and a “Blanket Crime” policy including employee dishonesty, forgery or alteration, theft, disappearance and destruction, robbery and safe burglary, property, and computer fraud coverage with responsible companies in such amounts as are customarily carried by business entities engaged in similar businesses similarly situated, and will upon request by the Lender furnish the Lender certificates evidencing renewal of each such policy. -76-
(i) Permit any representatives that are designated by the Lender to inspect the insurance policies maintained by or on behalf of the Loan Parties and to inspect books and records related thereto and any properties covered thereby. (j) None of the Credit Parties, or their agents or employees shall be liable for any loss or damage insured by the insurance policies required to be maintained under this Section 6.07. Each Loan Party shall look solely to its insurance companies or any other parties other than the Credit Parties for the recovery of such loss or damage and such insurance companies shall have no rights of subrogation against any Credit Party or its agents or employees. If, however, the insurance policies do not provide waiver of subrogation rights against such parties, as required above, then the Loan Parties hereby agree, to the extent permitted by law, to waive their right of recovery, if any, against the Credit Parties and their agents and employees. The designation of any form, type or amount of insurance coverage by any Credit Party under this Section 6.07 shall in no event be deemed a representation, warranty or advice by such Credit Party that such insurance is adequate for the purposes of the business of the Loan Parties or the protection of their properties. 6.08 Compliance with Laws. Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been set aside and maintained by the Loan Parties in accordance with GAAP; (b) such contest effectively suspends enforcement of the contested Laws, and (c) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect. 6.09 Books and Records; Accountants. (a) (i) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Loan Parties; and (ii) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over the Loan Parties. (b) At all times retain Deloitte Touche Tohmatsu Limited or another Registered Public Accounting Firm which is reasonably satisfactory to the Lender and shall instruct Deloitte Touche Tohmatsu Limited or such other Registered Public Accounting Firm to cooperate with, and be available to, the Lender or its representatives to discuss the Loan Parties’ financial performance, financial condition, operating results, controls, and such other matters, within the scope of the retention of Deloitte Touche Tohmatsu Limited or such other Registered Public Accounting Firm, as may be raised by the Lender. 6.10 Inspection Rights. (a) Permit representatives and independent contractors of the Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and Registered Public Accounting Firm, and permit the Lender or professionals (including investment bankers, consultants, accountants, and lawyers) retained by the Lender to conduct evaluations of the Loan Parties’ business plan, forecasts and cash flows, all at the expense of the Loan Parties and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Lead Borrower; provided, however, that when a Default or Event of Default exists the Lender (or any of its representatives or independent contractors) may do any of the -77-
foregoing at the expense of the Loan Parties at any time during normal business hours and without advance notice. (b) Upon the request of the Lender after reasonable prior notice, permit the Lender or professionals (including investment bankers, consultants, accountants, and lawyers) retained by the Lender to conduct commercial finance examinations and other evaluations, including, without limitation, of (i) the Lead Borrower’s practices in the computation of the Borrowing Base, and (ii) the assets included in the Borrowing Base and related financial information such as, but not limited to, sales, gross margins, payables, accruals and reserves. During any two (2) successive Fiscal Years in which (i) no Loans are outstanding and (ii) the aggregate balance of cash deposits in Blocked Accounts maintained at Wells Fargo is equal to or greater than $5,000,000, the Loan Parties shall pay the fees and expenses of the Lender and such professionals with respect to one (1) such commercial finance examination undertaken by the Lender during such two Fiscal Years; provided, that the Lender may, in its discretion undertake two (2) commercial finance examinations at the Loan Parties’ expense in any Fiscal Year in which (i) the outstanding principal amount of the Loans is greater than zero or (ii) the aggregate balance of cash deposits in Blocked Accounts maintained at Wells Fargo is less than $5,000,000; provided, further, that the Lender may in its discretion undertake three (3) commercial finance examinations at the Loan Parties’ expense in any Fiscal Year in which Availability is less than thirty percent (30%) of the Revolving Loan Cap. Notwithstanding the foregoing, the Lender may cause additional commercial finance examinations to be undertaken (i) as it in its discretion deems necessary or appropriate, at its own expense or, (ii) if required by Law or if a Default or Event of Default shall have occurred and be continuing, at the expense of the Loan Parties. (c) Upon the request of the Lender after reasonable prior notice, permit the Lender or professionals (including appraisers) retained by the Lender to conduct appraisals of the Collateral, including, without limitation, the assets included in the Borrowing Base. During any Fiscal Year in which no Loans are outstanding, the Loan Parties shall pay the fees and expenses of the Lender and such professionals with respect to one (1) such inventory appraisal undertaken by the Lender during such Fiscal Year; provided, that the Lender may in its discretion undertake two (2) inventory appraisals at the Loan Parties’ expense in any Fiscal Year in which the outstanding principal amount of the Loans is greater than zero; provided, further, that the Lender may in its discretion undertake three (3) inventory appraisals at the Loan Parties’ expense in any Fiscal Year in which Availability is less than thirty percent (30%) of the Revolving Loan Cap. 6.11 Use of Proceeds. Use the proceeds of the Credit Extensions (a) to finance the acquisition of assets of the Borrowers in the ordinary course of business, including the purchase of inventory and equipment, (b) to finance Capital Expenditures of the Borrowers, and (c) for general corporate purposes of the Loan Parties, in each case to the extent not prohibited under applicable Law or the Loan Documents. 6.12 Additional Loan Parties. Notify the Lender at the time that any Person (x) becomes a Subsidiary, and in each case promptly thereafter (and in any event within fifteen (15) days), cause any such Person (a) which is not a CFC, to (i) become a Loan Party by executing and delivering to the Lender a Joinder to this Agreement or a Facility Guaranty or such other documents as the Lender shall deem appropriate for such purpose, (ii) grant a Lien to the Lender on such Person’s assets of the same type that constitute Collateral to secure the Obligations, and (iii) deliver to the Lender documents of the types referred to in clauses (iii) and (iv) of Section 4.01(a) and, upon the reasonable request of the Lender, customary opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to in clause (a)), and (b) if any Equity Interests or Indebtedness of such Person are owned by or on behalf of any Loan Party, to pledge such Equity Interests and promissory notes evidencing such Indebtedness (except that, if such Subsidiary -78-
is a CFC, the Equity Interests of such Subsidiary to be pledged may be limited to 65% of the outstanding voting Equity Interests of such Subsidiary and 100% of the non-voting Equity Interests of such Subsidiary) in each case in form, content and scope reasonably satisfactory to the Lender. In no event shall compliance with this Section 6.12 waive or be deemed a waiver or consent to any transaction giving rise to the need to comply with this Section 6.12 if such transaction was not otherwise expressly permitted by this Agreement or constitute or be deemed to constitute, with respect to any Subsidiary, an approval of such Person as a Borrower or permit the inclusion of any acquired assets in the computation of the Borrowing Base. 6.13 Cash Management. (a) On or prior to the Closing Date: (i) deliver to the Lender copies of notifications (each, a “Credit Card Notification”) substantially in the form attached hereto as Exhibit F which have been executed on behalf of such Loan Party and delivered to such Loan Party’s Credit Card Issuers and Credit Card Processors listed on Schedule 5.21(b); and (ii) enter into a Blocked Account Agreement satisfactory in form and substance to the Lender with each Blocked Account Bank (collectively, the “Blocked Accounts”); and (iii) at the request of the Lender, deliver to the Lender copies of notifications (each, a “DDA Notification”) substantially in the form attached hereto as Exhibit G which have been executed on behalf of such Loan Party and delivered to each depository institution listed on Schedule 5.21(a). (b) From and after the Closing Date, the Loan Parties shall ACH or wire transfer no less frequently than each Business Day (or, in the case of subclause (iii) below, on Monday, Wednesday and Friday of each week (to the extent such Monday, Wednesday or Friday is a Business Day and, if such day is not a Business Day, on the next succeeding Business Day) so long as a Cash Dominion Event has not occurred and is continuing and on each Business Day if a Cash Dominion Event has occurred and is continuing) and whether or not there are then any outstanding Obligations, to a Blocked Account all of the following: (i) all amounts on deposit in each DDA (net of any minimum balance, not to exceed $5,000.00, as may be kept in the subject DDA under the Borrowers’ policies as in effect on the Second Amendment Effective Date); (ii) all payments from Credit Card Processors and Credit Card Issuers and proceeds of all credit card charges; (iii) all cash receipts from the Disposition of Inventory and other assets (whether or not constituting Collateral) (other than cash kept in Stores in the ordinary course of business consistent with the Borrowers’ policies as in effect on the Second Amendment Effective Date; (iv) all proceeds of Accounts; and -79-
(v) all Net Proceeds, and all other cash payments received by a Loan Party from any Person or from any source or on account of any Disposition or other transaction or event, including, without limitation, any Prepayment Event. (c) Each Blocked Account Agreement shall require upon notice from Lender, which notice shall be delivered only after the occurrence and during the continuance of a Cash Dominion Event, the ACH or wire transfer no less frequently than daily (and whether or not there are then any outstanding Obligations) to the concentration account maintained by the Lender at Wells Fargo (the “Concentration Account”), of all cash receipts and collections received by each Loan Party from all sources (the “Receipts and Collections”), including, without limitation, the following: (i) the then entire ledger balance of each Blocked Account (net of any minimum balance, not to exceed $5,000.00, as may be kept in the subject Blocked Account under the Borrowers’ policies as in effect on the Second Amendment Effective Date); (ii) all amounts required to be deposited into the Blocked Accounts pursuant to clause (b) above; and (iii) any other cash amounts received by any Loan Party from any other source, on account of any type of transaction or event; provided, however, the Lender may, in its sole discretion, permit the Loan Parties to have one or more “intermediate” Blocked Account Agreements, whereby such agreements would provide, upon notice from the Lender, which notice shall be delivered only after the occurrence and during the continuance of a Cash Dominion Event, the ACH or wire transfer no less frequently than daily (and whether or not there are then any outstanding Obligations) of all Receipts and Collections to another Blocked Account, as opposed to the Concentration Account. (d) The Concentration Account shall at all times be under the sole dominion and control of the Lender. The Lender shall cause all funds on deposit in the Concentration Account to be applied to the Obligations, which amounts shall be applied to the Obligations in the order proscribed in either Section 2.04(f) or Section 8.03 of this Agreement, as applicable. The Loan Parties hereby acknowledge and agree that (i) the Loan Parties have no right of withdrawal from the Concentration Account, and (ii) the funds on deposit in the Concentration Account shall at all times be collateral security for all of the Obligations. In the event that, notwithstanding the provisions of this Section 6.13, any Loan Party receives or otherwise has dominion and control of any such cash receipts or collections, such receipts and collections shall be held in trust by such Loan Party for the Lender, shall not be commingled with any of such Loan Party’s other funds or deposited in any account of such Loan Party and shall, not later than the Business Day after receipt thereof, be deposited into the Concentration Account or dealt with in such other fashion as such Loan Party may be instructed by the Lender. (e) Upon the request of the Lender, the Loan Parties shall cause bank statements and/or other reports to be delivered to the Lender not less often than monthly, accurately setting forth all amounts deposited in each Blocked Account to ensure the proper transfer of funds as set forth above. (f) If the Lender does not require DDA Notifications to be delivered on the Closing Date in accordance with Section 6.13(a)(iii) above, then the Loan Parties shall, upon the request of the Lender at any time after the Closing Date, deliver to the Lender copies of DDA Notifications, which have been executed on behalf of the applicable Loan Party and delivered to each depository institution listed on Schedule 5.21(a). -80-
6.14 Information Regarding the Collateral. (a) Furnish to the Lender at least thirty (30) days prior written notice of any change in: (i) any Loan Party’s name or in any trade name used to identify it in the conduct of its business or in the ownership of its properties; (ii) the location of any Loan Party’s chief executive office, its principal place of business, any office in which it maintains books or records relating to Collateral owned by it or any office or facility at which Collateral owned by it is located (including the establishment of any such new office or facility), excluding Store locations; (iii) any Loan Party’s organizational structure or jurisdiction of incorporation or formation; or (iv) any Loan Party’s Federal Taxpayer Identification Number or organizational identification number assigned to it by its state of organization. The Loan Parties agree not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the UCC or otherwise that are required in order for the Lender to continue at all times following such change to have a valid, legal and perfected first priority security interest in all the Collateral for its own benefit and the benefit of the other Credit Parties. (b) Should any of the information on any of the Schedules hereto (other than Schedule 5.08(b)(2)) become inaccurate or misleading in any material respect as a result of changes after the Closing Date, the Lead Borrower shall advise the Lender in writing of such revisions or updates as may be necessary or appropriate to update or correct the same. From time to time as may be reasonably requested by the Lender (which request shall not be made (i) more than one (1) time in each Fiscal Quarter with respect to Schedule 5.08(b)(2) and (ii) more than two (2) times in any Fiscal Year with respect to all other Schedules, in each case so long as no Default or Event of Default has occurred and is continuing), the Lead Borrower shall supplement each Schedule hereto, or any representation herein or in any other Loan Document, with respect to any matter arising after the Closing Date that, if existing or occurring on the Closing Date, would have been required to be set forth or described in such Schedule or as an exception to such representation or that is necessary to correct any information in such Schedule or representation which has been rendered inaccurate thereby (and, in the case of any supplements to any Schedule, such Schedule shall be appropriately marked to show the changes made therein). Notwithstanding the foregoing, no supplement or revision to any Schedule or representation shall be deemed the Credit Parties’ consent to the matters reflected in such updated Schedules or revised representations nor permit the Loan Parties to undertake any actions otherwise prohibited hereunder or fail to undertake any action required hereunder from the restrictions and requirements in existence prior to the delivery of such updated Schedules or such revision of a representation; nor shall any such supplement or revision to any Schedule or representation be deemed the Credit Parties’ waiver of any Default or Event of Default resulting from the matters disclosed therein. 6.15 Physical Inventories. (a) Cause not less than one (1) physical inventory to be undertaken, at the expense of the Loan Parties, in each Fiscal Year, and cycle counts, in each case consistent with past practices, conducted by such inventory takers as are satisfactory to the Lender and following such methodology as is consistent with past practices. The Lender, at the expense of the Loan Parties, may participate in and/or observe each scheduled physical count of Inventory which is undertaken on behalf of any Loan Party. The Lead Borrower, within thirty (30) days following the completion of such inventory, shall provide the Lender with a reconciliation of the results of such inventory (as well as of any other physical inventory or cycle counts undertaken by a Loan Party) and shall post such results to the Loan Parties’ stock ledgers and general ledgers, as applicable. (b) Permit the Lender, in its discretion, if any Default or Event of Default exists, to cause additional such inventories to be taken as the Lender determines (each, at the expense of the Loan Parties). -81-
6.16 Environmental Laws. (a) Conduct its operations and keep and maintain its Real Estate in material compliance with all Environmental Laws; (b) obtain and renew all environmental permits necessary for its operations and properties; and (c) implement any and all investigation, remediation, removal and response actions that are required to comply with Environmental Laws pertaining to the presence, generation, treatment, storage, use, disposal, transportation or release of any Hazardous Materials on, at, in, under, above, to, from or about any of its Real Estate, provided, however, that neither a Loan Party nor any of its Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and adequate reserves have been set aside and are being maintained by the Loan Parties with respect to such circumstances in accordance with GAAP. 6.17 Further Assurances. (a) Execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements and other documents), that may be required under any applicable Law, or which the Lender may request, to grant, preserve, protect, perfect or enforce the Liens created or intended to be created by the Security Documents or the validity or priority of any such Lien, all at the expense of the Loan Parties. The Loan Parties also agree to provide to the Lender, from time to time upon request, evidence satisfactory to the Lender as to the perfection and priority of the Liens created or intended to be created by the Security Documents. (b) If any material assets are acquired by any Loan Party after the Closing Date (other than assets constituting Collateral under the Security Documents that become subject to the perfected first-priority Lien (subject to Permitted Encumbrances) under the Security Documents upon acquisition thereof), notify the Lender thereof, and the Loan Parties will cause such assets to be subjected to a Lien securing the Obligations and will take such actions as shall be necessary or shall be requested by the Lender to grant and perfect such Liens, including actions described in paragraph (a) of this Section 6.17, all at the expense of the Loan Parties. In no event shall compliance with this Section 6.17(b) waive or be deemed a waiver or consent to any transaction giving rise to the need to comply with this Section 6.17 if such transaction was not otherwise expressly permitted by this Agreement or constitute or be deemed to constitute consent to the inclusion of any acquired assets in the computation of the Borrowing Base. (c) Upon the request of the Lender, cause each of its customs brokers, freight forwarders, consolidators and/or carriers in possession of a material portion of its Eligible Inventory to deliver an agreement (including, without limitation, a Customs Broker/Carrier Agreement) to the Lender covering such matters and in such form as the Lender may reasonably require. (d) Upon the request of the Lender, cause any of its landlords to deliver a Collateral Access Agreement to the Lender in such form as the Lender may reasonably require; provided, that the foregoing will not apply to Store locations. (e) Upon the request of the Lender, execute any and all further documents, agreements and instruments, and take all such further actions (including the filing of the Security Agreement or a short form thereof in the United States Copyright Office), that may be required under any applicable Law or which the Lender may request in order for the Lender to have a fully perfected Lien on, and security interest in, all right, title and interest of the applicable Loan Parties in any registered copyright and copyright application that is material to the Business. -82-
6.18 Compliance with Terms of Leaseholds. Except as otherwise expressly permitted hereunder, (a) make all payments and otherwise perform all obligations in respect of all Leases to which any Loan Party is a party, and keep such Leases in full force and effect, (b) not allow such Leases to lapse or be terminated or any rights to renew such Leases to be forfeited or cancelled, and (c) notify the Lender of any default by any party with respect to such Leases and cooperate with the Lender in all respects to cure any such default, in each case to the extent failure to do so could not reasonably be expected to have a Material Adverse Effect. 6.19 Material Contracts. (a) Perform and observe all material terms and provisions of each Material Contract to be performed or observed by it, (b) maintain each such Material Contract in full force and effect (except to the extent such Person elects to terminate the same in accordance with its terms and so notifies the Lender and, unless the failure to do so could not reasonably be expected to have a Material Adverse Effect, makes reasonable arrangements for a suitable replacement of the same), (c) enforce each such Material Contract in accordance with such Person’s reasonable business judgment, (d) take all such action to such end as may be from time to time reasonably requested by the Lender in its Permitted Discretion, and (e) upon the reasonable request of the Lender, make to each other party to each such Material Contract such demands and requests for information and reports or for action as any Loan Party is entitled to make under such Material Contract. 6.20 OFAC; Sanctions. Each Loan Party will, and will cause each of its Subsidiaries to comply with all applicable Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws. Each of the Loan Parties and its Subsidiaries shall implement and maintain in effect policies and procedures designed to ensure compliance by the Loan Parties and their Subsidiaries and their respective directors, officers, employees, agents and Affiliates with all applicable Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws. 6.21 Credit Card Processors. The Lead Borrower will, and will cause its Subsidiaries to (a) comply in all material respects with all obligations of such Person under each credit card processing agreement to which such Person is a party, (b) maintain each credit card processing agreement set forth on Schedule 5.21(b) and each credit card processing agreement entered into after the Closing Date in full force and effect (except to the extent such Person elects to terminate the same in accordance with the terms thereof and so notifies the Lender) and take or cause to be taken all actions necessary to maintain, preserve and protect the rights and interests of the Lender in all material respects with respect to all such agreements, and (c) promptly notify the Lender of the entry by such Person into any credit card processing agreement with any Credit Card Processor or Credit Card Issuer after the Closing Date and deliver to the Lender a copy of the Credit Card Notification delivered to each such Credit Card Processor or Credit Card Issuer contemporaneously with the entry by such Person into such credit processing agreement. ARTICLE VII NEGATIVE COVENANTS So long as the Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding (other than contingent indemnification obligations for which a claim has not been asserted), no Loan Party shall, directly or indirectly: 7.01 Liens. Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired or sign or file or suffer to exist under the UCC or -83-
any similar Law or statute of any jurisdiction a financing statement that names any Loan Party as debtor; sign or suffer to exist any security agreement authorizing any Person thereunder to file such financing statement; sell any of its property or assets subject to an understanding or agreement (contingent or otherwise) to repurchase such property or assets with recourse to it; or assign or otherwise transfer any accounts or other rights to receive income, other than, as to all of the above, Permitted Encumbrances. 7.02 Investments. Make any Investments, except Permitted Investments. 7.03 Indebtedness; Disqualified Stock. (a) Create, incur, assume, guarantee, suffer to exist or otherwise become or remain liable with respect to, any Indebtedness, except Permitted Indebtedness; (b) issue Disqualified Stock, or (c) issue and sell any other Equity Interests unless (i) such Equity Interests shall be issued solely by the Lead Borrower and not by a Subsidiary of a Loan Party, (ii) such Equity Interests shall not be subject to redemption other than redemption at the option of the Loan Party issuing such Equity Interests and in accordance with the limitations contained in this Agreement, and (iii) all Restricted Payments in respect of such Equity Interests are permitted pursuant to Section 7.06. 7.04 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into another Person, (or agree to do any of the foregoing), except that, so long as no Default or Event of Default shall have occurred and be continuing prior to or immediately after giving effect to any action described below or would result therefrom: (a) any Subsidiary which is not a Loan Party may merge with (i) a Loan Party, provided that the Loan Party shall be the continuing or surviving Person, or (ii) any one or more other Subsidiaries which are not Loan Parties, provided that when any wholly-owned Subsidiary is merging with another Subsidiary, the wholly-owned Subsidiary shall be the continuing or surviving Person; (b) any Subsidiary which is a Loan Party may merge into any Subsidiary which is a Loan Party or into a Borrower, provided that in any merger involving a Borrower, such Borrower shall be the continuing or surviving Person; (c) in connection with a Permitted Acquisition, any Subsidiary of a Loan Party may merge with or into or consolidate with any other Person or permit any other Person to merge with or into or consolidate with it; provided, that (i) the Person surviving such merger shall be a wholly-owned Subsidiary of a Loan Party and such Person shall become a Loan Party in accordance with the provisions of Section 6.12 hereof, and (ii) in the case of any such merger to which any Loan Party is a party, such Loan Party is the surviving Person; and (d) any CFC that is not a Loan Party may merge into any CFC that is not a Loan Party. 7.05 Dispositions. Make any Disposition or enter into any agreement to make any Disposition, except Permitted Dispositions. 7.06 Restricted Payments. Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that, so long as no Default or Event of Default shall have occurred and be continuing prior to or immediately after giving effect to any action described below or would result therefrom: (a) each Subsidiary of a Loan Party may make Restricted Payments to any Loan Party, including at such time as a Default or an Event of Default shall have occurred and is continuing; -84-
(b) the Loan Parties and each Subsidiary may declare and make dividend payments or other distributions payable solely in the common stock or other common Equity Interests of such Person; (c) if the Payment Conditions are satisfied, the Loan Parties and each Subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by it; (d) if the Payments Conditions are satisfied, the Lead Borrower may declare or pay cash dividends to its stockholders; (e) at any time following the date that is eighteen (18) months after the Closing Date and if the Adjusted Payment Conditions are satisfied, the Lead Borrower, in addition to the dividend payments described in clause (d) above, may pay a one-time dividend to its shareholders (as announced in a filing with the SEC) in an aggregate amount not to exceed $5,000,000; (f) any transaction expressly permitted pursuant to Section 7.09(f); and (g) so long as no Default or Event of Default has occurred and is continuing or would result from the making of any such Restricted Payment, the Loan Parties may make Restricted Payments in an amount not to exceed $2,000,000 in the aggregate during any Fiscal Year. 7.07 Prepayments of Indebtedness. Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner any Indebtedness, except (a) as long as no Default or Event of Default then exists, regularly scheduled or mandatory repayments, repurchases, redemptions or defeasances of Permitted Indebtedness, (b) voluntary prepayments, repurchases, redemptions or defeasances of Permitted Indebtedness as long as the Payment Conditions are satisfied, and (c) Permitted Refinancings of any such Indebtedness. 7.08 Change in Nature of Business. Engage in any line of business substantially different from the Business conducted by the Loan Parties on the Second Amendment Effective Date or any business substantially related or incidental thereto. 7.09 Transactions with Affiliates. Enter into, renew, extend or be a party to any transaction of any kind with any Affiliate of any Loan Party, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to the Loan Parties or such Subsidiary as would be obtainable by the Loan Parties or such Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate; provided, that the foregoing restriction shall not apply to (a) a transaction between or among the Loan Parties, (b) transactions described on Schedule 7.09 hereto, (c) advances for commissions, travel and other similar purposes in the ordinary course of business to directors, officers and employees, (d) the issuance of Equity Interests in the Lead Borrower to any officer, director, employee or consultant of the Lead Borrower or any of its Subsidiaries, (e) the payment of reasonable fees and out-of-pocket costs to directors, and compensation and employee benefit arrangements paid to, and indemnities provided for the benefit of, directors, officers or employees of the Lead Borrower or any of its Subsidiaries, and (f) any issuances of securities of the Lead Borrower (other than Disqualified Stock and other Equity Interests not permitted hereunder) or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, severance agreements, retention plans, employment agreements, deferred compensation agreements, stock options, restricted stock agreements and stock ownership plans (in each case in respect of Equity Interests in the Lead Borrower) of the Lead Borrower or any of its Subsidiaries. -85-
7.10 Burdensome Agreements. Enter into or permit to exist any Contractual Obligation (other than this Agreement or any other Loan Document) that: (a) limits the ability (i) of any Subsidiary to make Restricted Payments or other distributions to any Loan Party or to otherwise transfer property to or invest in a Loan Party, (ii) of any Subsidiary to Guarantee the Obligations, (iii) of any Subsidiary to make or repay loans to a Loan Party, or (iv) of the Loan Parties or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person in favor of the Lender; provided, however, that this clause (iv) shall not prohibit any negative pledge incurred or provided in favor of any holder of Indebtedness permitted under clauses (c) or (f) of the definition of Permitted Indebtedness solely to the extent any such negative pledge relates to the property financed by or the subject of such Indebtedness; or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person. 7.11 Use of Proceeds. Use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, (a) to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund Indebtedness originally incurred for such purpose, (b) to make any payments to a Sanctioned Entity or a Sanctioned Person, to finance any investments in a Sanctioned Entity or a Sanctioned Person, to fund any operations of a Sanctioned Entity or a Sanctioned Person, or in any other manner that would result in a violation of Sanctions by any Person, (c) for any purpose which would breach any Anti-Corruption Laws or Anti-Money Laundering Laws, or (d) for purposes other than those permitted under this Agreement. 7.12 Amendment of Material Documents. Amend, modify or waive any of a Loan Party’s rights under (a) its Organization Documents in a manner adverse to the Credit Parties, or (b) any Material Contract or Material Indebtedness (other than on account of any refinancing thereof otherwise permitted hereunder) to the extent that such amendment, modification or waiver would result in a Default or Event of Default under any of the Loan Documents, would be materially adverse to the Credit Parties or otherwise would be reasonably likely to have a Material Adverse Effect. 7.13 Fiscal Year. Change the Fiscal Year of any Loan Party, or the accounting policies or reporting practices of the Loan Parties, except as required by GAAP. 7.14 Deposit Accounts; Credit Card Processors. Open new DDAs or Blocked Accounts unless the Loan Parties shall have delivered to the Lender appropriate DDA Notifications (to the extent requested by Lender pursuant to the provisions of Section 6.13) or Blocked Account Agreements consistent with the provisions of Section 6.13 and otherwise satisfactory to the Lender. No Loan Party shall maintain any bank accounts or enter into any agreements with Credit Card Issuers or Credit Card Processors other than the ones expressly contemplated herein or in Section 6.13 hereof. 7.15 Financial Covenant. Permit Availability at any time to be less than the greater of (a) ten percent (10%) of the Revolving Loan Cap and (b) $3,000,000. 7.16 Maintenance of FILO Reserve. Fail to deliver a Borrowing Base Certificate as and when required hereunder which contains the FILO Reserve (if any), including a calculation thereof. -86-
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES 8.01 Events of Default. Any of the following shall constitute an Event of Default: (a) Non-Payment. The Borrowers or any other Loan Party fails to pay when and as required to be paid herein, (i) any amount of principal of any Loan or any L/C Obligation, or deposit any funds as Cash Collateral in respect of L/C Obligations, or (ii) any interest on any Loan or on any L/C Obligation, or any fee due hereunder, or (iii) any other amount payable hereunder or under any other Loan Document; or (b) Specific Covenants. Any Loan Party fails to perform or comply with any term, covenant or agreement contained in any of Section 6.01, 6.02, 6.03, 6.05, 6.07, 6.10, 6.11, 6.12, 6.13 or 6.14 or Article VII; or (c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for fifteen (15) days; or (d) Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of any Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith (including, without limitation, any Borrowing Base Certificate) shall be incorrect or misleading in any material respect when made or deemed made; or (e) Cross-Default. (i) Any Loan Party or any Subsidiary thereof (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Material Indebtedness (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement), or (B) fails to observe or perform any other agreement or condition relating to any such Material Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Material Indebtedness or the beneficiary or beneficiaries of any Guarantee thereof (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which a Loan Party or any Subsidiary thereof is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which a Loan Party or any Subsidiary thereof is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the Loan Party or such Subsidiary as a result thereof is greater than $5,000,000; or (f) Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or a proceeding shall be commenced or a petition filed, without the application or consent of such Person, seeking or requesting the appointment of any receiver, trustee, custodian, conservator, liquidator, -87-
rehabilitator or similar officer is appointed and the appointment continues undischarged, undismissed or unstayed for thirty (30) calendar days or an order or decree approving or ordering any of the foregoing shall be entered; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for thirty (30) calendar days, or an order for relief is entered in any such proceeding; or (g) Inability to Pay Debts; Attachment. (i) Any Loan Party or any Subsidiary thereof becomes unable or admits in writing its inability or fails generally to pay its debts as they become due in the ordinary course of business, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person; or (h) Judgments. There is entered against any Loan Party or any Subsidiary thereof (i) one or more judgments or orders for the payment of money in an aggregate amount (as to all such judgments and orders) exceeding $4,000,000 (to the extent not covered by independent third-party insurance as to which the insurer is rated at least “A” by A.M. Best Company, has been notified of the potential claim and does not dispute coverage), or (ii) any one or more non-monetary judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of thirty (30) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, is not in effect; or (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of any Loan Party under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $4,000,000 or which would reasonably likely result in a Material Adverse Effect, or (ii) a Loan Party or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $4,000,000 or which would reasonably likely result in a Material Adverse Effect; or (j) Invalidity of Loan Documents. (i) Any provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any Affiliate thereof contests in any manner the validity or enforceability of any provision of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any provision of any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document or seeks to avoid, limit or otherwise adversely affect any Lien purported to be created under any Security Document; or (ii) any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Loan Party or any Affiliate thereof not to be, a valid and perfected Lien on any Collateral, with the priority required by the applicable Security Document; or (k) Change of Control. There occurs any Change of Control; or (l) Cessation of Business. Except as otherwise expressly permitted hereunder (including, without limitation, in connection with a Permitted Disposition), any Loan Party shall take any action to suspend the operation of its business in the ordinary course, liquidate all or a material portion of its assets or Store locations, or employ an agent or other third party to conduct a program of closings, liquidations or “Going-Out-Of-Business” sales of any material portion of its business; or -88-
(m) Loss of Collateral. There occurs any uninsured loss to any portion of the Collateral with a fair market value in excess of $5,000,000; or (n) Indictment. The indictment or institution of any legal process or proceeding against, any Loan Party or any Subsidiary thereof, under any federal or state criminal statute, rule, regulation, order, or other requirement having the force of law for a felony; or (o) Guaranty. The termination or attempted termination of any Facility Guaranty except as expressly permitted hereunder or under any other Loan Document. 8.02 Remedies Upon Event of Default. If any Event of Default occurs and is continuing, the Lender may take any or all of the following actions: (a) declare the Commitments of the Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such Commitments and obligation shall be terminated; (b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other Obligations to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Loan Parties; (c) require that the Loan Parties Cash Collateralize the L/C Obligations; and (d) whether or not the maturity of the Obligations shall have been accelerated pursuant hereto, proceed to protect, enforce and exercise all rights and remedies of the Credit Parties under this Agreement, any of the other Loan Documents or applicable Law, including, but not limited to, by suit in equity, action at law or other appropriate proceeding, whether for the specific performance of any covenant or agreement contained in this Agreement and the other Loan Documents or any instrument pursuant to which the Obligations are evidenced, and, if such amount shall have become due, by declaration or otherwise, proceed to enforce the payment thereof or any other legal or equitable right of the Credit Parties; provided, however, that upon the occurrence of any Event of Default with respect to any Loan Party under Section 8.01(f), the obligation of the Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Loan Parties to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the Lender. No remedy herein is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or any other provision of Law. 8.03 Application of Funds. After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 8.02), any amounts received on account of the Obligations shall be applied by the Lender in the following order: First, to payment of that portion of the Obligations (excluding the Other Liabilities) constituting fees, indemnities, Credit Party Expenses and other amounts (including fees, charges -89-
and disbursements of counsel to the Lender and amounts payable under Article III) payable to the Lender; Second, to payment of that portion of the Obligations (excluding the Other Liabilities) constituting indemnities, Credit Party Expenses, and other amounts (other than principal, interest and fees) payable to the L/C Issuer (including fees, charges and disbursements of counsel to the L/C Issuer and amounts payable under Article III); Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Revolving Loans and other Obligations, and fees (including Letter of Credit Fees), ratably among the Lender and the L/C Issuer in proportion to the respective amounts described in this clause Third payable to them; Fourth, to the payment of that portion of the Obligations constituting unpaid principal of the Revolving Loans; Fifth, to the Lender for the account of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit; Sixth, to payment of that portion of the Obligations constituting accrued and unpaid interest on the FILO Loans; Seventh, to payment of that portion of the Obligations constituting unpaid principal of the FILO Loans; Eighth, to payment of all other Obligations (including without limitation the cash collateralization of asserted but unliquidated indemnification obligations of the Loan Parties under Section 9.04, but excluding any Other Liabilities), ratably among the Credit Parties in proportion to the respective amounts described in this clause Eighth held by them; Ninth, to payment of that portion of the Obligations arising from Cash Management Services to the extent secured under the Security Documents, ratably among the Credit Parties in proportion to the respective amounts described in this clause Ninth held by them; Tenth, to payment of that portion of the Obligations arising from Bank Products to the extent secured under the Security Documents, ratably among the Credit Parties in proportion to the respective amounts described in this clause Tenth held by them; and Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Loan Parties or as otherwise required by Law. Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above. 8.04 Separate Claims and Separate Classifications. Each of the Credit Parties hereto acknowledges and agrees that because of, among other things, their differing rights and priorities in the Collateral, the claims of the Revolving Loans and the FILO Loans in respect of any Collateral must be separately classified in any bankruptcy or other insolvency proceeding. To further effectuate the intent of -90-
the parties as provided in the immediately preceding sentence, if it is held that, in respect of any Collateral, the Revolving Loans and/or the FILO Loans in respect of such Collateral constitute only one secured claim (rather than separate classes of secured claims), then all distributions shall be made as if there were separate classes of secured claims in respect of any Collateral and, to the extent that any holder of the Revolving Loans and/or the FILO Loans receives distributions in respect of the Collateral, such distributions shall be held in trust by the receiving party and distributed giving effect to the foregoing. ARTICLE IX MISCELLANEOUS 9.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by any Loan Party therefrom, shall be effective unless in writing signed by the Lender and the Lead Borrower or the applicable Loan Party, as the case may be, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by the L/C Issuer, affect the rights or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it. Notwithstanding anything to the contrary in this Agreement or any other Loan Document, no provider or holder of any Bank Products or Cash Management Services shall have any voting or approval rights hereunder (or be deemed the Lender) solely by virtue of its status as the provider or holder of such agreements or products or the Obligations owing thereunder, nor shall the consent of any such provider or holder be required (other than in its capacity as the Lender, to the extent applicable) for any matter hereunder or under any of the other Loan Documents, including as to any matter relating to the Collateral or the release of Collateral or any Loan Party. 9.02 Notices; Effectiveness; Electronic Communications. (a) Notices Generally. (i) Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, to the address, facsimile number, electronic mail address or telephone number specified for such person on Schedule 9.02: (ii) Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b). (b) Electronic Communications. Notices and other communications to the Loan Parties, the Lender and the L/C Issuer hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Lender, provided that approval of such procedures may be limited to particular notices or communications. -91-
Unless the Lender otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the intended recipient’s receipt of the notice or communication, which shall be evidenced by an acknowledgment from the intended recipient (such as by the “delivery receipt” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and provided further that if the sender receives an “out-of-office” reply e-mail, that notice or other communication shall be deemed received upon the sender’s compliance with the instructions in such “out-of-office” reply e-mail regarding notification to another person in the intended recipient’s absence, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor. (c) Change of Address, Etc. Each of the Loan Parties, the Lender, and the L/C Issuer may change its address, facsimile or telephone number for notices and other communications hereunder by notice to the other parties hereto. (d) Reliance by Lender and L/C Issuer. The Lender and the L/C Issuer shall be entitled to rely and act upon any notices (including telephonic Committed Loan Notices) purportedly given by or on behalf of the Loan Parties even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof, except to the extent reliance on the same would constitute gross negligence or willful misconduct. The Loan Parties shall indemnify the Lender and the L/C Issuer, and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Loan Parties. All telephonic notices to and other telephonic communications with the Lender may be recorded by the Lender, and each of the parties hereto hereby consents to such recording. 9.03 No Waiver; Cumulative Remedies. No failure by any Credit Party to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or under any other Loan Document preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges provided herein and in the other Loan Documents are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default or Event of Default, regardless of whether any Credit Party may have had notice or knowledge of such Default or Event of Default at the time. 9.04 Expenses; Indemnity; Damage Waiver. (a) Costs and Expenses. The Borrowers shall pay all Credit Party Expenses. (b) Indemnification by the Loan Parties. The Loan Parties shall indemnify the Lender (and any sub-agent thereof), each other Credit Party, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless (on an after tax basis) from, any and all losses, claims, causes of action, damages, liabilities, settlement payments, costs, and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third -92-
party or by any Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, or, in the case of the Lender (and any sub-agents thereof) and their Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit, any bank advising or confirming a Letter of Credit or any other nominated person with respect to a Letter of Credit seeking to be reimbursed or indemnified or compensated, and any third party seeking to enforce the rights of a Borrower, beneficiary, nominated person, transferee, assignee of Letter of Credit proceeds, or holder of an instrument or document related to any Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by any Loan Party or any of its Subsidiaries, or any Environmental Liability related in any way to any Loan Party or any of its Subsidiaries, (iv) any claims of, or amounts paid by any Credit Party to, a Blocked Account Bank or other Person which has entered into a control agreement with any Credit Party hereunder, or (v) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Borrower or any other Loan Party or any of the Loan Parties’ directors, shareholders or creditors, and regardless of whether any Indemnitee is a party thereto, in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Indemnitee; provided, that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by a Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Borrowers or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction. (c) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable Law, the Loan Parties shall not assert, and hereby waive, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction. (d) Payments. All amounts due under this Section shall be payable on demand therefor. (e) Survival. The agreements in this Section shall survive the assignment of any Commitment or Loan by the Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all the other Obligations. 9.05 Payments Set Aside. To the extent that any payment by or on behalf of the Loan Parties is made to any Credit Party, or any Credit Party exercises its right of setoff, and such payment or the -93-
proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by such Credit Party in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred. 9.06 Successors and Assigns. (a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that no Loan Party may assign or otherwise transfer any of its rights or obligations hereunder or under any other Loan Document without the prior written consent of the Lender. The Lender may at any time, without consent of, or notice to, the Loan Parties, assign or otherwise transfer any of its rights or obligations hereunder (i) to an Eligible Assignee, (ii) by way of participation in accordance with the provisions of subsection Section 9.06(b), or (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section 9.06(d); provided however, that the Lender may not assign or otherwise transfer any of its rights and obligations hereunder if the result of such assignment or transfer would be to require payment by any Loan Party of additional amounts under Sections 3.01 or 3.04, or if the assignee or transferee of such rights or obligations would be entitled to invoke rights under Sections 3.02 or 3.03 and the Lender has not already invoked such rights; and provided further, to the extent that the Lender assigns any portion of its rights and/or obligations under this Agreement, the Borrowers agree to enter into any such amendments to this Agreement or the other Loan Documents as may be reasonably required by Lender in connection therewith, including, but not limited to, accommodating for multiple lenders and agents, as necessary. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (b) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Credit Parties) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Participations. Lender may at any time, without the consent of, or notice to, the Loan Parties, sell participations to any Person (each, a “Participant”) in all or a portion of the Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including the Lender’s participations in L/C Obligations) owing to it); provided, that (i) the Lender’s obligations under this Agreement shall remain unchanged, (ii) the Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the Loan Parties and the L/C Issuer shall continue to deal solely and directly with Lender in connection with Lender’s rights and obligations under this Agreement, and (iv) so long as no Specified Event of Default shall have occurred and be continuing, the Lender shall not sell participations to any Person that is a Competitor of the Loan Parties. Any Participant shall agree in writing to comply with all confidentiality obligations set forth in Section 9.07 as if such Participant was the Lender hereunder. Any agreement or instrument pursuant to which the Lender sells such a participation shall provide that the Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided, that such agreement or instrument may provide that the Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification that would reduce the principal of or the interest rate on the Loans, extend the term or increase the amount of the Commitment, as it relates to such Participant, or reduce the amount of any commitment fee payable pursuant to Section 2.08(a) to which such Participant is entitled. Subject to subsection (e) of this Section, the Loan Parties agree that each Participant shall be entitled to the -94-
benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were the Lender and had acquired its interest by assignment pursuant to Section 9.06(a) (c) Limitations upon Participant Rights. A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04 than the Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Lead Borrower’s prior written consent. (d) Certain Pledges. The Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of the Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided, that no such pledge or assignment shall release the Lender from any of its obligations hereunder or substitute any such pledgee or assignee for the Lender as a party hereto. (e) Electronic Execution of Assignments. The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act. (f) Resignation as L/C Issuer after Assignment. Notwithstanding anything to the contrary contained herein, if at any time the Lender assigns all of its Commitment and Loans pursuant to subsection (a) above, Wells Fargo may resign as L/C Issuer upon thirty (30) days prior written notice to the Lead Borrower. In the event of any such resignation as L/C Issuer, the Lead Borrower shall be entitled to appoint from among the Lenders a successor L/C Issuer; provided, however, that no failure by the Lead Borrower to appoint any such successor shall affect the resignation of Wells Fargo as L/C Issuer unless none of the other Lenders has the capabilities to issue letters of credit sufficient to meet the reasonable business needs of the Borrowers and is willing to accept such appointment. If Wells Fargo resigns as L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lender to make Base Rate Loans pursuant to Section 2.03(c)). Upon the appointment of a successor L/C Issuer, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer, and (b) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Wells Fargo to effectively assume the obligations of Wells Fargo with respect to such Letters of Credit. 9.07 Treatment of Certain Information; Confidentiality. Each of the Credit Parties agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, funding sources, attorneys, advisors and representatives in connection with the transactions contemplated hereby (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any -95-
other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to any Loan Party and its obligations, (g) with the consent of the Lead Borrower, or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to any Credit Party or any of their respective Affiliates on a non-confidential basis from a source other than the Loan Parties. For purposes of this Section, “Information” means all information received from the Loan Parties or any Subsidiary thereof relating to the Loan Parties or any Subsidiary thereof or their respective businesses pursuant to the terms of the Loan Documents, other than any such information that is available to any Credit Party on a non-confidential basis prior to disclosure by the Loan Parties or any Subsidiary thereof. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. Each of the Credit Parties acknowledges that (a) the Information may include material non-public information concerning the Loan Parties or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including Federal and state securities Laws. 9.08 Right of Setoff. If an Event of Default shall have occurred and be continuing or if the Lender shall have been served with a trustee process or similar attachment relating to property of a Loan Party, the Lender, the L/C Issuer and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by Lender, the L/C Issuer or any such Affiliate to or for the credit or the account of the Borrowers or any other Loan Party against any and all of the Obligations now or hereafter existing under this Agreement or any other Loan Document to the Lender or the L/C Issuer, regardless of the adequacy of the Collateral, and irrespective of whether or not the Lender or the L/C Issuer shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrowers or such Loan Party may be contingent or unmatured or are owed to a branch or office of the Lender or the L/C Issuer different from the branch or office holding such deposit or obligated on such indebtedness. The rights of the Lender, the L/C Issuer and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that the Lender, the L/C Issuer or their respective Affiliates may have. The Lender and the L/C Issuer agree to notify the Lead Borrower promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application. 9.09 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If the Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrowers. In determining whether the interest contracted for, charged, or received by the Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the -96-
effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder. 9.10 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Lender and when the Lender shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by facsimile, pdf., or other electronic transmission shall be as effective as delivery of a manually executed counterpart of this Agreement. 9.11 Survival. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Credit Parties, regardless of any investigation made by any Credit Party or on their behalf and notwithstanding that any Credit Party may have had notice or knowledge of any Default or Event of Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding. Further, the provisions of Sections 3.01, 3.04, 3.05 and 9.04 shall survive and remain in full force and effect regardless of the repayment of the Obligations, the expiration or termination of the Letters of Credit and the Commitment or the termination of this Agreement or any provision hereof. In connection with the termination of this Agreement and the release and termination of the security interests in the Collateral, the Lender may require such indemnities and collateral security as they shall reasonably deem necessary or appropriate to protect the Credit Parties against (x) loss on account of credits previously applied to the Obligations that may subsequently be reversed or revoked, (y) any obligations that may thereafter arise with respect to the Other Liabilities and (z) any Obligations that may thereafter arise under Section 9.04. 9.12 Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 9.13 Governing Law; Jurisdiction; Etc. (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF, BUT INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. (b) SUBMISSION TO JURISDICTION. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY -97-
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE LOAN PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE LOAN PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION IF REQUIRED TO REALIZE UPON ANY COLLATERAL. (c) WAIVER OF VENUE. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE LOAN PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT. (d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.02, EXCLUDING SERVICE OF PROCESS BY E-MAIL. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW. (e) ACTIONS COMMENCED BY LOAN PARTIES. EACH LOAN PARTY AND, EXCEPT AS PROVIDED IN THE LAST SENTENCE OF SECTION 9.13(b), EACH CREDIT PARTY, AGREES THAT ANY ACTION COMMENCED BY IT ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT SOLELY IN A COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS WITH RESPECT TO ANY SUCH ACTION. 9.14 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO -98-
ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. 9.15 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby, the Loan Parties each acknowledge and agree that: (i) the credit facility provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document) are an arm’s-length commercial transaction between the Loan Parties, on the one hand, and the Credit Parties, on the other hand, and each of the Loan Parties is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents (including any amendment, waiver or other modification hereof or thereof); (ii) in connection with the process leading to such transaction, each Credit Party is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary, for the Loan Parties or any of their respective Affiliates, stockholders, creditors or employees or any other Person; (iii) none of the Credit Parties has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Loan Parties with respect to any of the transactions contemplated hereby or the process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Loan Document (irrespective of whether any of the Credit Parties has advised or is currently advising any Loan Party or any of its Affiliates on other matters) and none of the Credit Parties has any obligation to any Loan Party or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; (iv) the Credit Parties and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Loan Parties and their respective Affiliates, and none of the Credit Parties has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (v) the Credit Parties have not provided and will not provide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Loan Document) and each of the Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate. Each of the Loan Parties hereby waives and releases, to the fullest extent permitted by law, any claims that it may have against each of the Credit Parties with respect to any breach or alleged breach of agency or fiduciary duty. 9.16 USA PATRIOT Act Notice. The Lender hereby notifies the Loan Parties that, pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow the Lender, as applicable, to identify each Loan Party in accordance with the Act. Each Loan Party is in compliance, in all material respects, with the Act. No part of the proceeds of the Loans will be used by the Loan Parties, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended. 9.17 Foreign Asset Control Regulations. Neither of the advance of the Loans nor the use of the proceeds of any thereof will violate the Trading With the Enemy Act (50 U.S.C. § 1 et seq., as amended) (the “Trading With the Enemy Act”) or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) (the “Foreign Assets Control Regulations”) or any enabling legislation or executive order relating thereto (which for the avoidance of doubt shall include, but shall not be limited to, (a) Executive Order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive Order”) and (b) the Uniting and -99-
Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56)). Furthermore, none of the Borrowers or their Affiliates (a) is or will become a “blocked person” as described in the Executive Order, the Trading With the Enemy Act or the Foreign Assets Control Regulations or (b) engages or will engage in any dealings or transactions, or be otherwise associated, with any such “blocked person” or in any manner violative of any such order. 9.18 Time of the Essence. Time is of the essence of the Loan Documents. 9.19 Publicity. Each Loan Party consents to the publication by the Lender of advertising material, including any “tombstone” or comparable advertising, on its website or in other marketing materials of Lender, relating to the financing transactions contemplated by this Agreement using any Loan Party’s name, product photographs, logo, trademark or other insignia. The Lender shall provide a draft reasonably in advance of any advertising material to the Lead Borrower for review and comment prior to the publication thereof. The Lender reserves the right to provide to industry trade organizations and loan syndication and pricing reporting services information necessary and customary for inclusion in league table measurements. Notwithstanding the foregoing or anything in the Loan Documents to the contrary, the Lender consents to the disclosure by the Loan Parties of all information required to be disclosed in accordance with applicable Securities Laws, as determined by the Lead Borrower in good faith. 9.20 Additional Waivers. (a) The Obligations are the joint and several obligation of each Loan Party. To the fullest extent permitted by Applicable Law, the obligations of each Loan Party shall not be affected by (i) the failure of any Credit Party to assert any claim or demand or to enforce or exercise any right or remedy against any other Loan Party under the provisions of this Agreement, any other Loan Document or otherwise, (ii) any rescission, waiver, amendment or modification of, or any release from any of the terms or provisions of, this Agreement or any other Loan Document, or (iii) the failure to perfect any security interest in, or the release of, any of the Collateral or other security held by or on behalf of the Lender or any other Credit Party. (b) The obligations of each Loan Party shall not be subject to any reduction, limitation, impairment or termination for any reason (other than the indefeasible payment in full in cash of the Obligations after the termination of the Commitment), including any claim of waiver, release, surrender, alteration or compromise of any of the Obligations, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of any of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Loan Party hereunder shall not be discharged or impaired or otherwise affected by the failure of the Lender or any other Credit Party to assert any claim or demand or to enforce any remedy under this Agreement, any other Loan Document or any other agreement, by any waiver or modification of any provision of any thereof, any default, failure or delay, willful or otherwise, in the performance of any of the Obligations, or by any other act or omission that may or might in any manner or to any extent vary the risk of any Loan Party or that would otherwise operate as a discharge of any Loan Party as a matter of law or equity (other than the indefeasible payment in full in cash of all the Obligations after the termination of the Commitment). (c) To the fullest extent permitted by applicable Law, each Loan Party waives any defense based on or arising out of any defense of any other Loan Party or the unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of any other Loan Party, other than the indefeasible payment in full in cash of all the Obligations and the termination of the Commitment. The Lender and the other Credit Parties may, at their election, foreclose -100-
on any security held by one or more of them by one or more judicial or non-judicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other accommodation with any other Loan Party, or exercise any other right or remedy available to them against any other Loan Party, without affecting or impairing in any way the liability of any Loan Party hereunder except to the extent that all the Obligations have been indefeasibly paid in full in cash and the Commitment has been terminated. Each Loan Party waives any defense arising out of any such election even though such election operates, pursuant to applicable Law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Loan Party against any other Loan Party, as the case may be, or any security. (d) Each Borrower is obligated to repay the Obligations as joint and several obligors under this Agreement. Upon payment by any Loan Party of any Obligations, all rights of such Loan Party against any other Loan Party arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subordinate and junior in right of payment to the prior indefeasible payment in full in cash of all the Obligations and the termination of the Commitment. In addition, any indebtedness of any Loan Party now or hereafter held by any other Loan Party is hereby subordinated in right of payment to the prior indefeasible payment in full of the Obligations and no Loan Party will demand, sue for or otherwise attempt to collect any such indebtedness; provided, that payment of such indebtedness on ordinary business terms is permitted except after the occurrence and during the continuance of an Event of Default. If any amount shall erroneously be paid to any Loan Party on account of (i) such subrogation, contribution, reimbursement, indemnity or similar right or (ii) any such indebtedness of any Loan Party, such amount shall be held in trust for the benefit of the Credit Parties and shall forthwith be paid to the Lender to be credited against the payment of the Obligations, whether matured or unmatured, in accordance with the terms of this Agreement and the other Loan Documents. Subject to the foregoing, to the extent that any Borrower shall, under this Agreement as a joint and several obligor, repay any of the Obligations constituting Loans made to another Borrower hereunder or other Obligations incurred directly and primarily by any other Borrower (an “Accommodation Payment”), then the Borrower making such Accommodation Payment shall be entitled to contribution and indemnification from, and be reimbursed by, each of the other Borrowers in an amount, for each of such other Borrowers, equal to a fraction of such Accommodation Payment, the numerator of which fraction is such other Borrower’s Allocable Amount and the denominator of which is the sum of the Allocable Amounts of all of the Borrowers. As of any date of determination, the “Allocable Amount” of each Borrower shall be equal to the maximum amount of liability for Accommodation Payments which could be asserted against such Borrower hereunder without (a) rendering such Borrower “insolvent” within the meaning of Section 101 (31) of the Bankruptcy Code, Section 2 of the Uniform Voidable Transactions Act (“UVTA”), Section 2 of the Uniform Fraudulent Transfer Act (“UFTA”) or Section 2 of the Uniform Fraudulent Conveyance Act (“UFCA”), (b) leaving such Borrower with unreasonably small capital or assets, within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UVTA, Section 4 of the UFTA, or Section 5 of the UFCA, or (c) leaving such Borrower unable to pay its debts as they become due within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UVTA, Section 4 of the UFTA, or Section 5 of the UFCA. 9.21 No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement. 9.22 Attachments. The exhibits, schedules and annexes attached to this Agreement are incorporated herein and shall be considered a part of this Agreement for the purposes stated herein, except -101-
that in the event of any conflict between any of the provisions of such exhibits and the provisions of this Agreement, the provisions of this Agreement shall prevail. 9.23 Amendment and Restatement. Effective immediately upon the Closing Date, the terms and conditions of the Existing Credit Agreement shall be amended and restated as set forth herein and the Existing Credit Agreement shall be superseded by this Agreement. On the Closing Date, the rights and obligations of the parties evidenced by the Existing Credit Agreement shall be evidenced by this Agreement and the other Loan Documents and the grant of security interests and Liens in the Collateral by the Borrowers and the Guarantors under the Existing Credit Agreement and the other “Loan Documents” (as defined in the Existing Credit Agreement) shall continue under this Agreement and the other Loan Documents, and shall not in any event be terminated, extinguished or annulled but shall hereafter continue to be in full force and effect and be governed by this Agreement and the other Loan Documents. All Obligations (as defined in the Existing Credit Agreement) under the Existing Credit Agreement and the other “Loan Documents” (as defined in the Existing Credit Agreement) shall continue to be outstanding except as expressly modified by this Agreement and shall be governed in all respects by this Agreement and the other Loan Documents, it being agreed and understood that this Agreement does not constitute a novation, satisfaction, payment or reborrowing of any Obligation (as defined in the Existing Credit Agreement) under the Existing Credit Agreement or any other “Loan Document” (as defined in the Existing Credit Agreement), nor does it operate as a waiver of any right, power or remedy of the Lender under any “Loan Document” (as defined in the Existing Credit Agreement). All references to the Existing Credit Agreement in any Loan Document or other document or instrument delivered in connection therewith shall be deemed to refer to this Agreement and the provisions hereof. 9.24 Keepwell. Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Loan Party to honor all of its obligations under the Facility Guaranty in respect of Swap Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section 9.24 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 9.24, or otherwise under the Facility Guaranty, voidable under applicable Law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP Guarantor under this Section shall remain in full force and effect until payment in full of the Obligations. Each Qualified ECP Guarantor intends that this Section 9.24 constitutes, and this Section 9.24 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Loan Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act. [ Signature pages follow ] -102-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written. BORROWERS: CHRISTOPHER & BANKS CORPORATION By: Name: Title: CHRISTOPHER & BANKS, INC. By: Name: Title: CHRISTOPHER & BANKS COMPANY By: Name: Title: Signature Page to Credit Agreement
LENDER AND L/C ISSUER: WELLS FARGO BANK, NATIONAL ASSOCIATION By: Name: Its Authorized Signatory Signature Page to Credit Agreement
SCHEDULE 5.08(b)(2) LEASED REAL ESTATE 2400 Xenium Lane North, Plymouth, MN 55441 See attached “Store Locations” list, current as of July 27, 2018.
Christopher & Banks Store Count as of 7/27/2018 Store # Division Center Name Address City State Zip Code Open Date 103 CBK Woodbury Lakes 9100 Hudson Road, Ste #112 Bldg A Woodbury MN 55125 9/14/2005 130 CBK Kirkwood Mall 630 Kirkwood Mall Bismarck ND 58504 2/1/2006 140 CBK Bay Park Square 251 Bay Park Square Green Bay WI 54304 7/29/1981 172 CBK Forest Mall 835 West Johnson Street, Spc #E01 Fond du Lac WI 54935 2/28/1984 178 CBK Fox River Mall 4301 West Wisconsin Avenue, Spc 146 Appleton WI 54913 7/18/1984 179 CBK Valley West Mall 1551 Valley West Drive, #235 West Des Moines IA 50266 8/6/1984 183 CBK Conestoga Mall 3404 West 13th Street, Unit D33 Grand Island NE 68803 9/6/1985 186 CBK Lindale Mall 4444 First Avenue NE, #142 Cedar Rapids IA 52402 3/10/1986 187 CBK Montclair on Center 13029 West Center Road Omaha NE 68144 7/31/1986 192 CBK Central Mall 2259 South 9th Street, #127 Salina KS 67401 2/24/1987 202 CBK White Oaks Mall 2501 Wabash Avenue, #A03A Springfield IL 62704 6/14/2001 208 CBK Brookfield Square Mall 95 North Moorland Road, #D‐42 Brookfield WI 53005 3/5/1988 217 CBK Empire Mall 4001 West 41st Street, #904 Sioux Falls SD 57106‐6512 7/27/1988 226 CBK Ashland Town Center 500 Winchester Avenue, #178 Ashland KY 41101 5/29/1999 254 CBK Boise Towne Square 350 North Milwaukee, #1041 Boise ID 83704 3/5/1993 303 CBK Bangor Mall 663 Stillwater Avenue, #F9/F10 Bangor ME 04401 3/9/2001 310 CBK West Ridge Mall 1801 Wanamaker Road, #F17 Topeka KS 66604 8/23/2002 318 CBK Apple Blossom Mall 1850 Apple Blossom Drive, #S149 Winchester VA 22601 3/9/2001 320 CBK Tippecanoe Mall 2415 Sagamore Parkway South, #B09 Lafayette IN 47905 4/6/2001 383 CBK Animas Valley Mall 4601 East Main Street, #470 Farmington NM 87402 11/8/2002 387 CBK The Shops At Boardwalk 8630 North Boardwalk Avenue, #SP18 Kansas City MO 64154 8/15/2003 401 CBK West Park Mall 3049 William Street, Ste 183 Cape Girardeau MO 63703 6/18/1999 404 CBK Layton Hills Mall 1201 N Hill Field Road, Ste 2088 Layton UT 84041 8/4/1994 406 CBK Charleston Town Center 3000 Charleston Town Center, #1015 Charleston WV 25389 6/11/1999 430 CBK Westland Mall 35000 West Warren Road, #401 Westland MI 48185 1/12/1998 436 CBK Muncie Mall 3501 N Granville Avenue, #K06 Muncie IN 47303 9/27/2002 467 CBK Kentucky Oaks Mall 5101 Hinkleville Road, #720 Paducah KY 42001 3/18/2000 473 CBK Lansing Mall 5324 W Saginaw Highway, #171 Lansing MI 48917 3/9/2001 549 CBK The Town Center at Levis Comm 4170 Levis Commons Blvd, Spc 18‐A Perrysburg OH 43551 10/26/2004 559 CBK The Greene Town Center 106 Plum Street Beavercreek OH 45440 11/3/2006 1
Christopher & Banks Store Count as of 7/27/2018 Store # Division Center Name Address City State Zip Code Open Date 619 CBK The Orchard 8653 Clinton Street, Spc #8653 New Hartford NY 13413 11/2/2007 635 CBK Mall at Fairfield Commons 2727 Fairfield Commons, #W170 Beavercreek OH 45431 9/8/2005 656 CBK The Promenade Shops at Cente 5855 Sky Pond Drive, Ste #F118 Loveland CO 80538 11/18/2005 669 CBK Shadow Lake Towne Center 7474 Towne Center Pkwy, Ste T‐117 Papillion NE 68046 5/26/2007 678 CBK Aspen Grove 7301 S Santa Fe Drive, #222 Littleton CO 80120 6/9/2006 684 CBK The Orchard Town Center 14587 Delaware Street, Ste 100 Westminster CO 80023 4/3/2008 804 CJB Fox River Mall 4301 West Wisconsin Ave, Spc 912 Appleton WI 54913 10/6/2000 807 CJB Forest Mall 835 West Johnson Street, Spc #E02 Fond du Lac WI 54935 8/18/2000 812 CJB White Oaks Mall 2501 Wabash Avenue, #A‐01 Springfield IL 62704 8/25/2000 813 CJB Lindale Mall 4444 First Avenue NE, Ste 36 Cedar Rapids IA 52402 9/15/2000 815 CJB Empire Mall 4001 West 41st Street, #540 Sioux Falls SD 57106‐6523 9/15/2000 826 CJB Montclair on Center 13023 West Center Road Omaha NE 68144 3/23/2001 845 CJB Boise Towne Square 350 N Milwaukee, #2323 Boise ID 83704 4/20/2001 853 CJB Tippecanoe Mall 2415 Sagamore Parkway South, #G12A Lafayette IN 47905 8/10/2001 855 CJB Brookfield Square Mall 95 North Moorland Road, #D1B Brookfield WI 53005 8/10/2001 860 CJB Conestoga Mall 3404 West 13th Street, #A3A Grand Island NE 68803 10/10/2001 871 CJB Ashland Town Center 500 Winchester Avenue, #250 Ashland KY 41101 4/12/2002 900 CJB Charleston Town Center 3000 Charleston Town Center Mall, #1017 Charleston WV 25389 6/4/2004 905 CJB Muncie Mall 3501 Granville Avenue, #M03 Muncie IN 47303 9/26/2002 912 CJB Central Mall 2259 South 9th Street, #46 Salina KS 67401 3/21/2003 916 CJB Kentucky Oaks Mall 5101 Hinkleville Road, #730 Paducah KY 42001 8/22/2003 920 CJB West Park Mall 3049 William Street, Ste 182 Cape Girardeau MO 63703 9/5/2003 934 CJB Apple Blossom Mall 1850 Apple Blossom Drive, #S171 Winchester VA 22601 3/12/2004 938 CJB Kirkwood Mall 642 Kirkwood Mall Bismarck ND 58504 5/21/2004 949 CJB Bangor Mall 663 Stillwater Avenue, #1082 Bangor ME 04401 9/24/2004 962 CJB Bay Park Square 303 Bay Park Square Green Bay WI 54304 5/13/2005 963 CJB Layton Hills Mall 1201 N Hill Field Road, Ste 2056 Layton UT 84041 4/15/2005 979 CJB The Shops At Boardwalk 8638 North Boardwalk Avenue, #14 Kansas City MO 64154 9/16/2005 982 CJB The Town Center at Levis Comm 4175 Levis Commons Blvd Perrysburg OH 43551 10/7/2005 988 CJB West Ridge Mall 1801 Wanamaker Road, #OC18A Topeka KS 66604 5/12/2006 2
Christopher & Banks Store Count as of 7/27/2018 Store # Division Center Name Address City State Zip Code Open Date 997 CJB Shadow Lake Towne Center 7474 Towne Center Pkwy, Ste T‐115 Papillion NE 68046 5/26/2007 1005 CJB Woodbury Lakes 9100 Hudson Road, Ste 110 Woodbury MN 55125 5/5/2006 1025 CJB Valley West Mall 1551 Valley West Drive, #281 West Des Moines IA 50266 4/13/2007 1029 CJB The Greene Town Center 110 Plum Street Beavercreek OH 45440 11/3/2006 1042 CJB The Orchard Town Center 14587 Delaware Street, #150 Westminster CO 80023 4/3/2008 1043 CJB Westland Mall 35000 West Warren Road, #205 Westland MI 48185 9/28/2007 1046 CJB The Orchard 8651 Clinton Street, #8651 New Hartford NY 13413 11/2/2007 1067 CJB The Promenade Shops at Cente 5971 Sky Pond Drive, Ste C148 Loveland CO 80538 10/11/2007 1101 CJB Aspen Grove 7301 South Santa Fe Drive, # 528 Littleton CO 80120 8/13/2010 3200 Outlet Albertville Premium Outlet 6415 Labeaux Avenue NE, Spc #A030 Albertville MN 55301 9/24/2010 3201 Outlet The Legends 1813 Village West Parkway, Ste Q‐102 Kansas City KS 66111 9/24/2010 3202 Outlet Birch Run Premium Outlets 12240 South Beyer Road, Spc V032 Birch Run MI 48415 4/15/2011 3203 Outlet Tanger Outlets ‐ Jeffersonville 8315 Factory Shops Boulevard Jeffersonville OH 43128 4/15/2011 3204 Outlet Grove City Premium Outlets 1911 Leesburg Grove City Road, Spc 1255 Grove City PA 16127 4/15/2011 3205 Outlet Pleasant Prairie Premium Outle 11211 120th Avenue, Spc 06 Pleasant Prairie WI 53158 4/15/2011 3206 Outlet Tanger Outlets Branson 300 Tanger Boulevard, Ste 304 Branson MO 65616 7/8/2011 3207 Outlet Edinburgh Premium Outlet 3200 Outlet Drive, #F050 Edinburgh IN 46124 9/9/2011 3208 Outlet Wisconsin Dells Outlet Center 210 N Gasser Road, Ste 1004 Baraboo WI 53913 10/7/2011 3209 Outlet North Branch Outlets 38500 Tanger Drive, Ste 113 North Branch MN 55056 5/6/2011 3210 Outlet The Outlet Shoppes at Oklahom 7654 West Reno Avenue, Ste 730 Oklahoma City OK 73127 8/4/2011 3211 Outlet Tanger Outlets Howell 1475 N. Burkhart Road, Ste G170 Howell MI 48855 5/6/2011 3212 Outlet Tanger Outlets Williamsburg 502 Tanger Drive Williamsburg IA 52361‐9653 5/6/2011 3213 Outlet Outlets at Tuscola D700 Tuscola Blvd Tuscola IL 61953 5/6/2011 3214 Outlet North Bend Premium Outlets 461 S Fork Avenue SW, Unit I North Bend WA 98045 9/9/2011 3215 Outlet Lebanon Premium Outlets One Outlet Village Blvd, Spc 350 Lebanon TN 37090 9/9/2011 3216 Outlet Tanger Outlets Myrtle Beach 4635 Factory Stores Boulevard, #C210 Myrtle Beach SC 29579 6/10/2011 3217 Outlet Lincoln City Outlet 1500 SE East Devils Lake Road, Ste 202 Lincoln City OR 97367 6/10/2011 3218 Outlet Centralia Outlets 110 West High Street, Spc 110 Centralia WA 98531 6/10/2011 3219 Outlet Ohio Station Outlets 9911 Avon Lake Road, Unit 200 Burbank OH 44214 7/22/2011 3220 Outlet The Outlet Shoppes at Oshkosh 3001 South Washburn Street, Spc D240 Oshkosh WI 54904 6/10/2011 3
Christopher & Banks Store Count as of 7/27/2018 Store # Division Center Name Address City State Zip Code Open Date 3221 Outlet Johnson Creek Premium Outlets 575 Linmar Lane, Spc A110 Johnson Creek WI 53038 7/22/2011 3222 Outlet The Outlet Shoppes at Gettysbu 1863 Gettysburg Village Drive, Spc 740 Gettysburg PA 17325 3/16/2012 3225 Outlet Osage Beach Premium Outlets 4540 Osage Beach Parkway, Spc #H‐5 Osage Beach MO 65065 8/23/2013 3229 Outlet Medford Outlet Center 6750 West Frontage Road, Spc B033 Medford MN 55049 3/23/2012 3231 Outlet Outlets at West Branch 2990 Cook Road, Ste 108 West Branch MI 48661 6/28/2013 3234 Outlet Tanger Outlets Pittsburgh 2200 Tanger Blvd, Ste #513 Washington PA 15301 11/7/2013 3235 Outlet Tanger Outlets Tilton 120 Laconia Road, Spc 220 Tilton NH 03276 3/31/2016 3236 Outlet The Outlet Shoppes at Burlingto 200 Fashion Way Burlington WA 98233 5/24/2013 3237 Outlet Waterloo Premium Outlets 655 State Route 318, Spc #A049 Waterloo NY 13165 8/1/2013 3238 Outlet St. Louis Premium Outlets 18533 Outlet Blvd, Spc #103 Chesterfield MO 63005 8/22/2013 3239 Outlet Rockvale Outlets 35 South Willowdale Drive, #312 Lancaster PA 17602 5/1/2014 3240 Outlet Columbia Gorge Outlets 450 NW 257th Way, #512 Troutdale OR 97060 5/2/2014 3241 Outlet The Outlet Shoppes of the Blueg1155 Buck Creek Road, Spc A110 Simpsonville KY 40067 7/30/2014 3242 Outlet Log Jam Outlet 1476 State Route 9, #H14 Lake George NY 12845 5/8/2014 3243 Outlet Bend Factory Outlets 61334 South Hwy 97, Spc #150 Bend OR 97702 5/9/2014 3246 Outlet Outlets at Anthem 4250 W Anthem Way, #0720 Anthem AZ 85086 3/5/2015 3247 Outlet Tanger Outlets Grand Rapids 350 84th Street SW, Spc 1025 Byron Township MI 49315 7/30/2015 3248 Outlet Twin Cities Premium Outlets 3965 Eagan Outlets Parkway, Ste 335 Eagan MN 55122 8/14/2014 3249 Outlet Tanger Outlets Columbus 400 S. Wilson Road, Space 1040 Sunbury OH 43074 6/23/2016 3250 Outlet The Outlet Shoppes at Fremont 6245 Old US 27, #E020 Fremont IN 46737 7/3/2014 3251 Outlet Charlotte Premium Outlets 5416 New Fashion Way, Spc #890 Charlotte NC 28278 7/31/2014 3253 Outlet Pigeon River Crossings 2616 Teaster Lane, Spc 2616 Pigeon Forge TN 37863 8/29/2014 3254 Outlet Essex Outlets 21 Essex Way, Ste #214 Essex Junction VT 05452 8/28/2014 3255 Outlet Tanger Outlets at Memphis 5205 Airways Boulevard, Suite 1045 Southaven MS 38671 11/19/2015 3257 Outlet Tucson Premium Outlets 6401 W. Marana Center Blvd, Ste 920 Tucson AZ 85742 10/1/2015 3259 Outlet Fashion Outlets of Niagara Falls 1900 Military Road, Spc #223 Niagara Falls NY 14304 10/23/2014 3260 Outlet Tampa Premium Outlets 2224 Grand Cypress Drive, Spc #728 Lutz FL 33559 10/28/2015 3264 Outlet Carolina Premium Outlets 1223B Industrial Park Drive Smithfield NC 27577 7/17/2015 3265 Outlet Tanger Outlets Blowing Rock 310 Shoppes on the Parkway Road, Ste #18 Blowing Rock NC 28605 4/3/2015 3266 Outlet Sanibel Outlets 20350 Summerlin Road, Spc #6110 Fort Myers FL 33908 7/3/2015 4
Christopher & Banks Store Count as of 7/27/2018 Store # Division Center Name Address City State Zip Code Open Date 3267 Outlet Outlets at Kittery 283 US Route 1, Ste 102 Kittery ME 03904 4/3/2015 3268 Outlet Settlers Green Outlet Village 2 Common Court, #D‐54 North Conway NH 03860 2/25/2015 3269 Outlet Asheville Outlets 800 Brevard Road, Ste #864 Asheville NC 28806 5/1/2015 3270 Outlet Westbrook Outlets 314 Flat Rock Place, Ste #C140 Westbrook CT 06498 4/3/2015 3271 Outlet St. Augustine Outlets 500 Outlet Mall Boulevard, Ste #320 St. Augustine FL 32084 7/17/2015 3272 Outlet Seaside Factory Outlet Center 1111 N. Roosevelt Drive, Spc #336 Seaside OR 97138 5/29/2015 3274 Outlet Williamsburg Premium Outlets 5699‐50 Richmond Road Williamsburg VA 23188 11/25/2015 3275 Outlet The Outlets of Little Rock 11201 Bass Pro Parkway, Spc #B‐M155 Little Rock AR 72210 10/15/2015 3276 Outlet Destiny USA 9090 Destiny USA Drive, Spc L204 Syracuse NY 13204 7/31/2015 3277 Outlet Tanger Outlet at Five Oaks 1645 Parkway, Ste #740 Sevierville TN 37862 9/18/2015 3278 Outlet Tanger Outlets Commerce 800 Steven B. Tanger Blvd, Ste #112 Commerce GA 30529 6/5/2015 3279 Outlet Tanger Outlets Terrell 301 Tanger Drive, Ste #217 Terrell TX 75160 5/29/2015 3280 Outlet Tanger Outlets Rehoboth Beach 36470 Seaside Outlet Drive, Suite #1820 Rehoboth Beach DE 19971 10/30/2015 3282 Outlet The Outlets at Sands Bethlehem 77 Sands Blvd, Spc #117 Bethlehem PA 18015 8/14/2015 3285 Outlet Ellenton Premium Outlets 5375 Factory Shops Blvd, Spc 585 Ellenton FL 34222 7/31/2015 3286 Outlet Tanger Outlets Locust Grove 1000 Tanger Drive, Spc #211 Locust Grove GA 30248 7/31/2015 3287 Outlet Tanger Outlets Ocean City 12741 Ocean Gateway, Ste #960 Ocean City MD 21842 7/31/2015 3288 Outlet Phoenix Premium Outlets 4976 Premium Outlets Way, Spc #746 Chandler AZ 85226 10/30/2015 3289 Outlet Calhoun Premium Outlets 455 Belwood Road, Spc #A107 Calhoun GA 30701 1/8/2016 3290 Outlet Lighthouse Place Premium Outl 511 Lighthouse Place, Spc E110 Michigan City IN 46360 7/31/2015 3293 Outlet Gloucester Premium Outlets 100 Premium Outlets Drive, Spc #500 Blackwood NJ 08012 8/13/2015 3294 Outlet Outlets at Traverse Mountain 3700 North Cabelas Blvd, Spc 343 Lehi UT 84043 3/18/2016 3295 Outlet Gaffney Premium Outlets 1 Factory Shops Blvd, Spc 655 Gaffney SC 29341 4/1/2016 3296 Outlet Cincinnati Premium Outlets 400 Premium Outlet Drive, Spc 968 Monroe OH 45050 4/1/2016 3302 Outlet Outlets of Des Moines 801 Bass Pro Drive NW, Spc #415 Altoona IA 50009 4/20/2018 3303 Outlet Outlets at Castle Rock 5050 Factory Shops Blvd., Spc 1020 Castle Rock CO 80108 6/3/2016 3305 Outlet Colorado Mills Mall 14500 West Colfax Avenue, #456 Lakewood CO 80401 11/12/2012 3306 Outlet Tanger Outlets @ Foxwoods 455 Trolley Line Blvd Mashantucket CT 06338 2/23/2018 4001 MPW Shoppes at Montage 2131 Shoppes Boulevard Moosic PA 18507 7/31/2009 4003 MPW NewMarket Square 2441 North Maize Road, Ste 1807 Wichita KS 67205 8/26/2011 5
Christopher & Banks Store Count as of 7/27/2018 Store # Division Center Name Address City State Zip Code Open Date 4005 MPW East Hills Mall 3702 Frederick Blvd, Spc 16 St. Joseph MO 64505 4/15/2011 4006 MPW Rushmore Crossing 1335 Eglin Street, Ste #100 Rapid City SD 57701 3/7/2012 4007 MPW Lakeport Commons 5001 Sergeant Road, Ste 295 Sioux City IA 51106 3/4/2011 4008 MPW Summit Fair 930‐V Northwest Blue Pkwy Lees Summit MO 64086 10/7/2011 4010 MPW The Shoppes of Oak Park Height 5825 Krueger Lane Oak Park Heights MN 55082 10/7/2011 4011 MPW Derby Marketplace 1930 N. Rock Road, Spc D‐13 Derby KS 67037 9/16/2011 4012 MPW Chillicothe Mall 1075 North Bridge Street, Ste 165 Chillicothe OH 45601 4/1/2011 4013 MPW Cedar Mall 2900 South Main, #E5 Rice Lake WI 54868 8/10/2012 4014 MPW Mall of America 270 South Boulevard Bloomington MN 55425 8/11/1992 4015 MPW Crossroads Mall 89 Crossroads Mall Mt. Hope WV 25880 8/17/2001 4016 MPW Columbia Center 1321 N Columbia Center Blvd, #408 Kennewick WA 99336 4/3/2014 4017 MPW Marketplace Mall 751 Miracle Mile Drive, #A1‐2 Rochester NY 14623 3/8/2002 4019 MPW Rimrock Mall 300 South 24th Street West, #B‐1 Billings MT 59102 4/6/2001 4020 MPW Mesa Mall 2424 US Hwy 6 & 50, #110 Grand Junction CO 81505 8/17/2001 4022 MPW Crossroads Commons 1120 Meridian Drive, Spc A Plover WI 54467 5/25/2012 4026 MPW Central Square Mall 201 NW 4th Street, #100 Grand Rapids MN 55744 5/8/1991 4029 MPW Palouse Mall 2018 West Pullman Road, #D7 Moscow ID 83843 10/3/2003 4033 MPW Great Northern Mall 116 Great Northern Mall North Olmsted OH 44070 5/23/2003 4037 MPW Midtown Mall 1084 South Stephenson Avenue Iron Mountain MI 49801 11/2/1994 4040 MPW Alton Square 116 Alton Square, #A09A Alton IL 62002 3/9/2001 4047 MPW Crossroads Mall 2060 Crossroads Boulevard Waterloo IA 50702 6/8/2001 4053 MPW Eden Prairie Center 8251 Flying Cloud Drive, #1210 Eden Prairie MN 55344 9/27/2013 4054 MPW Aberdeen Mall 3315 6th Avenue SE, #21 Aberdeen SD 57402 11/13/1990 4059 MPW Stones River Mall 1720 Old Fort Pkwy, #B‐140 Murfreesboro TN 37129 8/22/2003 4061 MPW Janesville Mall 2500 Milton Ave, #119 Janesville WI 53545 9/28/2007 4062 MPW The Mall at Greece Ridge 257 Greece Ridge Center Drive, H‐19a Rochester NY 14626 12/12/1998 4063 MPW Pyramid Mall Ithaca 40 Catherwood Road, #B06 Ithaca NY 14850 8/16/2002 4064 MPW Valley River Center 538 Valley River Center Eugene OR 97401 10/31/2002 4065 MPW Village Mall 2917 North Vermilion Danville IL 61832 8/18/1987 4066 MPW Crossroads Mall 217 South 25th Street, Unit C23 Fort Dodge IA 50501 3/1/1980 6
Christopher & Banks Store Count as of 7/27/2018 Store # Division Center Name Address City State Zip Code Open Date 4069 MPW Eastview Mall 150 Eastview Mall Victor NY 14564 12/4/1998 4074 MPW CoolSprings Galleria 1800 Galleria Blvd, #2240 Franklin TN 37067 5/23/2003 4075 MPW The Streets of Indian Lake 300 Indian Lake Blvd, Bldg A, Ste 220 Hendersonville TN 37075 3/13/2008 4077 MPW The Mall at Whitney Field 100 Commercial Road, #64 Leominster MA 01453 8/15/2003 4079 MPW Hickory Point Mall 1350 Hickory Point Mall, Spc #1120 Forsyth IL 62535 1/3/2014 4081 MPW The Shops at CenterPoint 3647 28th Street SE Grand Rapids MI 49512 2/24/2001 4082 MPW Northpark Mall 320 West Kimberly Road, Spc 90 Davenport IA 52806 2/26/2013 4083 MPW Richland Mall 687 Richland Mall Mansfield OH 44906 4/13/2001 4084 MPW Crest Plaza 1620 N Cedar Crest Blvd, Spc G Allentown PA 18104 4/26/2013 4085 MPW Glenbrook Square 4201 Coldwater, #E10 Fort Wayne IN 46805 10/12/2001 4086 MPW Riverdale Village 12771 Riverdale Blvd, #101‐#102 Coon Rapids MN 55448 9/21/2001 4087 MPW Northtown Mall 4750 North Division, #1216 Spokane WA 99207 10/4/2013 4088 MPW Pavilion Shopping Center 4344 South College Avenue, Unit 5 Fort Collins CO 80525 10/3/2013 4089 MPW Boulevard Mall 1281 Niagara Falls Boulevard, #733 Amherst NY 14226 3/30/1999 4090 MPW Rosedale Commons 2480 Fairview Avenue North, Ste #163 A&B Roseville MN 55113 1/24/2014 4091 MPW Novi Town Center 26040 Ingersol Drive Novi MI 48375 6/5/2014 4092 MPW Clackamas Town Center 12000 SE 82nd Avenue, #L203 Happy Valley OR 97086 4/4/2014 4093 MPW Westmoreland Mall 5256 Route 30, Ste #NL4 Greensburg PA 15601 5/9/2014 4094 MPW Bellis Fair One Bellis Fair Parkway, #616 Bellingham WA 98226 6/6/2014 4095 MPW Spokane Valley Mall 14700 East Indiana Avenue, #1104 Spokane Valley WA 99216 6/20/2014 4098 MPW Columbia Mall 2300 Bernadette Drive, #0302 Columbia MO 65203 4/4/2014 4099 MPW Orchard Crossing 914 Thomas Road, #106 Fort Wayne IN 46804 4/25/2014 4100 MPW Birchwood Mall 4350 24th Avenue, #228 Port Huron MI 48059 4/11/2003 4101 MPW Peru Mall 3940 Route 251, Spc #H2 Peru IL 61354 5/2/2003 4102 MPW SouthPark Mall 4500 16th Street, #630 Moline IL 61265 3/21/1981 4103 MPW Westwood Mall 1850 W Michigan Ave, #808 Jackson MI 49202 3/5/2004 4104 MPW New Towne Mall 400 Mill Avenue SE, #317 New Philadelphia OH 44663 5/6/1999 4105 MPW SouthPointe Pavilions 2940 Pine Lake Road, #I‐18 Lincoln NE 68516 4/11/2003 4106 MPW Logan Valley Mall 5580 Goods Lane, Ste 1141 Altoona PA 16602 8/13/2014 4107 MPW Polaris Fashion Place 1500 Polaris Parkway, #2008 Columbus OH 43240 5/9/2014 7
Christopher & Banks Store Count as of 7/27/2018 Store # Division Center Name Address City State Zip Code Open Date 4108 MPW Mission Mart Shopping Center 5327 Johnson Drive Mission KS 66205 1/9/2015 4109 MPW Holiday Village Mall 1200 10th Avenue South, #1 Great Falls MT 59405 3/13/2001 4110 MPW Chambersburg Mall 864 Chambersburg Mall, #739 Chambersburg PA 17202 11/19/2004 4111 MPW Shenango Valley Mall 3275 East State Street, #625 Hermitage PA 16148 8/23/2002 4112 MPW Wausau Center C324 Wausau Center Wausau WI 54403 8/16/1978 4113 MPW Mall St. Matthews 5000 Shelbyville Road, #1125 Louisville KY 40207 5/9/2014 4114 MPW Wilton Mall at Saratoga 3065 Route 50, #B011a Saratoga Springs NY 12866 6/17/2005 4115 MPW Central Mall 5111 Rogers Avenue, Spc #28 Fort Smith AR 72903 8/23/1994 4116 MPW Prescott Gateway Mall 3250 Gateway Blvd, Spc 1064 Prescott AZ 86303 11/8/2002 4117 MPW Sunrise Mall 6145 Sunrise Mall Citrus Heights CA 95610 4/8/2005 4118 MPW Mt. Shasta Mall 900 Dana Drive, Ste #C44 Redding CA 96003 11/19/2004 4119 MPW Montgomery Village 731 Village Court, #731 Santa Rosa CA 95405 9/26/2003 4120 MPW Arapahoe Crossings 6616 Parker Road, Ste #101 Aurora CO 80016 3/14/2003 4123 MPW The Promenade at Evergreen W 101 Evergreen Way, #115 South Windsor CT 06074 10/29/2004 4124 MPW Concord Mall 4737 Concord Pike, #740 Wilmington DE 19803 5/13/2005 4125 MPW Port Charlotte Town Center 1441 Tamiami Trail, #215 Port Charlotte FL 33948 11/15/2002 4126 MPW Tyrone Square 6924 Tyrone Square Mall St. Petersburg FL 33710 9/27/2002 4127 MPW Westgate Mall 515 North Adams, Ste 223 Carroll IA 51401 3/1/1994 4128 MPW Marshalltown Mall 2500 South Center Street Marshalltown IA 50158 9/27/1983 4129 MPW Quincy Place Mall 1110 Quincy Avenue, #84 Ottumwa IA 52501 11/2/1991 4130 MPW Westland Mall 550 South Gear Avenue, Ste #1360 West Burlington IA 52655 9/16/1981 4131 MPW Grand Teton Mall 2300 East 17th Street, Ste 54 Idaho Falls ID 83404 3/5/1993 4132 MPW Greenwood Park Mall 1251 US Highway 31 North, #F11A Greenwood IN 46142 5/20/2005 4133 MPW Markland Mall 1220 South 17th Street, B03 Kokomo IN 46902 9/7/2001 4134 MPW Fayette Mall 3401 Nicholasville Road, Ste 432 Lexington KY 40503 5/21/2004 4135 MPW TownMall of Westminster 400 North Center Street, Ste 147 Westminster MD 21157 8/22/2003 4137 MPW Southland Center 23000 Eureka Road, #1655 Taylor MI 48180 8/25/2006 4138 MPW Cary Towne Center 1105 Walnut Street, #150 Cary NC 27511‐4791 10/17/2003 4140 MPW Oakdale Mall 601‐635 Harry L Drive, Ste 74 Johnson City NY 13790 9/17/2004 4142 MPW Eastern Hills Mall 4545 Transit Road, #734 Williamsville NY 14221 11/17/2006 8
Christopher & Banks Store Count as of 7/27/2018 Store # Division Center Name Address City State Zip Code Open Date 4143 MPW Midway Mall 3250 Midway Mall Elyria OH 44035 9/26/2003 4144 MPW Great Lakes Mall 7850 Mentor Avenue, #514 Mentor OH 44060 6/1/2001 4148 MPW The Galleria 500 Galleria Drive, #218 Johnstown PA 15904 10/11/2002 4149 MPW Coventry Mall 351 West Schuylkill Road, #H2 Pottstown PA 19465 11/8/2002 4150 MPW Uniontown Mall 1728 Mall Run Road, #728 Uniontown PA 15401 11/1/2002 4156 MPW Northland Mall 954 West Northland Avenue Appleton WI 54914 11/1/1983 4157 MPW East Town Mall 2350 East Mason, #15 Green Bay WI 54302 10/14/1982 4158 MPW Morgantown Mall 9915 Mall Road, #915 Morgantown WV 26501 3/29/2002 4159 MPW Columbia Mall 2800 South Columbia Road, #335 Grand Forks ND 58201 7/25/2014 4160 MPW River Hills Mall 1850 Adams Street, #518 Mankato MN 56001‐4840 3/20/2002 4161 MPW Chapel Hills Mall 1710 Briargate Blvd, #117 Colorado Springs CO 80920 4/6/2001 4162 MPW Champlain Centre North 60 Smithfield Blvd, #C‐115 Plattsburgh NY 12901 2/13/2014 4163 MPW The Village at Jordan Creek 6925 Mills Civic Pkwy, #130 West Des Moines IA 50266 6/13/2014 4164 MPW Kalispell Center Mall 20 North Main Street, #B090 Kalispell MT 59901 8/1/2014 4165 MPW Cherryvale Mall 7200 Harrison Avenue, #H‐04 Rockford IL 61112 8/22/2014 4166 MPW Skyway Regional Shopping Cent 2013 Cromwell Dixon Lane, Ste 105 Helena MT 59602 10/8/2015 4167 MPW Northpark Mall 101 N. Range Line Rd, #350 Joplin MO 64801 7/11/2014 4168 MPW Kennedy Mall 555 John F Kennedy Road, #445 Dubuque IA 52002 4/13/2001 4169 MPW Meadowbrook Mall 2399 Meadowbrook Road, #330 Bridgeport WV 26330 4/13/2001 4170 MPW Ohio Valley Mall 67800 Mall Road, #570 St. Clairsville OH 43950 3/29/2002 4171 MPW Findlay Village Mall 1800 Tiffin Avenue, #469 Findlay OH 45840 8/27/2004 4172 MPW Sandusky Mall 4314 Milan Road, #180 Sandusky OH 44870 8/16/2002 4173 MPW Millcreek Mall 725 Millcreek Mall Erie PA 16565 3/8/2002 4174 MPW Nittany Mall 2900 East College Avenue, Spc #326 State College PA 16801 3/6/2015 4175 MPW RiverTown Crossings 3700 Rivertown Pkwy, #1218 Grandville MI 49418 8/1/2014 4176 MPW Mercer Mall 261 Mercer Mall Road, Ste 720 Bluefield WV 24701 9/1/2001 4177 MPW Moorhead Center Mall 512 Center Avenue Moorhead MN 56560 2/23/1994 4178 MPW Paul Bunyan Mall 1401 Paul Bunyan Drive NW Bemidji MN 56601 9/1/1978 4179 MPW Watertown Mall 1300 9th Avenue SE, #57 Watertown SD 57201 10/30/1991 4180 MPW Carolina Mall 1480 US Highway 29 N, #275 Concord NC 28025 4/23/2004 9
Christopher & Banks Store Count as of 7/27/2018 Store # Division Center Name Address City State Zip Code Open Date 4181 MPW Utica Corners 13291 Hall Road, Spc C140 Utica MI 48315 8/1/2014 4182 MPW The Shoppes at Dawley Farms 905 South Highline Place, Spc 102 Sioux Falls SD 57110 9/26/2014 4183 MPW Hampton Village Centre 2685 South Rochester Road, Spc #11 Rochester Hills MI 48307 9/12/2014 4184 MPW Maple Grove Crossing 8046 Wedgewood Lane North, Unit 10 Maple Grove MN 55369 9/19/2014 4185 MPW Vancouver Mall 8700 NE Vancouver Mall Dr, Spc #210 Vancouver WA 98662 9/12/2014 4186 MPW The Pinnacle at Turkey Creek 11437 Parkside Drive, Ste #603 Farragut TN 37934 8/21/2015 4188 MPW Monroeville Mall 200 Monroeville Mall, #212 Monroeville PA 15146 9/5/2014 4189 MPW Kitsap Mall 10315 Silverdale Way NW, #F01 Silverdale WA 98383 1/7/2015 4190 MPW Mid Rivers Mall 2004 Mid Rivers Mall Drive St. Peters MO 63376 11/14/2014 4191 MPW Valley View Mall 4802 Valley View Blvd NW, #LA‐5 Roanoke VA 24012 1/29/2015 4192 MPW Bay City Mall 4101 Wilder Road, #E517 Bay City MI 48706 8/18/2000 4193 MPW Northland Mall 2900 East Lincolnway, #10 Sterling IL 61081 4/3/1998 4194 MPW Salmon Run Mall 21182 Salmon Run Mall Loop West, Spc #A104 Watertown NY 13601 10/3/2014 4195 MPW Laurel Park Place 37700 West Six Mile Road, #D‐280 Livonia MI 48152 10/3/2014 4196 MPW Westridge Court 256 South Route 59, Ste #104 Naperville IL 60540 8/28/2014 4197 MPW Carriage Crossing 4670 Merchants Park Circle, #660 Collierville TN 38017 10/3/2014 4198 MPW University Mall 1237 East Main Street, #1052 Carbondale IL 62901 4/30/2004 4199 MPW Park City Center 575 Park City Center, E0575 Lancaster PA 17601 11/8/2002 4200 MPW Thunderbird Mall 1427 South 12th Avenue, Ste 27 Virginia MN 55792‐3247 7/12/1992 4201 MPW The Crossroads 6650 S Westnedge Ave, #255 Portage MI 49024 1/27/2015 4202 MPW West County Center 72 West County Center, #1300 Des Peres MO 63131 6/5/2015 4203 MPW Greenwood Mall 2625 Scottsville Road, #100 Bowling Green KY 42104 11/21/2014 4204 MPW Market Place Shopping Center 2000 North Neil Street, Spc 104 Champaign IL 61820 11/14/2014 4205 MPW Shoppes on Ford Avenue 1603 Ford Avenue, Ste A Effingham IL 62401 1/30/2015 4206 MPW North Grand Mall 2801 Grand Avenue, #1090 Ames IA 50010 9/9/2005 4207 MPW Clearview Mall 101 Clearview Circle, Room #730 Butler PA 16001 9/26/2003 4209 MPW Centrum Plaza 915 Short Street Decorah IA 52101 2/22/1994 4210 MPW South Park Mall 901 11th Street SW, Unit #48 Spencer IA 51301 8/17/1993 4211 MPW Coral Ridge Mall 1451 Coral Ridge Ave, #118 Coralville IA 52241 2/2/2018 4212 MPW Holiday Mall 425 College Drive South, Ste #6 Devils Lake ND 58301 8/19/1979 10
Christopher & Banks Store Count as of 7/27/2018 Store # Division Center Name Address City State Zip Code Open Date 4213 MPW Buffalo Mall 2400 8th Avenue SW, Ste E4 Jamestown ND 58401 8/19/1993 4214 MPW Lufkin Mall 4600 S Medford Drive, #1124 Lufkin TX 75901 10/8/2004 4215 MPW Collin Creek Mall 811 North Central Expressway, Spc 2190 Plano TX 75075 11/8/2007 4217 MPW Mall of Abilene 4310 Buffalo Gap Road, #1404 Abilene TX 79606 6/24/2005 4218 MPW Westgate Mall 7701 West Interstate 40, Ste #548 Amarillo TX 79121 3/28/2003 4220 MPW Firewheel Town Center 155 Cedar Sage Drive, #D11 Garland TX 75040 5/8/2009 4221 MPW Auburn Mall 550 Center Street, #1108 Auburn ME 04210 10/20/2014 4222 MPW Marketplace at Augusta 2 Stephen King Drive, Suite 4 Augusta ME 04330 11/15/2007 4223 MPW Pinnacle Hills Promenade 2203 Promenade Blvd, #2130 Rogers AR 72758 10/4/2006 4227 MPW Wenatchee Valley Mall 511 Valley Mall Parkway, Spc B08 East Wenatchee WA 98802 8/16/1994 4228 MPW Kent Station 438 Ramsey Way, Ste 105 Kent WA 98032 11/1/2006 4229 MPW Cache Valley Mall 1300 North Main Street, #1110 Logan UT 84341 10/8/2004 4230 MPW Provo Towne Center 1200 Provo Towne Center Blvd, #1000 Provo UT 84601 10/28/1998 4231 MPW Red Cliffs Mall 1770 East Red Cliffs Drive, #1168 St. George UT 84790 3/12/2004 4234 MPW Mall of New Hampshire 1500 South Willow Street, #E111 Manchester NH 03103 11/15/2002 4235 MPW Village at Sandhill 631 Promenade Place, Ste 12 Columbia SC 29229 5/26/2006 4236 MPW Mall of Georgia 3333 Buford Drive, #2049A Buford GA 30519 8/15/2003 4237 MPW College Square 2550 East Morris Blvd, #56 Morristown TN 37813 6/6/2003 4238 MPW Northgate Mall 271 Northgate Mall Chattanooga TN 37415 6/13/2003 4239 MPW Dover Mall 1365 N Dupont Hwy, #1110 Dover DE 19901 10/14/2005 4241 MPW Valley Mall 1925 East Market Street, #0416 Harrisonburg VA 22801 5/8/2015 4242 MPW Heritage Mall 2137 14th Avenue SE, #A117 Albany OR 97322 3/12/2015 4243 MPW Eastridge Mall 601 SE Wyoming Boulevard, #1258 Casper WY 82609 5/1/2011 4244 MPW Grand Traverse Mall 3200 S Airport Road West, #411 Traverse City MI 49684 4/11/2003 4245 MPW Greenway Station Shopping Cen 1661 Deming Way, Suite 138 Middleton WI 53562 3/6/2015 4247 MPW The Monroe Marketplace 330 Marketplace Blvd, #C6 Selinsgrove PA 17870 2/13/2015 4248 MPW River Ridge Mall 3405 Candlers Mountain Road, #F265 Lynchburg VA 24502 8/23/2002 4249 MPW University Mall 575 East University Pkwy, #A8A Orem UT 84097 3/10/2006 4250 MPW Magic Valley Mall 1485 Pole Line Lane #195 Twin Falls ID 83301 8/19/2005 4251 MPW Washington Park Mall 2350 SE Washington Blvd Bartlesville OK 74006 6/1/2007 11
Christopher & Banks Store Count as of 7/27/2018 Store # Division Center Name Address City State Zip Code Open Date 4252 MPW The Lakes Mall 5600 Harvey Street, #2072 Muskegon MI 49444 8/15/2001 4253 MPW West Acres Shopping Center 3902 13th Avenue South, #233 Fargo ND 58103 8/20/1979 4254 MPW Hamilton Town Center 14002 Hoard Dr, Ste 300 Noblesville IN 46060 5/1/2008 4255 MPW Midland Mall 6800 Eastman Avenue, #240 Midland MI 48642 11/12/2004 4256 MPW The Arboretum of South Barring 100 West Higgins Road, Ste Q65 South Barrington IL 60010 4/10/2015 4257 MPW Germantown Plaza III N96 W19160 County Line Road, Unit #2 Germantown WI 53022 4/17/2015 4258 MPW Corbin Park 6501 West 135th Street, Ste F‐8 Overland Park KS 66223 4/24/2015 4259 MPW Shoppes on Six 205 County Road 6 East, Suite F Elkhart IN 46514 9/4/2015 4260 MPW Superstition Springs Mall 6555 East Southern Avenue, Ste 1210 Mesa AZ 85206 4/15/2015 4261 MPW Durango Mall 800 South Camino del Rio, #F5 & #F6 Durango CO 81301 2/6/2015 4262 MPW Arrowhead Towne Center 7700 W. Arrowhead Towne Center Dr, Spc #1253 Glendale AZ 85308 5/8/2015 4263 MPW Capital Mall 3600 Country Club Drive, #306 Jefferson City MO 65109 2/10/1982 4264 MPW The Shops at Perry Crossing 314 Marketplace Mile, Suite 115 Plainfield IN 46168 8/28/2015 4266 MPW College Mall 2916 East 3rd Street, #M‐12 Bloomington IN 47401 4/5/2002 4267 MPW Chautauqua Mall 318 East Fairmount Avenue, #644 Lakewood NY 14750 9/24/2004 4268 MPW Patrick Henry Mall 12300 Jefferson Avenue, #412 Newport News VA 23602 4/18/2003 4269 MPW New River Valley Mall 782 New River Road, #831 Christiansburg VA 24073 8/10/2001 4270 MPW Short Pump Town Center 11800 W Broad Street, #2138 Richmond VA 23233 8/19/2005 4272 MPW Salem Center 480 Center Street, #2220 Salem OR 97301 6/11/2004 4273 MPW The Tower Shops at The Pinnacl 562 Pinnacle Parkway, Spc #518 Bristol TN 37620 5/12/2016 4274 MPW Alderwood Mall 3000 184 Street SW, Spc #398 Lynnwood WA 98037 6/12/2015 4275 MPW Northwoods Mall 2200 West War Memorial Drive, #CU‐9 Peoria IL 61613 4/12/2002 4276 MPW Green Oak Village Place 9736 Village Place Blvd, #F Brighton MI 48116 9/29/2006 4277 MPW River Valley Mall 1635 River Valley Circle South, #331 Lancaster OH 43130 5/17/2002 4278 MPW Indian Mound Mall 771 South 30th Street, #721 Heath OH 43056 3/15/2002 4279 MPW Eastland Mall 1615 East Empire Street, #1048 Bloomington IL 61701 10/15/2004 4280 MPW Lycoming Mall 300 Lycoming Mall Circle, Ste #257 Pennsdale PA 17756 9/20/2002 4281 MPW Southgate Mall 2901 Brooks Street, #B2 Missoula MT 59801 7/3/2015 4283 MPW Genesee Valley Mall 3341 South Linden Road, #620 Flint MI 48507 11/5/2004 4284 MPW Colonie Center 131 Colonie Center, #280 Albany NY 12205 5/4/2015 12
Christopher & Banks Store Count as of 7/27/2018 Store # Division Center Name Address City State Zip Code Open Date 4285 MPW Garden City Plaza 2214 East Kansas Avenue, Suite 6 & 7 Garden City KS 67846 10/27/1993 4286 MPW Frontier Mall 1400 Dell Range Boulevard Cheyenne WY 82009 4/7/1982 4287 MPW Miami Valley Centre 987 East Ash Street, Spc C6 Piqua OH 45356 10/28/2004 4289 MPW Arnot Mall 3300 Chambers Road South, Ste 5146 Horseheads NY 14845 3/12/2004 4290 MPW Johnson City Crossing 3211 Peoples Street, Ste #700 Johnson City TN 37604 8/7/2015 4291 MPW Liberal Plaza Shopping Center 1505 North Kansas Avenue Liberal KS 67901 10/9/2015 4293 MPW The Shoppes on Burbank 4369 Burbank Road, Unit 20 Wooster OH 44691 3/18/2016 4294 MPW Wilshire Plaza 5530 Grape Road Mishawaka IN 46545 9/15/2016 4296 MPW Washington Square Mall 815 Lake Avenue, #5 Detroit Lakes MN 56501 4/30/1991 4298 MPW Viking Plaza 3015 Highway 29 South, Ste 4095 Alexandria MN 56308 4/15/1992 4299 MPW Greeley Mall 1955 Greeley Mall Greeley CO 80631 5/18/1983 4300 MPW Manhattan Town Center 100 Manhattan Town Center, #270 Manhattan KS 66502 10/25/1983 4301 MPW Time Square 7605 148th Street Apple Valley MN 55124 11/1/1977 4302 MPW Beaver Valley Mall 344 Route 18, #344 Monaca PA 15061 4/23/1999 4304 MPW Miller Hill Mall 1600 Miller Trunk Hwy, #E02D Duluth MN 55811 11/15/2007 4306 MPW Westgate Mall 14136 Baxter Drive, Ste 36 Baxter MN 56425 11/5/1991 4307 MPW Hilltop Mall 5003 North 2nd Avenue, Ste 5 Kearney NE 68848 10/15/1992 4308 MPW Hutchinson Mall 1060 Hwy 15 South, #36 Hutchinson MN 55350 11/12/1992 4309 MPW Monument Mall 2302 Frontage Road, #2 Scottsbluff NE 69361 3/30/1993 4310 MPW Northridge Plaza 1615 North Harrison, #13 Pierre SD 57501 4/7/1993 4311 MPW Yankton Mall 2101 Broadway, #130 Yankton SD 57078 7/26/2018 4312 MPW Winona Mall 1213 Gilmore Winona MN 55987 10/26/1993 4314 MPW Delta Plaza Mall 301 North Lincoln Road Escanaba MI 49829 2/16/1994 4315 MPW Pueblo Mall 3539 Dillon Drive Pueblo CO 81008 5/3/1994 4316 MPW Market Street Mall 1420 East College Drive Marshall MN 56258 8/31/1994 4317 MPW Karcher Mall 1509 Caldwell Boulevard, Ste #1174 Nampa ID 83651 8/2/1994 4318 MPW Marshfield Mall 503 East Ives Street Marshfield WI 54449 8/23/1994 4319 MPW Francis Scott Key Mall 5500 Buckeystown Pike, #255 Frederick MD 21703 4/12/2002 4321 MPW Rotterdam Square Mall 93 West Campbell Road, #6050 Schenectady NY 12306 3/9/2001 4323 MPW Platte River Mall 1000 South Dewey, #40/50 North Platte NE 69101 5/18/2001 13
Christopher & Banks Store Count as of 7/27/2018 Store # Division Center Name Address City State Zip Code Open Date 4324 MPW Rockford Road Plaza 4190 Vinewood Lane North, #127 Plymouth MN 55442 10/7/2011 4326 MPW Marketplace at Northglenn 331 West 104th Avenue, Unit A Northglenn CO 80234 5/3/2002 4328 MPW Towne East Square 7700 East Kellogg Drive, #P05 Wichita KS 67207 4/8/2004 4329 MPW Petoskey Town Center 1319 Spring Street Petoskey MI 49770 6/28/1995 4330 MPW Sooner Mall 3301 West Main Street, #305 Norman OK 73072 6/13/2003 4332 MPW Eastwood Mall 5555 Youngstown‐Warren Road, #1155 Niles OH 44446 9/22/2000 4333 MPW Grand Central Mall 100 Grand Central Avenue, #263 Vienna WV 26105 3/22/2002 4334 MPW South Hills Village 301 South Hills Village, #2030A Pittsburgh PA 15241 9/29/2000 4335 MPW Eastwood Towne Center 3016 Towne Centre Blvd, #D4 Lansing MI 48912 3/7/2003 4337 MPW Stroud Mall 344 Stroud Mall Road, Ste 274 Stroudsburg PA 18360 6/6/2003 4338 MPW Harford Mall 670 Bel Air Road, #6 Bel Air MD 21014 10/3/2003 4339 MPW Towne Square Mall 5000 Frederica Street, H10 & H12 Owensboro KY 42301 10/24/2003 4340 MPW Village Centre 122 East 24th Street, A11 Columbus NE 68601 8/15/2003 4341 MPW Pine Ridge Mall 4155 Yellowstone Hwy, #1152 Chubbuck ID 83202 11/7/2003 4342 MPW Cottonwood Mall 10000 Coors Blvd Bypass NW, #C206 Albuquerque NM 87114 5/7/2004 4343 MPW Towne Mall 1704 N Dixie Hwy, #A003 Elizabethtown KY 42701 11/21/2003 4344 MPW Diamond Run Mall Route 7 South, #230 Rutland VT 05701 6/11/2004 4345 MPW Richmond Square 3801 National Road East, #541 Richmond IN 47374 3/25/2005 4346 MPW Capitola Mall 1855 41st Avenue, #E09 Capitola CA 95010 8/13/2004 4347 MPW University Mall 155 Dorset Street, #H8 South Burlington VT 05403 9/10/2004 4348 MPW Somerset Mall 4150 US Hwy 27 S, #12b Somerset KY 42501 10/1/2004 4349 MPW Cross County Mall 700 Broadway East, #3 Mattoon IL 61938 10/1/2004 4350 MPW Shawnee Mall 4901 North Kickapoo Street, #1556 Shawnee OK 74804 11/12/2004 4353 MPW Berkshire Mall 1665 State Hill Road, #350 Wyomissing PA 19610 11/18/2005 4354 MPW Country Club Mall 1262 Vocke Road, Suite 444 LaVale MD 21502 3/16/2007 4355 MPW Mall at Tuttle Crossing 5043 Tuttle Crossing Blvd, #268 Dublin OH 43016 9/16/2005 4357 MPW Streets of Cranberry 20430 Route 19, #160 Cranberry Township PA 16066 3/23/2007 4358 MPW DuBois Mall 5522 Shaffer Road, Unit 3A DuBois PA 15801 8/18/2006 4359 MPW Volusia Mall 1700 W International Speedway, #414 Daytona Beach FL 32114 8/25/2006 4361 MPW Quail Springs Mall 2501 W Memorial Road, Spc 153 Oklahoma City OK 73134 11/8/2007 14
Christopher & Banks Store Count as of 7/27/2018 Store # Division Center Name Address City State Zip Code Open Date 4362 MPW Parkway Place 2801 Memorial Pkwy SW, Spc 162 Huntsville AL 35801 3/6/2008 4364 MPW Southtown Center 7833 Southtown Center, #511 Bloomington MN 55431 3/9/2001 4365 MPW Fashion Place 6191 South State Street, #1585 Murray UT 84107 3/11/2016 4366 MPW Willow Creek Crossing 532 Indianhead Drive Mason City IA 50401 7/3/2015 4367 MPW Belden Village 4129 Belden Village Mall, Spc B40 Canton OH 44718 4/14/2016 4368 MPW Valley Mall 17301 Valley Road Mall, #462 Hagerstown MD 21740 3/11/2016 4369 MPW Valley View Mall 3800 State Road 16, #178 La Crosse WI 54601 1/29/2016 4370 MPW Fashion Square Mall 4895 Fashion Square Mall, Spc 402 Saginaw MI 48604‐2796 5/30/2003 4371 MPW Yorktown Shopping Center 260 Yorktown Shopping Center Lombard IL 60148 9/28/2007 4375 MPW Battlefield Mall 2825 South Glenstone Ave, Spc #F04A Springfield MO 65804 3/25/2016 4376 MPW Galleria at Pittsburgh Mills 210 Pittsburgh Mills Circle Tarentum PA 15084 7/14/2005 4378 MPW Northfield Square Mall 1600 N State Route 50, #424a Bourbonnais IL 60914 11/25/2005 4385 MPW St. Clair Square 134 St. Clair Square, Spc 180 Fairview Heights IL 62208 12/16/2016 4386 MPW McKinley Mall 3701 McKinley Pkway #736 Buffalo NY 14219 1/27/2016 4387 MPW Branson Landing 1105 Branson Landing Boulevard Branson MO 65616 3/4/2016 4388 MPW York Galleria 2899 Whiteford Road, Ste 234 York PA 17402 6/4/1999 4389 MPW Gateway Mall 516 Gateway Mall Lincoln NE 68505‐2462 2/1/2007 4392 MPW Burnsville Center 2016 Burnsville Center Burnsville MN 55306 8/18/2000 4393 MPW Dakota Square 218 Dakota Square Minot ND 58701 10/13/2000 4394 MPW Towne West Square 4600 West Kellogg Drive, #Q08 Wichita KS 67209 9/28/1993 4395 MPW Huntington Mall 500 Mall Road, Unit 850 Barboursville WV 25504 3/10/2017 4396 MPW Apache Mall 333 Apache Mall, Ste 1020 Rochester MN 55902 4/21/2017 4397 MPW Bechtle Crossing 1642 N Bechtle Ave, Space 60 Springfield OH 45504 3/3/2017 4398 MPW Crossroads Center 4101 West Division Street, Space C0012 St. Cloud MN 56301 4/14/2017 4399 MPW Southern Park Mall 7401 Market Street, #221A Youngstown OH 44512 6/2/2000 4400 MPW Quincy Mall 3347 Quincy Mall Quincy IL 62301 5/5/2006 4401 MPW Eastland Mall 800 North Green River Road, #146 Evansville IN 47715 11/18/2016 4402 MPW Oakwood Mall 4800 Golf Road, Spc 88 Eau Claire WI 54701 1/27/2017 4403 MPW South Hill Mall 3500 South Meridian, Spc 440 Puyallup WA 98373 4/14/2017 4404 MPW Honey Creek Mall 3401 South US Hwy 41, #H3 Terre Haute IN 47802 8/10/2001 15
Christopher & Banks Store Count as of 7/27/2018 Store # Division Center Name Address City State Zip Code Open Date 4405 MPW Lima Mall 2400 Elida Road, #158 Lima OH 45805 3/20/1998 4406 MPW Sunset Plaza 1700 Market Lane, #200 Norfolk NE 68701 10/10/2003 4407 MPW Big Creek Crossing (fka ‐ The Ma 2918 Vine Street, #60 Hays KS 67601 5/1/1998 4409 MPW Metro Crossing Shopping Cente 3606 Metro Drive, Ste 200 Council Bluffs IA 51501 9/10/2009 4410 MPW South County Center 316 South County Center Way St. Louis MO 63129 9/28/2017 4411 MPW The Shops at South Town 10450 South State Street, Space 1110 Sandy UT 84070 9/14/2017 4412 MPW Great Northern Mall 4155 State Route 31, #B106 Clay NY 13041 9/28/2001 4413 MPW Kandi Mall 1605 South 1st Street, #C10/11 Willmar MN 56201 5/18/2007 4414 MPW Foothills Mall 145 Foothills Mall Drive, #48/#50 Maryville TN 37801 10/13/2006 4415 MPW Crestview Hills Town Center 2815 Town Center Boulevard, #2020 Crestview Hills KY 41017 3/1/2006 4419 MPW Rogue Valley Mall 1600 N Riverside Drive, #2041 Medford OR 97501 10/8/1999 16
Christopher & Banks Insurance Policy Schedule Effective 2/1/2018 Insurance Coverage Insurance Provider Policy Dates Broker Commercial Property Affiliated FM 2/1/18 – 1/31/19 Willis Towers Watson Cargo Travelers Property Casualty Company 2/1/18 – 1/31/19 Willis Towers Watson Commercial General Crum & Forster – The North River Insurance 2/1/18 – 1/31/19 Willis Towers Watson Liability Company (United States Fire Insurance Company) Commercial Auto Crum & Forster – The North River Insurance 2/1/18 – 1/31/19 Willis Towers Watson Company (United States Fire Insurance Company) Workers’ Compensation Crum & Forster – The North River Insurance 2/1/18 – 1/31/19 Willis Towers Watson and Employers Liability Company (United States Fire Insurance Company) International Package Continental Insurance Company (CNA) 2/1/18 – 1/31/19 Willis Towers Watson Commercial Umbrella Everest (Primary Layer) - $25M 2/1/18 – 1/31/19 Willis Towers Watson Continental Insurance Company (CNA) (Secondary Layer) - $25M Excess Follow Form Continental Insurance Company (CNA) 2/1/18 – 1/31/19 Willis Towers Watson liability Surety – Fundraising Westfield Insurance Company September 30, 2018 – Willis Towers Watson Bond - Alabama September 30, 2019 Surety – Fundraising Westfield Insurance Company December 31, 2017 – Willis Towers Watson Bond – Massachusetts December 31, 2018 Surety – Custom’s Bond C.A. Shea – OneBeacon Atlantic Specialty June 2018 – June 2019 Willis Towers Watson Insurance Cyber Insurance Coverage Lloyds of London Syndicates 10/1/17 – 10/31/18 Willis Towers Watson Primary Directors & National Union Fire Ins. Co of Pittsburgh 2/1/18 – 1/31/19 Willis Towers Watson Officers Liability (AIG) - $10M 1st Excess Directors & Endurance Risk Solutions Assurance Co 2/1/18 – 1/31/19 Willis Towers Watson Officers Liability (Sompo) - $10M x $10M 2nd Excess Directors & Continental Casualty Company (CNA) 2/1/18 – 1/31/19 Willis Towers Watson Officers Liability $10M x $20M 3rd Excess Directors & XL Specialty Insurance Company 2/1/18 – 1/31/19 Willis Towers Watson Officers Liability $5M x $30M 4th Excess Directors & Beazley Insurance Company 2/1/18 – 1/31/19 Willis Towers Watson Officers Liability $10M x $35M 5th Excess Directors & National Union Fire Insurance Co of 2/1/18 – 1/31/19 Willis Towers Watson Officers Liability Pittsburgh (AIG) $10M x $45M Primary Employment National Union Fire Ins. Co of Pittsburgh - 2/1/18 – 1/31/19 Willis Towers Watson Practices Liability $5M 1st Excess Employment AXIS Insurance Company - $5M x $5M 2/1/18 – 1/31/19 Willis Towers Watson Practices Liability Fiduciary Liability National Union Fire Ins. Co of Pittsburgh 2/1/18 – 1/31/19 Willis Towers Watson Crime Coverage Federal Insurance Company (Chubb) 2/1/18 – 1/31/19 Willis Towers Watson
SCHEDULE 5.13 SUBSIDIARIES; OTHER EQUITY INVESTMENTS (a) Ownership of Christopher & Banks, Inc. and Christopher & Banks Company: Owner Issuer Type of # of Equity Certificate Percentage Equity Interests Number Ownership Interests Christopher & Banks Christopher & Common 1,000 Shares 3 100% Corporation Banks, Inc. Stock Christopher & Christopher & Common 1,000 Shares 1 100% Banks, Inc. Banks Company Stock (b) None.
SCHEDULE 5.17 INTELLECTUAL PROPERTY MATTERS Trademarks See attached “Trademarks” list. Patents None. Claims and Litigation None.
ATTACHMENT 1 Trademarks Trademark Owner Registration Date Status Registration No. Christopher & May 29, 2018 Registered 5,481,754 Banks Company Christopher & July 17, 2012 Registered 4,176,007 Banks Company Christopher & December 8, 2009 Registered 3,723,759 Banks Company Christopher & June 1, 2010 Registered 3,797,571 Banks Company Christopher & November 29, 2011 Registered 4,062,718 Banks Company cj banks Christopher & May 4, 2010 Registered 3,786,187 Banks Company C.J. BANKS Christopher & July 3, 2001 Registered 2,466,691 Banks Company christopher & banks Christopher & December 8, 2009 Registered 3,723,169 Banks Company CHRISTOPHER & BANKS Christopher & April 19, 1988 Registered 1,485,374 Banks Company Christopher & January 25, 2000 Registered 2,311,711 Banks Company Christopher & March 21, 2000 Registered 2,331,821 Banks Company EASY WEAR. EVERY WEAR. Christopher & August 19, 2014 Registered 4,590,384 Banks Company EVERY DAY, WOMEN DO AMAZING Christopher & July 2, 2013 Registered 4,361,752 THINGS Banks Company March 12, 2013 Registered 4,302,044 FRIENDSHIP Christopher & December 7, 2010 Registered 3,887,711 Banks Company Christopher & March 14, 2017 Registered 5,159,900 Banks Company Christopher & October 16, 2012 Registered 4,227,243 Banks Company HERITAGE CORD Christopher & August 12, 2014 Registered 4,585,770 Banks Company
Trademark Owner Registration Date Status Registration No. IT’S A PROPORTION NOT A SIZE Christopher & December 1, 2009 Registered 3,719,274 Banks Company Life. You Wear It Well. Christopher & May 15, 2012 Registered 4,144,120 Banks Company RELAXED. RESTYLED. Christopher & August 19, 2014 Registered 4,590,293 Banks Company SIGNATURE COMFORT Christopher & May 20, 2014 Registered 4,533,748 Banks Company Christopher & October 29, 2013 Registered 4,425,549 Banks Company Signature Slimming Christopher & August 12, 2014 Registered 4,585,757 Banks Company Christopher & September 8, 2015 Registered 4,809,457 Banks Company Christopher & September 8, 2015 Registered 4,809,455 Banks Company Christopher & September 8, 2015 Registered 4,809,458 Banks Company Christopher & September 8, 2015 Registered 4,809,456 Banks Company TUMMY SLIMMER Christopher & July 30, 2013 Registered 4,375,557 Banks Company
SCHEDULE 5.24 MATERIAL CONTRACTS 1. Bank Card Merchant Agreement, dated February 21, 2007, between Fifth Third Processing Solutions and Christopher & Banks Corporation (“Bank Card Merchant Agreement”). 2. First Amendment to Bank Card Merchant Agreement, dated September 26, 2007, between Fifth Third Bank and Christopher & Banks Corporation. 3. Second Amendment to Bank Card Merchant Agreement, dated August 29, 2008, between Fifth Third Bank and Christopher & Banks Corporation. 4. Third Amendment to Bank Card Merchant Agreement, dated June 18, 2010, among Fifth Third Processing Solutions, Fifth Third Bank and Christopher & Banks Corporation. 5. Fourth Amendment to Bank Card Merchant Agreement, dated August 26, 2011, among Vantiv, LLC and Fifth Third Bank and Christopher & Banks Corporation. 6. Fifth Amendment to Bank Merchant Agreement, dated June 27, 2013, among Vantiv, LLC, Fifth Third Bank and Christopher & Banks Corporation. 7. Special Amendment to the Bank Merchant Agreement, dated September 14, 2015, among Vantiv, LLC and Fifth Third Bank and Christopher & Banks Corporation. 8. Second Special Amendment to Bank Card Merchant Agreement, dated April 9, 2016, among Vantiv, LLC f/k/a Fifth Third Processing Solutions, LLC and Fifth Third Bank and Christopher & Banks Corporation. 9. Restated and Amended Master Services Agreement, dated October 25, 2007, between Accretive Commerce, Inc. and Christopher & Banks, Inc. 10. Restated and Amended Statement of Work, dated October 25, 2007, between Accretive Commerce, Inc. and Christopher & Banks, Inc. 11. Amendment to Restated and Amended Master Services Agreement, effective as of March 17, 2008, by and between GSI Commerce South, Inc. and Christopher & Banks, Inc. 12. Amendment No. 1 to Restated and Amended Statement of Work and to the Amended and Restated Master Services Agreement, effective as of February 28, 2011, by and between GSI Commerce South, Inc. and Christopher & Banks, Inc. 13. Amendment No. 2 to Restated and Amended Statement of Work, effective as of April 20, 2012, by and between GSI Commerce South, Inc. and Christopher & Banks, Inc. 14. Amendment No. 3 to Restated and Amended Master Services Agreement and Restated and Amended Statement of Work, effective as of July 6, 2015, by and between eBay Enterprise, Inc. and Christopher & Banks, Inc.
15. Amendment No. 4 to Restated and Amended Master Services Agreement and Restated and Amended Statement of Work, effective as of March 23, 2016, by and between eBay Enterprise, Inc. and Christopher & Banks, Inc. 16. Private Label Credit Card Plan Agreement, dated September 19, 2011, between World Financial Network Bank and Christopher & Banks, Inc. 17. First Amendment to Private Label Credit Card Plan Agreement, effective as of March 31, 2017, by and between Comenity Bank and Christopher & Banks, Inc. 18. Second Amendment to Private Label Credit Card Plan Agreement, effective as of April 21, 2017, by and between Christopher & Banks, Inc. and Comenity Bank. 19. Global Master Services Agreement, effective as of January 1, 2016, by and between ADP, LLC and Christopher & Banks Corporation. 20. First Amendment to Global Master Services Agreement, effective as of August 11, 2016, by and between ADP, LLC and Christopher & Banks Corporation. 21. Third Amendment to Global Master Services Agreement, effective as of November 1, 2016, by and between ADP, LLC and Christopher & Banks Corporation. 22. Master Subscription and Services Agreement, effective as of March 16, 2015, by and between Demandware, Inc. and Christopher & Banks, Inc. 23. Lease Agreement, dated as of April 27, 2018, by and between 2400 Xenium, LLC and Christopher & Banks Corporation. 24. Escrow Agreement, dated as of April 27, 2018, by and between 2400 Xenium, LLC, Christopher & Banks Corporation and Republic National Title Insurance Company.
SCHEDULE 7.01 EXISTING LIENS Christopher & Banks Corporation Lienholder Amount of Property/Asset Secured Obligation Secured N/A Christopher & Banks, Inc. Lienholder Amount of Property/Asset Secured Obligation Secured N/A Christopher & Banks Company Lienholder Amount of Property/Asset Secured Obligation Secured N/A
CHRISTOPHER & BANKS CORPORATION AND SUBSIDIARIES INVESTMENT POLICY Approved by the Audit Committee on December 3, 2014 and supersedes all prior Investment Policies and Addendums thereto. Contents Statement of Purpose..................................................................................................................................2 Policy Review & Approval .........................................................................................................................2 Investment Objectives.................................................................................................................................2 Investment Committee................................................................................................................................2 Investment Advisers....................................................................................................................................2 Legal & Regulatory Compliance ...............................................................................................................3 Investment Guidelines ................................................................................................................................3
Statement of Purpose The purpose of this Investment Policy (the “Policy”) is to establish guidelines for the investment of the general funds of Christopher & Banks Corporation and its subsidiaries (“the Company”). Specifically, the Policy: 1. Identifies investment objectives; 2. Specifies investment authority and responsibility; and 3. Establishes investment portfolio guidelines. The Company believes a sound Investment Policy is essential to developing strategies that ensure the investment objectives of the Company are achieved. Policy Review & Approval Senior management, with the assistance of its investment advisers, if any, shall annually review the Policy with the Audit Committee of the Company’s Board of Directors. Changes in this Policy must be approved by the Audit Committee of the Board of Directors, and following any such revisions or approvals, the updated Policy will be provided to the other members of the Company’s Board of Directors. Investment Objectives The Company’s primary investment objectives are, in order of importance, as follows: 1. Safety of principal; 2. Maintenance of adequate liquidity; and 3. Maximization of after-tax, after-fees return on investment. Investment Committee There shall be an Investment Committee consisting of (i) the Chief Executive Officer (“CEO”), (ii) the Chief Financial Officer (“CFO”), (iii) the Vice President, Controller (“Controller”) and (iv) the Vice President, Tax and Treasury (“VP Tax”) (collectively, the “Committee”). The Committee shall meet periodically and at any meeting at which the CEO and two (2) or more other members are present the Committee shall have the authority to retain investment advisers, open securities accounts, and transfer cash or securities between sub-portfolios, securities custodial accounts or the Company’s cash concentration account. Any one member of the Committee may transfer cash between the Company’s cash concentration account and its money market account or other operating account utilized for meeting the Company’s immediate liquidity needs, consistent with the Company’s internal control procedures. The Committee also may take one or more of the above actions by unanimous written consent. Investment Advisers The Company may choose to hire the services of one or more investment management firms and give such parties discretionary authority over individual security selection and transaction execution, provided that each such firm and its affiliates may not have more than seventy-five percent (75%) of the Company’s investable assets under its management at any one time and that they agree in writing to: 1. Manage the Company’s assets in accordance with all applicable laws and regulations and this Policy; - 2 -
2. Promptly inform the Company of material events related to the credit markets as a whole as well as those matters effecting the safety or liquidity of any of the Company’s specific investments; 3. Contact a member of the Committee promptly upon the occurrence of any of the following events: (i) a security held in the portfolio is placed on “Negative Outlook” or “CreditWatch with Negative Implications”; (ii) a security held in the portfolio is downgraded and note whether or not it causes the credit quality of that security to fall below the minimum standards stated in this Policy; or (iii) the value of the investments under its management decreases by the lesser of $500,000 or five percent (5%).* 4. Conduct the purchase and sale of securities designed to receive the best price and execution, provided that, in any individually managed portfolio, no securities shall be sold that result in a loss of $10,000 or more without the prior written approval of the CEO and either the CFO or VP Tax; 5. Provide monthly written reports within 10 days following the last trading day of the month describing portfolio holdings, transactions, and performance. Such reports must be made available to the Company via the manager’s or custodian’s website or in paper copy; 6. In the event of a change in the Company’s tax status, the Company will inform the managers of the portfolios effected who will then be responsible for factoring such change into the portfolio’s reported after-tax yield; 7. Promptly inform the Company of matters pertinent to the placement of its assets with the investment management firm such as significant changes in ownership and relevant personnel changes; 8. Meet in person with Company management at least quarterly or more often if deemed necessary by the Company; 9. Attend the Company’s Audit Committee meetings if requested by management or the Committee; 10. At least annually, review and recommend changes to this Investment Policy as appropriate; and 11. Limit fund transfers to and from the Company’s securities custodial accounts to its designated cash concentration account. * Note: Promptly following any notice under Section 3(iii) above, a member of the Investment Committee shall promptly notify the members of the Audit Committee. In addition, a member of the Investment Committee shall also promptly notify the members of the Audit Committee if the value in the aggregate of the investable assets covered by this Policy decreases by the lesser of $500,000 or five percent (5%). Legal & Regulatory Compliance The management and investment of Company funds is to be done in full compliance with all applicable laws and regulations and shall be reviewed and modified as necessary to comply with changes in laws and regulations. Investment Guidelines The Company will maintain adequate cash to meet its daily, weekly, and monthly liquidity needs in bank accounts or money market funds. Remaining corporate funds shall be invested only in Eligible Investments and further classified into one of three sub-portfolios – Enhanced Cash, Short Duration and Intermediate Duration – each as further described in Tables I and II below. The amount of funds allocated to each sub-portfolio may change over time as directed by the Company. - 3 -
Table I. Eligible Investments Minimum Credit Rating (Note 1) Instrument (Abbreviation) (S&P/Moody’s/Fitch) Short Term Long Term Money Market Mutual Funds MMF N/A Other Mutual Funds MF Notes 2, 4 Repurchase Agreements Repo Note 3 Derivatives -- Note 4 U.S. Treasuries UST N/A Federal Agencies USA N/A FDIC Insured Certificates of CD N/A N/A Deposit Commercial Paper – Taxable CCP A-1/P-1/F-1 N/A Commercial Paper – Tax Exempt MCP A-1/MIG 1 or VMIG 1/F-1 N/A Sovereigns (dollars only) SOV N/A AA-/Aa3/AA- Corporate Bonds Corp N/A A-/A3/A- Municipal Bonds Muni N/A A-/A3/A- 1. Investments will be considered to have the highest rating if there is more than rating agency rating the investment. 2. An open-end mutual fund may be an Eligible Investment provided that its stated investment objectives are consistent with the Company’s investment objectives and portfolio guidelines as described herein and it complies with all applicable requirements of the Investment Company Act of 1940, as amended, including the provision of a daily liquidity feature at net asset value. 3. Repurchase agreements must be collateralized with U.S. Treasury or Agency securities. 4. Prohibited Investments: Direct investment in derivatives is prohibited; however a qualifying Mutual Fund as defined in Note 2 may use interest rate swaps, futures, or options to hedge against changes in interest rates and lock in yields. - 4 -
Table II. Portfolio Guidelines Min Wtd Sub- Sub-Portfolio Concentration Limits Avg Investment Portfolio Max Portfolio Sub- Instrument Yield Duration Per Issue Sub-Portfolio Quality Portfolio Max Benchmarks Name (Note 3) Max (Notes 1 & 2) Maturity MMFs N/A Up to 100% USTs 1 year Up to 100% none USAs 1 year Up to 75% Repos 7 days Up to 50% Enhanced Note 4 N/A CDs 1 year Up to 25% Cash CCP or 1 year 5% or less of Up to 75% MCP sub-portfolio Corps 1 year Up to 25% Munis 1 year Up to 100% BAML 1-3 USTs Up to 100% Year USAs none Up to 75% Treasury MFs Up to 100% Short Index SOVs Up to 25% Duration or 2 years AA-/ MRS N/A Up to 25% Aa3/AA- (~1-3 yr Barclays or less maturities) Capital 1 ABS 5% or less of Up to 25% Year Corps sub-portfolio Up to 25% Municipal Munis Up to 100% Bond Index BAML 1-3 USTs Up to 100% Year USAs none Up to 75% Treasury MFs Up to 100% Intermediate Index SOVs Up to 25% Duration or 4 years MRS N/A Up to 25% (~4-7 yr Barclays or less maturities) Capital 5 ABS 5% or less of Up to 25% Year Corps sub-portfolio Up to 25% Municipal Munis Up to 100% Bond Index 1. Initial Quality: At the time of purchase, no more than 10% of the securities in a sub-portfolio may be rated A- /A3/A- or less. Also at the time of purchase, no more than 5% of the securities in a sub-portfolio may be unrated. 2. Downgrades: In the event a security in an individually managed sub-portfolio is downgraded subsequent to purchase and causes a violation of minimum weighted average portfolio quality, the downgraded security may be held by the manager only after obtaining the Company’s written approval. If such approval is not obtained, the security must be sold as soon as practical but in all instances within 30 days of the downgrade. 3. Per Issue Limit: The “per issue limit” of 5% or less is determined at time of purchase, for example, if $50 million is allocated to a given sub-portfolio, then the maximum investment in any one municipal or corporate issue would be $2.5 million. 4. Yield Benchmarks: Acceptable yield benchmarks for the Enhanced Cash sub-portfolio include the Lipper Money Market Fund Index, the Lipper Short US Treasury Index, the Barclays 1-3 Month Treasury Index, the Bank of America Merrill Lynch (“BAML”) 1-3 Month Treasury Index, and the BAML 6 Month Treasury Index. - 5 -
EXHIBIT B-1 FORM OF REVOLVING NOTE REVOLVING NOTE $_______________ _______________, ____ FOR VALUE RECEIVED, the undersigned (individually, a “Borrower” and, collectively, the “Borrowers”), jointly and severally promise to pay to the order of Wells Fargo Bank, National Association (hereinafter, with any subsequent holders, the “Lender”), One Boston Place, 18th Floor, Boston, MA 02108, the principal sum of ___________________ ($______________), or, if less, the aggregate unpaid principal balance of Revolving Loans made by the Lender to or for the account of any Borrower pursuant to the Second Amended and Restated Credit Agreement dated as of July 12, 2012 (as amended, modified, supplemented or restated and in effect from time to time, the “Credit Agreement”) by and among the Borrowers and the Lender. This is a “Revolving Note” to which reference is made in the Credit Agreement and is subject to all terms and provisions thereof. The principal of, and interest on, this Revolving Note shall be payable at the times, in the manner, and in the amounts as provided in the Credit Agreement and shall be subject to prepayment and acceleration as provided therein. Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement. The Lender’s books and records concerning the Revolving Loans, the accrual of interest thereon, and the repayment of such Revolving Loans, shall be prima facie evidence of the indebtedness to the Lender hereunder. No delay or omission by the Lender in exercising or enforcing any of such Lender’s powers, rights, privileges, remedies, or discretions hereunder shall operate as a waiver thereof on that occasion nor on any other occasion. No waiver of any Event of Default shall operate as a waiver of any other Event of Default, nor as a continuing waiver of any such Event of Default. Each Borrower, and each endorser and guarantor of this Revolving Note, waives presentment, demand, notice, and protest, and also waives any delay on the part of the holder hereof. Each Borrower assents to any extension or other indulgence (including, without limitation, the release or substitution of Collateral) permitted by the Lender with respect to this Revolving Note and/or any Collateral or any extension or other indulgence with respect to any other liability or any collateral given to secure any other liability of any Borrower or any other Person obligated on account of this Revolving Note. This Revolving Note shall be binding upon each Borrower, and each endorser and guarantor hereof, and upon their respective successors, assigns, and representatives, and shall inure to the benefit of the Lender and its successors, endorsees, and assigns. The liabilities of each Borrower, and of any endorser or guarantor of this Revolving Note, are joint and several, provided, however, the release by the Lender of any one or more such Persons shall not release any other Person obligated on account of this Revolving Note. Each reference in this Revolving Note to any Borrower, any endorser, and any guarantor, is to such Person individually; each reference to 8734644
the Borrowers, the endorsers or the guarantors is to all such Persons jointly. No Person obligated on account of this Revolving Note may seek contribution from any other Person also obligated unless and until all of the Obligations have been paid in full in cash. THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES THEREOF, BUT INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS REVOLVING NOTE OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE BORROWERS AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS REVOLVING NOTE OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS REVOLVING NOTE OR ANY OTHER LOAN DOCUMENT AGAINST ANY OF THE BORROWERS OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION. EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS REVOLVING NOTE OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO ABOVE. EACH OF THE BORROWERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT. Each Borrower makes the following waiver knowingly, voluntarily, and intentionally, and understands that the Lender, in the establishment and maintenance of their respective relationship with the Borrowers contemplated by this Revolving Note, are each relying thereon. EACH BORROWER, EACH GUARANTOR, ENDORSER AND SURETY, AND THE LENDER, BY ITS ACCEPTANCE HEREOF, HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS REVOLVING NOTE OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT THE LENDER HAS BEEN INDUCED TO ENTER 2
INTO THE CREDIT AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS HEREIN. [Signature Page to Follow] 3
IN WITNESS WHEREOF, the Borrowers have caused this Revolving Note to be duly executed as of the date set forth above. BORROWERS: CHRISTOPHER & BANKS CORPORATION By: ___________________________ Name: Title: CHRISTOPHER & BANKS, INC. By: ___________________________ Name: Title: CHRISTOPHER & BANKS COMPANY By: ___________________________ Name: Title: [Signature Page to Revolving Note]
EXHIBIT B-2 FORM OF FILO NOTE FILO NOTE $_______________ _______________, ____ FOR VALUE RECEIVED, the undersigned (individually, a “Borrower” and, collectively, the “Borrowers”), jointly and severally promise to pay to the order of Wells Fargo Bank, National Association (hereinafter, with any subsequent holders, the “Lender”), One Boston Place, 18th Floor, Boston, MA 02108, the principal sum of ___________________ ($______________), or, if less, the aggregate unpaid principal balance of FILO Loans made by the Lender to or for the account of any Borrower pursuant to the Second Amended and Restated Credit Agreement dated as of July 12, 2012 (as amended, modified, supplemented or restated and in effect from time to time, the “Credit Agreement”) by and among the Borrowers and the Lender. This is a “FILO Note” to which reference is made in the Credit Agreement and is subject to all terms and provisions thereof. The principal of, and interest on, this FILO Note shall be payable at the times, in the manner, and in the amounts as provided in the Credit Agreement and shall be subject to prepayment and acceleration as provided therein. Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement. The Lender’s books and records concerning the FILO Loans, the accrual of interest thereon, and the repayment of such FILO Loans, shall be prima facie evidence of the indebtedness to the Lender hereunder. No delay or omission by the Lender in exercising or enforcing any of such Lender’s powers, rights, privileges, remedies, or discretions hereunder shall operate as a waiver thereof on that occasion nor on any other occasion. No waiver of any Event of Default shall operate as a waiver of any other Event of Default, nor as a continuing waiver of any such Event of Default. Each Borrower, and each endorser and guarantor of this FILO Note, waives presentment, demand, notice, and protest, and also waives any delay on the part of the holder hereof. Each Borrower assents to any extension or other indulgence (including, without limitation, the release or substitution of Collateral) permitted by the Lender with respect to this FILO Note and/or any Collateral or any extension or other indulgence with respect to any other liability or any collateral given to secure any other liability of any Borrower or any other Person obligated on account of this FILO Note. This FILO Note shall be binding upon each Borrower, and each endorser and guarantor hereof, and upon their respective successors, assigns, and representatives, and shall inure to the benefit of the Lender and its successors, endorsees, and assigns. The liabilities of each Borrower, and of any endorser or guarantor of this FILO Note, are joint and several, provided, however, the release by the Lender of any one or more such Persons shall not release any other Person obligated on account of this FILO Note. Each reference in this FILO Note to any Borrower, any endorser, and any guarantor, is to such Person individually; each reference to the 8734696
Borrowers, the endorsers or the guarantors is to all such Persons jointly. No Person obligated on account of this FILO Note may seek contribution from any other Person also obligated unless and until all of the Obligations have been paid in full in cash. THIS FILO NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES THEREOF, BUT INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS FILO NOTE OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE BORROWERS AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS FILO NOTE OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS FILO NOTE OR ANY OTHER LOAN DOCUMENT AGAINST ANY OF THE BORROWERS OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION. EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS FILO NOTE OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO ABOVE. EACH OF THE BORROWERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT. Each Borrower makes the following waiver knowingly, voluntarily, and intentionally, and understands that the Lender, in the establishment and maintenance of their respective relationship with the Borrowers contemplated by this FILO Note, are each relying thereon. EACH BORROWER, EACH GUARANTOR, ENDORSER AND SURETY, AND THE LENDER, BY ITS ACCEPTANCE HEREOF, HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS FILO NOTE OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT THE LENDER HAS BEEN INDUCED TO ENTER 2
INTO THE CREDIT AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS HEREIN. [Signature Page to Follow] 3
IN WITNESS WHEREOF, the Borrowers have caused this FILO Note to be duly executed as of the date set forth above. BORROWERS: CHRISTOPHER & BANKS CORPORATION By: ___________________________ Name: Title: CHRISTOPHER & BANKS, INC. By: ___________________________ Name: Title: CHRISTOPHER & BANKS COMPANY By: ___________________________ Name: Title: [Signature Page to FILO Note]
